Ahead of the Open | March 21, 2022
GRAIN CALLS
Corn: 8 to 12 cents higher.
Soybeans: 12 to 18 cents higher.
Wheat: HRW and SRW 28 to 32 cents higher, spring wheat 13 to 20 cents higher.
Ukraine rejected Russia’s ultimatum that Mariupol surrender after weeks of Russian bombardments and ongoing street guerrilla warfare. Ukraine described the situation in Mariupol on Monday as “very difficult” and said it had been unable to establish a new safe corridor to evacuate civilians from the city. The Kremlin said on Monday peace talks between Russia and Ukraine had not yet made any significant progress. Moscow has accused Kyiv of stalling talks by making proposals unacceptable for Russia. Ukraine has said it is willing to negotiate but will not surrender or accept Russian ultimatums.
Russia is exporting more wheat via its Black Sea ports as Azov Sea routes remain restricted, while domestic wheat prices rose last week because of the weakening ruble. “Exports are active. If the weather permits – it is currently unstable in the Black Sea due to strong wind – Russia will export more than 2 MMT of wheat in March,” said Dmitry Rylko, the head of the IKAR ag consultancy. SovEcon, another consultancy, said: Russia’s war in Ukraine has sparked a fresh wave of hoarding in parts of Europe with panic buying surfacing caused in part by shortages of various food and other products in world markets. This month, global wheat prices spiked at more than 80% higher than a year ago. Sunflower oil — 80% of it produced by Ukraine and Russia — is rapidly becoming unavailable, pushing up the cost of alternatives.
War in Ukraine and drought in Brazil have global crop importers turning to the U.S. for supplies. As a result, costs to ship grains and soybeans on the Mississippi River have soared to an almost eight-year high. Rates for dry bulk barges on the Mississippi at St. Louis jumped to $34.75 per short ton, the highest since 2014, according to USDA. Elevated water levels on Mississippi River were also restricting the number of barges towboats could push by about 15.
Exports of Malaysian palm oil products for March 1-20 were down around 8% from Feb. 1-20, Reuters reported, citing cargo surveyor Intertek Testing Services and independent inspection company Amspec Agri. Malaysia has maintained its April export tax for crude palm oil at 8%, a notice on the Malaysian Palm Oil Board website showed.
China sold 522,804 MT of state-owned wheat reserves out of 524,804 MT put up for auction last week – 99.6% of the total. But the average price declined slightly from the two previous weeks to 2,958 yuan ($465) per MT.
South Korea purchased 60,000 MT of U.S. corn and 45,000 MT of U.S. milling wheat.
CORN: May corn futures rose as high as $7.57 1/2 overnight after ending Friday at $7.41 3/4, down 20 3/4 cents for the week. Corn will look to the wheat market for direction this week. Initial resistance is seen at last week’s high of $7.67 1/2 and support at last week’s low of $7.26 3/4.
Large speculators in mid-March boosted their bullish bets in the corn market to the highest level since late last year. The managed money net long in corn rose 4,125 futures and options contracts during the week ended March 15 to 372,909 contracts, the highest since the week ended Dec. 28, according to the Commodity Futures Trading Commission.
SOYBEANS: May soybeans rose as high as $16.90 3/4 overnight after ending Friday at $16.68, down 8 cents for the week. Markets such as crude oil and wheat will be primary influencers for the soy complex this week, and traders will watch for export business from China, which has recently slowed its purchases of U.S. soybeans. Initial resistance in May soybeans is seen at last week’s high of $16.97 3/4 and support is seen at last week’s low at $16.38.
The managed money net long in soybean futures and options fell for the third straight week, dropping 1,024 contracts during the week ended March 15 to 170,690 contracts, according to CFTC data.
WHEAT: May SRW wheat reached $11.01 overnight after ending Friday at $10.63 3/4, down 43 1/4 cents for the week. May HRW futures reached $11.07 overnight after settling Friday at $10.70 1/2, down 18 3/4 cents for the week. Wheat markets appeared to established major tops with contract highs posted earlier this month, but likely will remain elevated and volatile as the Russia/Ukraine war persists. Parts of the U.S. HRW wheat belt are expected to receive 0.5 to 1.5 inches of moisture this week, with heavy snow possible in southwestern Kansas into the northern Texas Panhandle and southeastern Oklahoma, World Weather Inc. said.
Large speculators increased their net long in SRW wheat. The managed money net long rose 2,737 futures and options contracts to 22,945 contracts as of March 15, the largest net long since mid-August.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weaker
CATTLE: Live cattle futures may extend last week’s gains on wholesale beef market gains and signs of renewed strength in cash prices. USDA-reported live steers averaged $138.55 through Friday morning, up 25 cents from the previous week’s average, and traders may expect continue gains this week. April live cattle are trading around $2 above last week’s cash market, suggesting some optimism is built into the market. If there are signs of a strong cash advance, futures may have additional upside potential. Wholesale beef prices extended a recent upturn, indicating improving retail demand. Choice beef cutout values rose $1.11 Friday to $258.16, the highest daily average since Feb. 25.
June live cattle rose $1.15 Friday to $137.075, the contract’s highest closing price since Feb. 28 and a gain of $4.125 for the week. April feeder cattle rose $1.225 to $162.325.
