Ahead of the Open | April 25, 2022
GRAIN CALLS
Corn: 2 to 5 cents lower.
Soybeans: 17 to 22 cents lower.
Wheat: SRW wheat 1 cent lower to 1 cent higher, HRW and HRS 2 to 5 cents higher.
GENERAL COMMENTS: Soybean futures fell to the lowest prices in over a week as the market followed declining crude oil and palm oil markets overnight. Corn futures also fell while wheat was mostly higher. Malaysian palm oil futures closed down 2.1%, reversing a nearly 7% jump during early trade following news that the palm oil export ban by Indonesia would cover shipments of refined palm olein but not crude palm oil. Nearby U.S. crude oil futures are down more than $4. U.S. stock index futures indicate a weaker open, while the U.S. dollar index is nearly 400 points higher after reaching a two-year high.
USDA reported daily soybean sales of 330,000 MT for delivery to China, 66,000 MT for delivery during the 2021-22 marketing year and 264,000 MT for delivery during the 2022-23 marketing year. Another 204,000 MT of soybean sales were reported during the reporting period to China for 2022-23.
Indonesian government officials told palm oil companies today the export ban announced late last week would cover shipments of refined, bleached, deodorized palm olein but not crude palm oil, Reuters reported. Soyoil futures were heavily pressured by the news overnight.
Argentine farmers are unlikely to take full advantage of record soyoil prices due to drought, a recent export tax hike and subsidies to keep domestic prices low. Drought has cut some of Argentina’s soybean production this year. The government recently increased its soyoil and meal tax from 31% to 33% and there are some export quotas to help rein in domestic prices. Industry analysts explained the country’s soy crushing in March totaled 2.93 MMT, 14% below last year. The country has commitments of 305,100 MT of soyoil to be shipped between April 20 and May 10, 25% behind last year.
China has stopped its weekly wheat auctions from state reserves, earlier than last year when stocks were higher. China suspended wheat sales from its reserves last week and did not release any auction results on Monday. China had been releasing only around 500,000 MT of wheat from the reserves in weekly auctions recently, compared with 4 MMT at some auctions in 2021. Auctions last year did not stop until May 10, and more than 27 MMT of wheat was sold from the reserves.
USDA’s Food Safety and Inspection Service (FSIS) announced Friday it approved the Clemens Food Group pork packing plant in Coldwater, Michigan, to run faster line speeds under a one-year trial program. The agency now has let four plants operate with faster harvesting line speeds, which could increase packing capacity and alleviate supply issues in the face of strong pork demand.
Mexico's agriculture ministry reported the outbreak of highly pathogenic H7N3 bird flu virus at two chicken farms in the northern state of Coahuila, which borders Texas. The strain has existed in some regions since 2012, the ministry said.
Over the weekend, thousands of Argentine farmers protested in Buenos Aires against President Alberto Fernandez, whose policies to contain food prices to curb rampant inflation have been criticized by the agricultural sector. Farmers were protesting higher taxes.
Argentina’s Agriculture Minister Julian Dominguez sought to reassure the public that export taxes won’t be increased in the agricultural sector, as a protest Saturday by the nation’s grain delivery trucks got underway. About 4,300 trucks lined up to enter Argentina’s grain ports on Saturday, fewer than the daily average of more than 6,000, agency AgroEntregas said on Twitter.
Algeria tendered to buy a nominal 50,000 MT of optional origin durum wheat.
CORN: December corn fell overnight for the fourth session in the past five amid forecasts for better planting conditions in the Midwest. The Midwest will see a mix of rain and sunshine during the next two weeks, with seasonal warming and increasing drying rates, World Weather Inc. said. “Planting should advance between rain events,” the forecaster said. USDA’s next weekly crop condition update after today’s close likely will show farmers made little planting progress last week. The crop was 4% planted as of April 17, behind the 6% average for the previous five years.
July corn futures overnight fell as low as $7.81 before finding support just above Friday’s low of $7.80 1/2. The most-active contract gained 5 1/4 cents last week.
SOYBEANS: July soybeans overnight dropped as low as $16.59, the contract’s lowest intraday price since April 14. The most-active contract gained 22 3/4 cents last week. Nearby soyoil futures were down sharply overnight after posting record highs last week.
WHEAT: Nearby SRW wheat faded to slight declines after July futures reached $10.89 1/2 overnight. The most-active contract fell 29 1/4 cents last week. USDA’s weekly condition ratings after today’s close will be studied for any signs of improvement in the drought-stressed HRW crop.
LIVESTOCK CALLS
CATTLE: Lower
HOGS: Steady-firmer
CATTLE: Live cattle futures may extend Friday’s losses following a bearish USDA Cattle on Feed Report. The April 1 feedlot inventory was up 1.7% from last year and March placements fell just 0.4%, both well on the bearish side of expectations. Placements were expected to fall 7.8%. Also, USDA’s Cold Storage Report showed March beef inventories rose to a record 536.9 million lbs. for the month. Wholesale beef slipped last week, with Choice beef cutout values down $2.26 Friday to $267.91, down from $272.62 at the end of the previous week. Live steers averaged $143.00 through Friday morning, up nearly $2.00 from the previous week’s average.
June live cattle fell $1.475 Friday to $138.425, up $2.00 for the week. May feeder futures fell 97.5 cents to $163.875, a weekly gain of $2.10.
HOGS: Lean hog futures may extend modest gains posted late last week behind continued strength in cash fundamentals. Today’s CME lean hog index is up 10 cents to $101.35, the highest since April 4. Pork cutout values ended last week at $111.28, up from $110.21 a week earlier. Movement was stronger at 336 loads. June lean hogs rose $1.60 Friday to $118.775, up 30 cents for the week.
USDA’s Cold Storage Report showed pork stocks at 487.2 million lbs. at the end of March, up 7.3 million lbs. from February and a sharp departure from the typical drawdown for the month. Over the previous five years, pork stocks declined an average of 18.6 million lbs. during March. Pork inventories were still 79.4 million lbs. (14.0%) under the five-year average, so the data shouldn’t be seen as too bearish.
