GRAIN CALLS
Corn: 20 to 28 cents higher.
Soybeans: 32 to 42 cents higher.
Wheat: 30 to 60 cents higher.
GENERAL COMMENTS: Wheat futures led corn and the soy complex sharply higher overnight as the intensifying Russia/Ukraine conflict fueled concerns over disruptions to the global grain trade. Malaysian palm oil futures soared 5.5% to a record high and front-month Nymex crude oil futures rallied more than $4 and topped $99 a barrel. U.S. stock index futures point to a lower open this morning and the U.S. dollar index strengthened more than 400 points.
USDA reported daily soybean sales of 120,000 MT to “unknown destinations” during the 2021-22 marketing year and 136,000 MT for delivery to China during 2022-23. Since Jan. 28, USDA has reported a combined 4.67 MMT of soybean sales to China or unknown destinations.
Ukraine continued to exert strong resistance against Russian troops and military hardware over the weekend. In the face of Ukrainian opposition, Russia has had to “commit a bit more logistics and sustainment capability, like fuel specifically, than what we believe they had originally planned to do this early in the operation,” a U.S. defense official said. President Vladimir Putin on Sunday ordered Russian nuclear deterrent forces put on high alert in response to what he called “aggressive statements” by leading NATO powers. A Ukrainian delegation met with Russian officials near the Belarusian border, Ukrainian President Volodymyr Zelenskyy’s office confirmed.
Russia’s attack on Ukraine is expected to halt the processing and export of Ukrainian oilseed crops for at least one month, curbing flows of sunflower seed to the European Union, consultancy Strategie Grains said. The firm trimmed its forecast for 2021-22 EU sunflower seed imports from Ukraine by 41,000 MT from a month earlier to 97,000 MT, while cutting projected EU imports of Ukrainian sunmeal by about 230,00 MT to 1 MMT. For sunoil, for which Ukraine is the main source of EU imports, Strategie Grains kept its forecast of total EU imports this season at 2.4 MMT. However, it reduced its outlook for overall Ukrainian sunoil exports to 6.2 MMT from 6.4 MMT last month and after initially planning to raise the forecast to 6.7 MMT before Russia’s invasion. The crisis would not have a short-term effect on Ukrainian rapeseed flows to the EU, with Ukraine having virtually completed its rapeseed exports for 2021-22.
USDA now expects food price inflation in 2022 to rise 2.5% to 3.5% from last year, up from its prior outlook that food prices would increase 2% to 3%. The forecast for food away from home (restaurant) prices is for an increase of 4% to 5%, the second increase in as many months. Food at home (grocery store) prices are now forecast to be up 2% to 3% in 2022, up from USDA’s initial outlook that those prices would increase 1.5% to 2.5% from 2021 levels.
Large speculators increased their bullish bets in the soybean market for the fifth straight week while reducing their bearish bets in SRW wheat for the first time in four weeks, according to the CFTC’s Commitments of Traders report. The managed money net long in soybean futures and options increased 4,962 contracts to 180,334 contracts for the week ended Feb. 22, the highest since the week ended May 11. Managed money’s net short in SRW wheat decreased 16,605 contracts during the week ended Feb. 22 to 18,053 futures and options contracts, according to CFTC data.
Russia’s wheat export tax dropped for the seventh consecutive week. The price for March 2-8 will be $88.20 per MT, based on an indicative price of $326.10 per MT and is down from the peak rate $98.20 per MT in mid-January, but is still 214% higher than the initial rate of $28.10 per MT at the beginning of June when Russia started using the sliding scale.
China sold 522,037 MT out of the 529,607 MT of state-owned wheat reserves put up for auction last week at an average price of 2,753 yuan ($436) per metric ton. The average sales price was the highest since China started wheat sales in October.
Egypt tendered to buy an unspecified amount of wheat from multiple origins, with results expected later this morning.
CORN: May corn futures rose as high as $6.88 1/2 overnight after plunging 34 1/2 cents Friday to $6.55 3/4, the lowest closing price since Feb. 18 but still up 3 cents for the week. Corn futures will likely follow the lead of wheat this week.
SOYBEANS: May soybeans rose as high as $16.46 1/4 overnight after tumbling 69 1/2 cents Friday to $15.84 1/2, down 19 1/4 cents for the week and the lowest close since Feb. 15. Wheat futures and speculative money flow will drive soy complex direction this week. Nearby soybeans pulled back sharply after briefly pushing above $17.00 last week, which as in corn suggests the market has reached exhaustion.
WHEAT: May SRW futures rose as high as $9.34 3/4 overnight after sinking 75 cents Friday to $8.59 3/4, up 55 3/4 cents for the week. Emotionally-charged trading is likely to continue this week as the market closely follows Russia/Ukraine developments. The two countries combined account for nearly 30% of global wheat exports.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-weaker
CATTLE: Live cattle futures may extend last week’s declines on followthrough from signs the market established a near-term top. USDA’s Cattle on Feed Report released after the close Friday was largely price-neutral, meaning market focus will center on money flow, technicals and outside markets. Concerns over spring demand are weighing on futures despite cash cattle strength. Live steers last week averaged around $143.40, up from $142.36 last week. Choice cutout values fell 97 cents Friday to $258.27, down $7.58 for the week and near an 11-month low. April live cattle fell 37.5 cents Friday to $141.925, the lowest closing price since Jan. 27 and a $3.95 weekly decline. March feeder cattle rose 92.5 cents to $160.025.
USDA estimated 1.999 million head of cattle were sent to feedlots during January, down 1.2% from the same month in 2021 and larger than expectations for a decline of about 0.8%. Cattle on feed as of Feb. 1 totaled 12.199 million head, up 0.8% from a year earlier and consistent with trade expectations. Marketings during January fell 3.1%.
HOGS: Lean hog futures may see followthrough pressure from sharp declines during the second half of last week amid indications the market has put in a near-term top. Active followthrough selling early this week would confirm a deeper corrective pullback is underway, but a return of buyers would signal last week’s pullback was likely a correction in a bull market. Technicals will likely overshadow fundamentals, but the CME lean hog index is up 36 cents to $98.40, the highest since Sept. 7 and indicates the cash market may have further upside. Wholesale pork has also been strong. Pork cutout values ended last week at $113.32, up $3.41 for the week. April lean hogs dropped $1.85 Friday to $103.675, the lowest closing price since Feb. 14 and a decline of $5.725 for the week.