Ahead of the Open | April 8, 2022
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 8 to 14 cents higher.
Wheat: 7 to 12 cents higher.
GENERAL COMMENTS: Grain and soy complex futures climbed late in the overnight session ahead of USDA’s Supply & Demand Report later this morning that carries greater than usual uncertainty due to Russia’s war with Ukraine. Malaysian palm oil futures rose, completing a weekly gain of 6.4%. Nearby Nymex crude oil is up more than $1 but still down over $2 for the week. U.S. stock index futures signal a mixed open, while the U.S. dollar index is around 250 points higher this morning.
USDA will release its April WASDE Report at 11 a.m. CT. The report may reflect global supply disruptions from the Russia/Ukraine war, as well as a further reduction in South America’s soybean outlook. U.S. ending stocks are expected to come in at 1.415 billion bu. for corn (versus 1.440 billion bu. in March), 262 million bu. for soybeans (285 million bu. in March) and 656 million bu. for wheat (653 million bu. in March), based on a Reuters survey. Global ending stocks for corn, soybeans and wheat are expected to be reduced slightly.
Global food prices as measured by the UN Food and Agriculture Organization (FAO) surged 12.6% in March to an all-time high behind record levels for vegoils, cereal grains and meat. Sugar and dairy prices also rose significantly but didn’t hit record highs. FAO’s global food price index is up 33.6% from last year. Compared to year-ago, prices jumped 56.1% for vegoils, 37.3% for cereal grains, 23.6% for dairy, 22.6% for sugar and 19.0% for meat.
FAO’s global wheat production forecast for 2022 was lowered slightly, “largely as a result of the conflict in Ukraine,” but it still points to an increase of 1.1% from 2021 to 784 MMT. “Wheat production in Ukraine is now forecast to fall below the five-year average, primarily reflecting expectations that at least 20% of the winter planted area may not be harvested due to direct destruction, constrained access or a lack of resources to harvest crops,” the FAO said.
Russia’s wheat export tax for April 13-19 will be $101.40 per MT, based on an indicative price of $344.90 per MT, up $5.30 from the previous week. The wheat export tax has risen for four consecutive weeks and is at its highest level.
An estimated 92% of French soft wheat crops were in good or excellent condition in the week to April 4, unchanged from the previous week and above a year-earlier score of 87%, farm office FranceAgriMer said. About 4% of the expected grain maize area had been planted, below the 8% progress seen a year ago, the office said in a weekly cereal crop report.
CORN: May corn futures reached $7.62 1/2 overnight and are on track to post a solid weekly gain after ending last week at $7.35. December corn hit $7.11, just 1 1/2 cents below the contract high posted April 5.
SOYBEANS:May soybeans overnight touched $16.59 1/2, the contract’s highest intraday price since March 31 and up from $15.82 3/4 at the end of last week.
WHEAT: Winter wheat futures climbed near the close of overnight trading and are poised for a firm weekly gain. May SRW wheat traded as high at $10.34 3/4 overnight. The contract ended last Friday at $9.84 1/2.
LIVESTOCK CALLS
CATTLE: Steady-weak
HOGS: Steady-weaker
CATTLE: Live cattle futures strengthened in recent sessions but are still on track to end lower for the week amid bearish attitudes revolving around expectations that high slaughter weights and elevated cow slaughter are boosting beef supplies. June live cattle is trading around $5 under the cash market, contrary to the premium typical for this time of year. Concerns high beef prices will curtail demand also hang over the market. Choice cutout values gained 36 cents yesterday to $271.40, though movement was lighter than recent days at 94 loads. USDA-reported live steers averaged $138.72 this week through yesterday morning, down 60 cents from last week's average.
June live cattle futures fell 12.5 cents yesterday to $134.10, down from $135.85 at the end of last week. May feeder futures declined 47.5 cents to $159.475.
HOGS: Lean hog futures are on track for a sharp weekly drop as cash fundamentals weaken. The CME lean hog index is down 40 cents to $100.68, a drop of $2.98 over the past six days. While the index is still $1.63 above where nearby April futures finished on Thursday, buying interest is likely to be limited until the cash market shows signs of bottoming. Pork cutout values fell $1.26 yesterday to $103.11, near a three-week low and led by a drop of nearly $13 in bellies. Movement totaled 252 loads. June lean hogs fell 55 cents to $114.15, the contract’s seventh decline in the past eight sessions and down from $120.45 at the end of last week.
China’s state planner will buy another 40,000 MT of frozen pork for state reserve – its fourth round of stockpiling this year. The move is an effort to support domestic prices, which have fallen sharply. While lower pork prices are helping ease consumer inflation, they are squeezing hog production margins. China has previously purchased 118,000 MT of pork for reserves, though that’s a small fraction of its annual production, which reached 53 MMT last year.
