Ahead of the Open | April 28, 2022
GRAIN CALLS
Corn: 3 to 7 cents higher.
Soybeans: 2 to 4 cents higher.
Wheat: 6 to 12 cents higher.
GENERAL COMMENTS: Nearby corn futures extended a rally near 10-year highs overnight. Soybean and wheat futures also firmed. Malaysian palm oil futures fell 1%, while nearby U.S. crude oil futures are near unchanged. U.S. stock index futures signal a firmer open, while the U.S. dollar index is up nearly points after hitting a five-year high.
USDA reported a daily sale of 1.088 MMT of corn for delivery to China, including 476,000 MT for the 2021-22 marketing year and 612,000 MT for 2022-23. That’s the fourth large corn sales to China (all in excess of 1 MMT) this month.
The U.S. economy unexpectedly shrank during the first quarter as inflation and Covid infections soared. Gross domestic product declined 1.4% in the first three months of 2022, a sharp reversal from a 6.9% expansion at the end of 2021, the Commerce Department reported today. The GDP drop was well below expectations for 1.0% growth.
Indonesia’s palm oil export ban is expected to be short-lived. Indonesia should be able to resolve the country’s cooking oil shortages not long after the Muslim festival of Eid al-Fitr, which falls in early May, according to Sahat Sinaga, a senior official at the industry-run Indonesia Palm Oil Board. He’s confident additional supplies would ease domestic prices. “Expectation is the ban will be lifted in three weeks,” said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
Global cooking oil prices have been rising since the pandemic began for multiple reasons, including poor harvests in South America, Covid-related labor shortages and steadily increasing demand from the biofuel industry, the Los Angeles Times reported. The war in Ukraine, which supplies nearly half of the world’s sunflower oil, interrupted shipments. Vegetable oil prices hit a record high in February, then increased another 23% in March, according to the United Nations Food and Agriculture Organization.
Brazil's top grain-producing state is facing its driest April in 17 years, threatening a key second corn crop, Reuters reported, citing weather service EarthDaily Agro. Accumulated April rainfall in Mato Grosso state is likely to total 30 millimeters (1.18 inches), 70% below the average for the last decade. “Corn producers are increasingly concerned with the drought that has lasted more than a month in several municipalities," according to the EarthDaily Agro report.
CORN: USDA reported net U.S. corn export sales for the week ended April 21 of 866,800 MT for 2021-22, down 1% from the previous week and down 5% from the average for the previous four weeks. China was the top buyer at 729,200 MT. For 2022-23, net sales totaled 843,400 MT, also led by China at 612,000 MT. Sales were expected at 900,000 MT to 1.6 MMT for 2021-22 and 800,000 to 1.25 million MT for 2022-23.
SOYBEANS: Net weekly soybean sales totaled 481,300 MT for 2021-22, up 5% from the previous week but down 37% from the prior four-week average. China was a lead buyer at 165,100 MT, including 121,000 MT switched from “unknown destinations” and decreases of 33,300 MT. For 2022-23, net sales totaled 580,000 MT, led by China at 468,000 MT. Sales were expected at 250,000 to 800,000 MT for 2021-22 and 250,000 to 750,000 MT for 2022-23.
WHEAT: Net weekly wheat sales totaled 32,300 MT for 2021-22, up 23% from the previous week but down 65% from the prior four-week average. For 2022-23, net sales totaled 124,300 MT. Old-crop sales were at the low end of expectations ranging from zero to 175,000 MT, while 2022-23 sales fell short of projections for 150,000 to 400,000 MT.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-weaker
CATTLE: Live cattle futures may extend the week’s sharp declines as cash prices weaken and slumping wholesale beef prices fuel concerns over demand. Choice cutout values dropped $2.26 yesterday to $261.91, a five-week low, though movement was again strong at 160 loads. Packers are cutting prices to keep product moving as demand waned after post-Easer orders were filled. But a seasonal rise in demand and prices is likely in May as retailers gear up for Memorial Day and Father’s Day features. June live cattle fell $1.225 yesterday to $135.025, the lowest closing price since April 11. August feeder cattle fell $4.20 at $168.95, near a six-month low.
USDA reported net weekly beef sales of 11,400 MT for 2022, down 24% from the previous week and down 34% from the prior four-week average.
HOGS: Lean hog futures may face further pressure from eroding chart patterns and demand concerns. The CME lean hog index is down 55 cents today, ending the recent string of strength. But futures’ premiums to the cash index dropped to $1.835 for May hogs and $8.01 for the June contract. Even if the cash index shows more near-term weakness, it’s unlikely traders would tighten those premiums much more, as prices typically strengthen seasonally into mid-summer. June lean hog futures fell 82.5 cents yesterday to $110.35, the contract’s lowest settlement since Feb. 4.
USDA reported net weekly pork sales at 31,500 MT for 2022, up “noticeably” from the previous week and up 19% from the prior four-week average.
