Ahead of the Open | March 9, 2022
GRAIN CALLS
Corn: Old-crop 6 to 9 cents lower; new-crop 3 to 5 lower
Soybeans: Old-crop 3 to 9 cents higher; new-crop steady to 1 higher.
Wheat: HRW and SRW 58 to 70 cents lower, spring wheat 35 to 40 cents lower.
GENERAL COMMENTS: Wheat futures extended yesterday’s losses in overnight trade as the market monitored the Russia/Ukraine war. Corn futures were also lower while soybeans rose sharply for the second straight day. Malaysian palm oil futures reached a record high as Indonesia further restricted exports, while Nymex crude oil futures sank around $6.00. U.S. stock index futures point to a stronger open this morning, while the U.S. dollar index weakened around 700 points.
USDA’s March Supply & Demand Report, scheduled for release at 11 a.m. CT, typically features fine tuning to old-crop U.S. usage forecasts. But this year, USDA likely will increase U.S. corn and wheat exports to reflect major uncertainties with Black Sea grain shipments. We also anticipate higher usage forecasts for soybeans to reflect reduced South American soybean and soy product exports. The average pre-report estimates peg 2021-22 U.S. ending stocks at 1.479 billion bu. for corn (1.540 billion bu. in February), 278 million bu. for soybeans (325 million bu.) and 628 million bu. for wheat (648 million bu.).
Russian Foreign Minister Sergei Lavrov will travel to Turkey today for talks with his Ukrainian counterpart Dmytro Kuleba as fighting between the two countries will extend into its third week. Ukraine said it will try to evacuate civilians through six “humanitarian corridors” Russia said it would provide. Both Russia and Ukraine said they would “observe a regime of silence” to provide safe passage from Kyiv, Chernihiv, Sumy, Kharkiv and Mariupol, though until today only the corridor from Sumy has been opened.
Ukraine’s government has banned exports of rye, barley, buckwheat, millet, sugar, salt and meat until the end of this year, according to a cabinet resolution. Notably missing from the export ban are corn, wheat and sunflower oil. Russia said on Tuesday it would restrict exports of certain commodities and energy products to some countries. The list of restricted products and countries from which exports will be banned is expected to be released later this week.
Indonesia is expanding its limits on exports of palm oil with the country’s trade minister saying the new restrictions were aimed at quelling rising cooking oil prices. In restrictions that will run for at least six months, Indonesia will require firms to sell 30% of planned exports of crude palm oil and olein domestically, an increase from the 20% level currently in place. This action further restricts supplies in a market that has already become tight and comes as exports of sunflower oil out of Russia and Ukraine are uncertain at best. Those two countries account for over 70% of global sunflower oil trade.
China lowered its 2021-22 edible oil import forecast as drought in South America, palm oil export restrictions in Indonesia and the conflict in Ukraine limited supplies and sent prices soaring. China’s ag ministry now expects the country to import 8.5 MMT of edible oils, down from February’s forecast of 9.3 MMT. China did not adjust its 2021-22 corn or soybean import forecasts this month, leaving them at 20 MMT and 102 MMT, respectively.
Jordan cancelled a tender to buy 120,000 MT of milling wheat. Japan tendered to buy 80,000 MT of feed wheat and 100,000 MT of feed barley.
CORN: May corn futures traded within Tuesday’s range overnight after rising 2 1/4 cents yesterday to $7.53. Friday’s contract high at $7.82 1/2 marks key resistance. USDA is expected to lower its Brazilian corn crop estimate for the second month in a row by about 1 MMT to 112.98 MMT, based on a Reuters survey of analysts. Argentina’s crop estimate is expected to be reduced nearly 2 MMT to 52.09 MMT.
SOYBEANS: May soybeans overnight reached $17.34, the highest intraday price since the contract high of $17.59 1/4 posted Feb. 24. May soybean oil hit a contract high at 78.58 cents. Soybean futures regained bullish momentum this week behind continued Chinese buying, putting a test of the contract high within reach. USDA is expected to lower its Brazilian soybean crop estimate for the third month in a row, with the Reuters survey pegging expectations at 129.01 MMT, down from 134 MMT in USDA’s February report.
WHEAT: May SRW wheat overnight traded within yesterday’s unusually wide $1.99 1/2 range, which included a contract high at $13.63 1/2. The most-active contract’s recent sharp rally left a couple of chart gaps traders may aim to fill in coming days, including a gap between the March 3 high of $11.34 and $12.09 the following day, when the contract opened limit-up and didn’t trade.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-weak
CATTLE: Live cattle may see some followthrough momentum from a sharp bounce the previous two days, but continued erosion in cash prices probably will limit buying interest. Cash trade around $138 was reported in the Southern Plains early this week and $222 in the northern dressed market, down more than $2 from last week. The price recovery in cattle futures the first two days this week could encourage feedlots with cattle left to sell to hold out for firmer prices than have been recorded so far this week. But it’s unlikely packers would raise cash bids enough to push the price over last week’s average of $140.61.
Choice cutout values fell $2.27 yesterday to $252.44, the lowest since April 1. Movement was strong at 194 loads. April live cattle climbed $1.15 to $139.05 and April feeders gained 65 cents to $60.325.
