Ahead of the Open | March 7, 2022
GRAIN CALLS
Corn: 2 to 8 cents higher.
Soybeans: 2 to 6 cents higher in old-crop.
Wheat: 60 to 85 cents higher.
GENERAL COMMENTS: May SRW wheat futures rose the expanded 85-cent limit overnight, with other wheat contracts sharply higher. Corn and soybean futures also rose as the Russia/Ukraine war fueled concerns over disruption to the global grain markets. Malaysian palm oil futures jumped more than 5% and Nymex crude oil futures are up more than $2 after earlier surpassing $130, a 14-year high. U.S. stock index futures signal a lower open this morning, while the U.S. dollar index is firmer after rising to the highest level since May 2020.
China extended a buying spree in U.S. soybeans that began in late January. USDA reported daily soybean sales of 132,000 MT for delivery to China, equally divided between 2021-22 and 2022-23. Since Jan. 28, USDA has reported a combined 5.96 MMT of soybean sales to China or unknown destinations, a more than eight-fold increase from the pace over the previous month.
A third round of talks between Russia and Ukraine on ending the war will be held in Belarus today as fighting between the two countries continues. Russian Foreign Minister Sergei Lavrov and Ukrainian Foreign Minister Dmytro Kuleba plan to meet on the sidelines of a diplomatic forum in Turkey Thursday. Ukrainian ports remain closed and grain dealers are reluctant to trade Russian wheat after Western sanctions, so buyers are seeking alternative suppliers. Export demand for European Union wheat surged last week and is expected to continue to rise.
China imported 13.9 MMT of soybeans in January and February, up 4.1% from the first two months of last year. The imports were larger than expected and don’t match up with the tightness in supplies reported by crushers, according to China-based consultancy Mysteel.
AgRural lowered its estimate for Brazil’s soybean crop to 122.8 MMT from 128.5 MMT in early February as private forecasters continued to scale back South American crop expectations due to drought. The consultant estimates Brazilian corn production at 110.9 MMT. USDA will update its Brazilian crop forecasts Wednesday and Conab will release revised official crop estimates Thursday.
Large speculators sharply cut their bearish bets in SRW wheat for the second week in a row, CFTC data showed. The managed money net short in SRW wheat decreased 11,017 futures and options contracts during the week ended March 1 to 7,036 contracts. In soybeans, the managed money net long fell 4,613 contracts to 175,721 contracts.
Palm oil production in each of the world’s top producers Indonesia and Malaysia is likely to rise about 3% this year, but it would not be enough to meet global edible oil demand, analyst James Fry told Reuters. Adverse weather in South America and Canada has curbed the supply of soybean oil and rapeseed oil, while there is a lack of availability of sunflower oil due to Russia’s invasion of Ukraine, Fry, chairman of agribusiness consultancy LMC International, told Reuters in an interview.
Taiwan tendered to buy 50,000 MT of U.S. milling wheat. Tunisia tendered to buy 125,000 MT of soft milling wheat and 100,000 MT of feed barley, both optional origin.
CORN: May corn futures overnight reached $7.80 1/4 before trimming gains to just above unchanged. The most-active contract ended last week at $7.54 1/4, up 98 1/2 cents for the week, and posted a contract high Friday at $7.82 1/2. Friday’s high marks initial chart resistance. Russia/Ukraine will continue to dominate market focus this week, along with prospects the conflict may drive export business to the U.S.
SOYBEANS: May soybeans reached $16.96 3/4 overnight before cutting gains. The most-active contract fell 7 1/4 cents Friday to $16.60 1/2, still up 76 cents for the week. The market faces stiff resistance at $17 and shows signs of topping, but the Russia/Ukraine war will keep soy complex prices elevated. Traders will watch to see whether China’s five-week buying binge is sustained.
WHEAT: May SRW wheat overnight traded at a contract high of $12.94 and remained locked at the 85-cent limit. The most-active SRW contract gained $3.50 last week. May HRW futures posted a contract high at $12.99 1/2 after gaining $3.14 last week.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-mixed
CATTLE: Live cattle futures may extend last week’s slump to five-month lows on concern the Russia/Ukraine war will hurt beef demand. Futures are oversold and due for a correction but demand concerns persist amid high retail prices, keeping short-term downside risk open and limiting the upside to short bouts of corrective buying. Choice cutout values ended last week at $254.33, down nearly $4.00 from a week earlier and an 11-month low. Live steers last week averaged $140.48 through Friday morning, down from the previous week’s average of $143.22.
April live cattle fell $2.575 Friday to $135.775, down $6.15 for the week and a five-month closing low. April feeder futures sank $3.275 to $157.25, down $7.50 for the week.
