Ahead of the Open | March 29, 2022

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GRAIN CALLS

Corn: 15 to 25 cents lower

Soybeans: 15 to 20 cents lower

Wheat: Winter wheat 70 to 85 cents (limit down) lower; spring wheat 50 to 60 cents (limit down) lower

GENERAL COMMENTS: Wheat futures sharply extended losses at the end of overnight trade after Russia called peace talks with Ukraine constructive. Corn also extended losses, while soybeans turned lower after trading higher earlier overnight. Crude oil futures turned sharply lower this morning after trading higher overnight amid the Russia/Ukraine peace talks. The U.S. dollar index is down more than nearly 900 points this morning.

Ukrainian and Russian negotiators met in Turkey for the first face-to-face talks in nearly three weeks. Russia promised to drastically scale down its military operations around Kyiv and the northern Ukrainian city of Chernihiv, while Ukraine proposed adopting a neutral status with international guarantees to protect it from attack. Turkey, which hosted the talks, said this marked the most significant progress yet. The top Russian negotiator said the talks were “constructive,” triggering renewed hopes of a ceasefire.

HRW wheat crop ratings improved a little during March based on individual state crop ratings. When those ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500, with 500 being perfect), the HRW wheat crop showed modest improvement over the past month. Based on individual state ratings, the HRW CCI rating stands at 266.5 points, up 7.5 points from the end of February but down 58.0 points from USDA’s last national ratings last fall and 63.4 points below the five-year average for the beginning of April, when USDA starts issuing its national crop condition reports each spring.

 

CORN: May corn futures dropped as low as $7.22 3/4 overnight, threatening a downside breakout from the nearly four-week choppy range. Support is at $7.22 and $7.16 3/4. If those levels are violated, bears would target the psychological $7.00 mark, though the contract couldn’t get that low today because of the 35-cent daily trading limit.

SOYBEANS: May soybeans traded as low as $16.46 3/4 overnight after earlier reaching $16.73, though the contract remains in the sideways trading range. Near-term support is at $16.38 and $16.34 1/2.

WHEAT: May SRW wheat plunged through support at $10.31 3/4 late in the overnight session, triggering an active wave of sell stops and confirming a downside breakout from the bear flag formation on the daily chart. The contract could trade as low as $9.72 today, which would be down the daily 85-cent trading limit.  

 

LIVESTOCK CALLS

CATTLE: Lower

HOGS: Choppy to lower

CATTLE: Live cattle futures are expected to open with a weaker tone, as outside markets have turned negative this morning amid renewed hopes of a ceasefire in between Russia and Ukraine. April live cattle are trading at more than $1 premium to last week’s average cash cattle price of $138.95. That’s likely to limit buyer interest in the front-month contract until traders have a better sense of this week’s cash trade. Boxed beef prices posted strong gains on Monday, with Choice beef prices up $1.23 and Select $4.18 higher, though packers moved only 71 loads of product at the sharply higher values. Retailers remain selective buyers of beef, suggesting they don’t want to get caught with a lot of supply if consumers balk at near-record retail prices.

HOGS: Lean hog futures are expected to trade on both sides of unchanged to start today’s session. The CME lean hog index is up 68 cents to $102.93. April hogs finished Monday $4.645 above that level, which could limit buying in the lead contract. The pork cutout value fell $2.49 on Monday after posting strong gains in morning trade. While attitudes are strong and focus is mostly on cash fundamentals, hog traders will keep a close watch on outside markets, especially with crude oil futures turning lower this morning after trading higher overnight amid renewed hopes of a ceasefire in the war between Russia and Ukraine.

USDA’s Hogs & Pigs Report on Wednesday is expected to show the U.S. hog herd contracted 1.2% from year-ago as of March 1. Based on the average pre-report estimate, the March 1 hog herd is expected to total just over 73 million head, including a market hog inventory of 66.8 million head (down 1.3%) and breeding herd of 6.2 million head (up 0.1%).

 

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