Ahead of the Open | April 13, 2022

GRAIN CALLS

Corn: Steady to 4 cents lower.

Soybeans: 1 to 5 cents lower.

Wheat: Winter wheat 6 to 10 cents lower; spring wheat 2 to 4 cents lower.

GENERAL COMMENTS: Wheat futures fell for the first day in four during overnight trade and corn and soybeans also dropped under profit-taking pressure following recent rallies. Malaysian palm oil futures also halted a three-day upturn. Nymex crude oil are around $2 higher at a one-week high. U.S. stock index futures signal a mostly firmer open, while the U.S. dollar index is slightly firmer this morning.

The world is facing “a multi-year problem” in food supply as the war in Ukraine drives global prices higher and disrupts production of staple crops, the U.N.'s World Food Program Executive Director David Beasley said yesterday. Beaseley was speaking at a news conference after French and European Union officials met in Rome to discuss a food security initiative in response to the conflict in Ukraine.

China’s winter wheat crop improved more than expected after a poor start last fall. The percentage of first and second grade wheat was on par with normal levels, the country’s ag ministry said. But recent Covid outbreaks and stricter lockdowns are impacting farmers to varying degrees, with some facing reduced crop inputs and fuel, while others are stuck in cities where they take on winter jobs. That combination has resulted in spring planting delays in key growing regions.

China imported 6.4 MMT of soybeans in March, down 18.3% from last year, as poor crush margins and delays in shipments from Brazil slowed arrivals. Through the first three months of the year, China’s soybean imports stood at 20.3 MMT, down 4.2% from the same period last year.

France’s ag ministry lowered its forecast for French 2021-22 wheat exports outside the European Union by 200,000 MT to 9.5 MMT. The reduction partly reversed a 3-MMT upward revision to the ministry’s forecast last month, when it anticipated France would replace some Black Sea trade disrupted by Russia's invasion of Ukraine.

Grain truckers in Argentina extended their strike that started Monday, bringing grain transportation to a virtual halt. The indefinite strike has not yet hit exports because the ports have large reserves of grains, but a prolonged protest could affect shipments.

Algeria bought an estimated 80,000 to 100,000 MT of optional origin milling wheat, though that figure could change. Japan is seeking 70,000 MT of feed wheat and 40,000 MT of feed barley.

CORN: May corn futures traded inside Tuesday’s range overnight after gaining 11 3/4 cents yesterday to $7.76 1/4, a lifetime-high settlement for the contract. December corn touched $7.34 overnight, a contract high for the fourth day in a row. Nearby corn will continue to be driven by money flow and the wheat market, while a slow start to the U.S. planting season may underpin new-crop prices.

SOYBEANS:  May soybeans traded within Tuesday’s range overnight after rising 15 cents yesterday to $16.70 1/4 while November soybeans gained 21 1/4 cents to $15.07, near a three-week high. Strength in crude oil and concerns over tightening global vegetable oil supplies likely will keep the soy complex underpinned.

WHEAT:  July SRW wheat traded within yesterday’s range overnight after rising 23 1/2 cents Tuesday to $11.12 1/2, the contract’s highest closing price since $11.27 1/2 on March 15. Supply disruptions from the Russia/Ukraine war and poor crop conditions in the U.S. Plains should keep futures underpinned.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

CATTLE: Live cattle futures may see followthrough buying from yesterday’s gains amid signs of strength in the cash market. Some cash cattle traded yesterday around $139 in the Southern Plains, about $1 higher than last week’s trade in the region, and firmer bids also surfaced in the northern market, though movement there was light. With packers raising cash bids, most feedlots are still holding out in hopes of even firmer prices. Wholesale beef remains strong. Choice cutout values gained $1.36 yesterday to $273.47, near a two-month high. Movement totaled 115 loads, a pick-up from recent days.

June live cattle futures gained $1.50 yesterday to $136.30, the highest closing price since March 31. May feeder futures advanced $1.025 to $160.925.

HOGS: Lean hog futures may find carryover buying from yesterday’s technical strength, but the upside may be limited by cash weakness. The CME lean hog index is down another 53 cents today to $99.10 (as of March 11), the ninth straight daily decline totaling nearly $4. April hogs, which expire Thursday and are settled against the cash index on April 19, finished Tuesday 52.5 cents above today’s quote. Pork cutout values rose 16 cents yesterday to an average of $106.80, the highest daily average since March 31. Movement totaled 305 loads, stronger than recent days. June lean hogs rose $3.45 yesterday to $118.475, the contract’s highest close since April 1.

China imported 594,000 MT of meat in March, down 42% from last year’s record. Its meat imports during the first three months this year at 1.7 MMT fell 37% from the same period last year. The preliminary data doesn’t give specifics of meat imports by category, but the sharp drop was driven by a significant decline in pork arrivals as domestic pork production has surged as the country aggressively rebuilt its herd after the African swine fever outbreak.