Ahead of the Open | April 6, 2022
GRAIN CALLS
Corn: 1 to 4 cents lower.
Soybeans: 1 to 4 cents lower.
Wheat: 7 to 12 cents lower.
GENERAL COMMENTS: Grain and soybean futures fell under mild profit-taking pressure overnight after two days of gains as the market watched for a potential ratcheting-up of sanctions on Russia. Malaysian palm oil futures were little changed, ending a two-day rally. Nymex crude oil is up around $1 this morning. U.S. stock index futures signal a weaker open, while the U.S. dollar index is down about 125 points.
USDA reported a sale of 132,000 MT of soybeans for delivery to China during the 2021-22 marketing year. That marked the first USDA-announced soybean sale to China since a 132,000-MT purchase on March 28.
Minutes released this afternoon by the Federal Reserve’s policy-setting committee, the FOMC, are expected provide insight into how quickly the central bank plans to raise rates and reduce its bond holdings. The Fed “will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting,” Fed Governor Lael Brainard said Tuesday.
Conservation Reserve Program (CRP) enrollment will be down a net 1.4 million acres, according to USDA Secretary Tom Vilsack. Only 1.8 million of the 4 million acres in expiring contracts will be re-enrolled in the program, as 52% to 56% of the maturing acres were not offered in the general signup, Vilsack said. Also, new contracts on around 800,000 acres would be offered, which would be a net loss of about 1.4 million total CRP acres.
Russia plans to continue setting quotas for fertilizer exports during the next winter grain planting, due this fall, and in spring 2023 planting, an official said on Tuesday. In November, Russia limited exports of nitrogen fertilizers and complex nitrogen-containing fertilizers with quotas for Dec. 1-May 31 to help curb any further increase in food prices amid higher gas prices.
Wild swings in commodities are here to stay with global supply chains being reassessed in the wake of Russia’s invasion of Ukraine, according to Gregory Broussard, global head of financial trading for Cargill Inc.’s risk management unit. An economic ostracization of Russia is likely to persist even if the war ends, prompting reconsideration of how critical supplies like grain, fertilizer and fuel are sourced and produced, Broussard told Bloomberg. Countries will likely start hoarding commodities as a caution. “We will exit this war from the supply side tighter than we entered it,” he said.
USDA Secretary Tom Vilsack said he doesn’t expect major export losses for U.S. poultry producers from a bird flu outbreak that has spread to 24 states. While the outbreak has prompted more than 80 countries to curb imported U.S. products, Vilsack said the restrictions have been limited to poultry raised in affected counties or states.
Plentiful rains have boosted soil moisture across Australia, improving the outlook for a potential bumper crop as planting starts. Many farmers are expected to keep their regular crop rotations. However, USDA forecast Australia will harvest its second-largest canola crop in 2022-23 as farmers increase acres to take advantage of higher prices.
Kazakhstan will limit wheat exports to 1 MMT and wheat flour exports to 300,000 MT until June 15. The limits would take effect within two weeks, according to the country’s Agriculture Minister.
National Sunflower Association expects U.S. farmers to plant 20% more sunflower acres this year, well above USDA’s current projection for a 10% increase. The group is fielding calls from first-time sunflower farmers asking for information about planting the crop. The cash market price for new-crop sunflowers is now almost $34 per 100 pounds, surpassing the prior all-time high of $30.50 in 2008.
CORN: May corn futures overnight fell as low as $7.50 1/4 after gaining nearly 25 cents the previous two days and settling yesterday at $7.59 3/4, the contract’s highest close since $7.62 1/2 on March 11. Prices may extend the sideways consolidation that’s persisted the past month, unless wheat makes a sharp move or nearby futures can break through last week’s high or low.
SOYBEANS:May soybeans overnight reached $16.43, a high for the week, before retreating. Initial resistance is seen around the 10- and 40-day moving averages, both just under $16.45, with support at this week’s low of $15.76 3/4, a 2 1/2-month intraday low.
WHEAT: May SRW wheat traded within yesterday’s range overnight after gaining 35 cents yesterday to $10.45 1/4, the contract’s highest close since $10.57 on March 28. USDA’s unexpectedly poor crop ratings released Monday may limit selling interest as traders watch Russia/Ukraine developments.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-weaker
CATTLE: Live cattle futures may find support following sharp declines the previous three days amid signs of improving retail demand for end-of-Lent and spring features. Choice cutout values rose $3.49 yesterday to $271.53, the highest daily average since Feb. 14, and movement was stronger at 123 loads. Weakness in corn prices may boost feeder futures, which ended at a 10-month low yesterday. But cash cattle prices are expected to weaken this week and money flow will be more important to near-term futures direction action in cattle futures.
June live cattle futures sank $1.60 yesterday to $133.325, the lowest closing price since $132.95 on March 11. May feeder futures fell $3.475 to $159.00, the contract’s lowest close in 10 months.
HOGS: Lean hogs may face followthrough technical pressure as a chart breakdown sent futures sharply lower over the past week. Cash fundamentals continue to erode. The CME lean hog index is down another 75 cents today, its fourth straight daily decline and a $2 drop over that period. But April hogs’ drop yesterday extended the lead contract’s discount to today’s cash index (as of April 2) to nearly $4. Pork cutout values fell $2.75 yesterday to an average of $103.60 on relatively light movement of 260 loads.
