Ahead of the Open | March 28, 2022

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GRAIN CALLS

Corn: 8 to 12 cents lower

Soybeans: 15 to 20 cents lower

Wheat: 30 to 40 cents lower

GENERAL COMMENTS: Wheat futures led overnight price declines in the grain and soy complex amid risk aversion to start the week on heightened Covid concerns in China. Despite the heavy pressure, wheat and corn futures remained within their recent sideways trading ranges, while soybeans stayed within their choppy to higher range. Malaysian palm oil prices dropped nearly 1% overnight amid heavy pressure on crude oil. Front-month U.S. crude oil futures are down more than $5 this morning. The U.S. dollar index is nearly 450 points higher this morning.

USDA reported daily sales of 132,000 MT of soybeans to China for 2021-22 and 127,920 MT of corn to unknown destinations – 77,120 MT for 2021-22 and 50,800 MT for 2022-23.  

Shanghai will lock down half of the city in turns to conduct a mass testing blitz for Covid-19, as authorities race to control a spiraling outbreak. Residents will be barred from leaving their homes, public transport will be suspended and private cars will not be allowed on the roads unless necessary. An analysis of figures shows China’s latest outbreak was preceded by an influx of imported cases from Hong Kong. All over Shanghai, the government’s announcement sparked frenzied scrambles to food markets and grumbling about the disruption to urban life in a city that until recently appeared relatively unaffected by Covid. Any suspension of commercial activity in Shanghai will likely have global ripple effects as the city is one of China’s primary centers for finance, manufacturing and goods trade.

Ukraine and Russia are preparing for the first face-to-face peace talks in more than two weeks, with Kyiv insisting it would make no concessions on Ukraine’s territorial integrity as battlefield momentum has shifted in its favor. Ukrainian officials played down the chances of a major breakthrough at the talks, due to be held in Istanbul.

 

CORN: May corn traded as low as $7.40 3/4 overnight but remained well within the sideways trading range of the past three weeks. Support at the bottom of the range is at the March 16 low of $7.26 3/4 and the March 3 low at $7.22. Resistance is at least week’s high at $7.70 1/4 and the contract high at $7.82 3/4.

SOYBEANS: May soybeans fell as low as $16.87 1/2 overnight but remained in the short-term choppy to higher pattern. Support is at the March 15 low of $16.38 and the Feb. 25 low of $15.79. Resistance is at last week’s high of $17.36 1/2 and the contract high at $17.59 1/4.

WHEAT: May SRW wheat fell as low as $10.55 overnight but remained well within the sideways range of the past three-plus weeks. Near-term support is the March 17 low at $10.31 3/4. Near-term resistance is last week’s high at $11.69 1/4.

 

LIVESTOCK CALLS

CATTLE: Choppy to lower

HOGS: Higher

CATTLE: Live cattle futures are expected to face pressure on the open this morning. Last Friday’s Cattle on Feed Report was slightly negative. It showed a record number of cattle in feedlots as of March 1 and up 1.4% from year-ago, which was slightly greater than anticipated. February placements rose 9.3% and marketings increased 4.9%. The report data should have limited lasting impact, though additional pressure is likely from the renewed Covid concerns in China, which sparked active risk-off trade across markets overnight. Traders will wait until later in the week to formulate cash cattle expectations for the week, though last week’s weaker trade isn’t encouraging for feedlots or bulls.  

HOGS: Lean hog futures are expected to open higher amid followthrough buying after strong gains last Friday. But a lack of active buying early this morning could lead to some corrective trade, especially if the risk aversion seen in markets overnight carries through to daytime trade. The CME lean hog index is up 75 cents today (as of March 24) to $102.25, the highest level since Aug. 31. The surge in April futures last week pushed the front-month contract more than $5 above the cash index, which could limit followthrough buying.

 

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