Ahead of the Open | March 2, 2022
GRAIN CALLS
Corn: 6 to 12 cents higher.
Soybeans: old-crop 3-9 cents lower.
Wheat: mostly 40 to 75 cents higher.
GENERAL COMMENTS: Winter wheat futures rose sharply and extended a rally to near 14-year highs overnight as Russia’s war with Ukraine continued to stir fears of global supply disruptions. Corn futures approached a 10-month high and soybeans traded mostly lower overnight. Malaysian palm oil futures rose about 1.5% after earlier soaring to a record high. Nymex crude oil futures surpassed $112 a barrel to the highest price since May 2011. U.S. stock index futures signal a firmer open this morning and the U.S. dollar index strengthened around 150 points.
USDA reported daily soybean sales of 264,000 MT to “unknown destinations,” including 198,000 MT is for delivery during the 2021-22 marketing year and 66,000 MT for 2022-23. USDA also reported daily soybean sales of 266,000 MT to China, including 198,000 MT is for 2021-22 and 68,000 MT for 2022-23. Since Jan. 28, USDA has reported a combined 5.464 MMT of soybean sales to China or unknown destinations, a more than eight-fold increase compared to the sales the previous month.
Russia and Ukraine will hold a second round of talks later today as battles rage on, according to Russian news agency TASS, citing an aide to the Ukrainian president’s office. Ukraine’s Foreign Minister said Russia’s demands remain unchanged from what they were before it started the war and his country is unwilling to bow to those ultimatums. The Ukrainian city of Kharkiv has not yet been taken by Russia, despite an intensive shelling effort that took place over the past 24 hours.
The conflict has raised major concerns about the availability of supplies from the Black Sea region. “Global buyers of grains have been increasingly turning to the U.S., Europe or South America to secure supplies in the immediate term,” ING said in a note. “The demand for stockpiling has also increased due to the current uncertainty, as prolonged military action in the region could create long-term supply imbalances.”
China booked at least five cargoes of U.S. old-crop soybeans for delivery in April-May, export sources told Reuters. “While prices of U.S. and Brazil beans were almost the same, logistics for U.S. cargoes were faster,” one trader said. On Monday, China was rumored to have purchased at least 10 cargoes of U.S. corn to replace shipments from Ukraine due to the closure of its ports until at least the Russian invasion ends.
South Korea purchased 134,000 MT of optional origin corn. Japan purchased 24,074 MT of U.S. milling wheat. Turkey provisionally purchased 370,000 MT of milling wheat from unspecified origins, though the final tally could be adjusted as the tender remains open. Tunisia purchased around 100,000 MT of optional origin durum wheat. Jordan received no offers in its tender to buy 120,000 MT of wheat.
CORN: May corn futures rose as high as $7.47 3/4, a contract high for the second day in a row. March corn touched $7.57, the highest for a nearby contract since May 2021. Based on continuation charts, bulls will target the May 2021 high at $7.75. Russia and Ukraine provide almost 20% of world corn exports.
SOYBEANS: May soybeans fell as low as $16.55 3/4 overnight after surging 53 1/4 cents yesterday to $16.90. Unlike corn and wheat, soybeans are not a major crop in the Russia/Ukraine region, and soybean futures price action over the past week suggests the market may be decoupling from grains, though still likely to remain elevated in light of recent export business.
WHEAT: May SRW and HRW wheat both rose the expanded 75-cent daily limit overnight to notch contract highs for the second straight day, reaching $10.59 and $10.78, respectively. March SRW hit $10.53 1/2, the highest for a nearby contract since April 2008. May spring wheat hit a contract high at $11.09.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-firm
Live cattle may face further followthrough pressure after dropping yesterday to five-week lows amid an ongoing slump in wholesale beef. Packers have been reluctant to make initial bids for cash cattle, while feedlots are seeking $144 or higher for this week’s supplies. Market-ready supplies will tighten through spring and recent weekly slaughter totals have been strong, but the drop in cattle futures throws some uncertainty into this week’s cash cattle negotiations. Unless packers unexpectedly come with firmer cash bids, it appears the bulk of this week’s cash trade will be pushed deep into the week. Corn futures’ surge above $7.00 will continue to pressure feeder cattle. Choice beef cutout values fell 83 cents yesterday to $256.68, an 11-month low, though movement increased to 144 loads.
April live cattle futures fell 90 cents yesterday to $140.525, the lowest close since $140.10 on Jan. 25. April feeder futures fell $2.20 to $159.80, the lowest close since Nov. 1.
