Ahead of the Open | April 27, 2022
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 12 to 15 cents higher.
Wheat: HRW and SRW 6 to 10 cents lower, HRS 2 to 5 cents lower.
GENERAL COMMENTS: Soybean futures followed soyoil and palm oil higher overnight on concerns over tight global vegoil supplies, while corn and wheat fell. Malaysian palm oil futures jumped to a seven-week high ahead of Indonesia’s ban on some palm oil products. Nearby U.S. crude oil futures are down slightly. U.S. stock index futures signal a firmer open, while the U.S. dollar index is up more than 600 points, reaching a five-year high.
Indonesia’s planned export ban on cooking oil’s raw material will cover crude palm oil, refined palm oil and used cooking oil, among other palm oil products, its chief economic minister said today. The announcement was a reversal of the minister’s statement a day earlier, in which he had said the export ban would only cover refined, bleached, and deodorized palm olein.
The next two weeks in the U.S. Corn Belt are expected to be “a little wetter overall” than forecast Tuesday, with southwestern areas receiving three rounds of rain Friday through May 6 and not likely to dry down enough to allow for fieldwork between rains, World Weather Inc. said today. “An important period of drier weather will occur May 7-11, but another round of organized rain may occur May 9-10 and if rain falls to heavily planting delays will be extended deeper into May,” the forecaster said.
Bunge Ltd reported a higher quarterly profit and raised its full-year earnings forecast 21% on robust demand and tighter supplies of essential crops since Russia’s invasion of Ukraine. Bunge’s results highlighted how global grains merchants have weathered surging crop prices and supply-chain disruptions triggered by the war. Bunge’s agribusiness unit reported a 7% drop in volumes and a nearly 15% rise in net sales on the back of strong soybean crushing margins in the U.S., Europe and Brazil.
Russia launched two missile strikes and damaged a strategic bridge in Ukraine’s Odesa region, which could affect the country’s plans to expand grain exports through Danube ports. The bridge across the Dniester Estuary is a part of the only fully Ukrainian-controlled railway route to Ukraine’s ports on Danube. Ukrainian officials have said the country is seeking to boost export capacity of Danube River ports, which allow grain to be shipped through the river to Romanian Black Sea ports.
Trucking demand is “near freight recession levels,” according to Bank of America. Shippers’ outlook on rates, capacity and inventory levels are matching attitudes not seen since May and June 2020, when pandemic lockdowns sent freight volumes into a historic decline.
USDA’s Animal and Plant Health Inspection Service (APHIS) now puts the count of commercial operations that have been confirmed with highly pathogenic avian influenza (HPAI) at 157 with the addition of cases in Utah and Minnesota.
Algeria purchased between 230,000 and 250,000 MT of durum wheat – likely to be sourced from Mexico. Jordan made no purchases in its tender to buy 120,000 MT of optional origin milling wheat. Thailand passed on a tender to purchase optional origin feed wheat.
SOYBEANS: July soybeans rose to $16.91 overnight after falling 3 1/2 cents Tuesday to $16.71 3/4. July soyoil rose over 300 points before pulling back slightly and posted a contract high at 85.77 cents.
WHEAT: July SRW wheat fell as low as $10.78 1/4 overnight after gaining 22 1/2 cents Tuesday to $10.95. Winter wheat weakness may reflect prospects for moisture relief in the U.S. Plains. Southwestern U.S. HRW wheat areas are forecast to get rain this weekend and may receive more later next week, World Weather said. No general soaking of rain is expected, but 0.25 to 0.75 inch and local totals of 1.00 to 2.00 inches is possible for a few counties in the Texas Panhandle as well as western Oklahoma and far southern Kansas.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-weaker
CATTLE: Live cattle may face pressure from signs of weakness in the cash market. Moderate to active cash cattle trade occurred so far this week at steady to lower prices compared with last week. Packers are filling holes in upcoming slaughter schedules and may be a little more short-bought on near-term needs than previously thought, cash sources said. But once the holes are filled, packer demand for cash cattle is likely to wane as the summer supply of fed cattle should be plentiful.
Wholesale beef prices extended a recent slide, with Choice cutout values falling $2.43 Tuesday to a four-week low at $264.17, though movement surged to 183 loads. June live cattle rose 82.5 cents Tuesday to $136.25. May feeder futures fell 57.5 cents to $160.725.
HOGS: Lean hog futures may face followthrough pressure from weakening technicals and concerns over export demand as the U.S. dollar surges. Wholesale pork continued slipping, with cutout values dropping 24 cents Tuesday to $105.55, a three-week low. However, movement jumped to nearly 341 loads, suggesting weaker prices sparked stepped-up retail purchases. The CME lean hog index is up another 39 cents today (as of April 25), extending the recent string of price strength. After recent sharp price declines, May hog futures finished Tuesday only $2.31 above today’s cash index quote, while the premium in June hogs narrowed to $8.285. Given the technical breakdown in hog futures, followthrough selling is likely, meaning premiums would further narrow.
China will buy another 40,000 MT of frozen pork for state reserves on Friday to support domestic prices for hog producers saddled with poor margins. This will be the sixth round of pork buys for state reserves.
