GRAIN CALLS
Corn: 3 cents lower to 2 cents higher.
Soybeans: 5 to 7 cents higher.
Wheat: 22 to 34 cents higher.
GENERAL COMMENTS: Wheat futures climbed near two-week highs as the ongoing Russia/Ukraine war disrupted supplies from two of the world’s top grain producers. Nearby soybeans posted a two-week high while corn was mostly firmer overnight. Malaysian palm oil futures rose a second day, while Nymex crude oil futures rose above $115 a barrel before retreating to the $112 level this morning. U.S. stock index futures portend a slightly firmer open, while the U.S. dollar index is near unchanged this morning.
USDA reported a daily soybean sale of 240,000 MT for delivery to “unknown destinations” during the 2021-22 marketing year.
Peace talks resumed between Russia and Ukraine but there are few signs of significant progress. Fallout from Russia’s invasion is already threatening global food supplies. Ukrainian crops from last year’s harvest are locked down in warehouses behind Russian battle lines, the Wall Street Journal reported, and farmers face the loss of wheat that is already in the ground and corn crops later this year because they can’t get needed materials. The war has disrupted Ukrainian agriculture, triggering higher prices and the threat of global shortages to countries that rely on the country’s commodities. Russia’s naval blockade has cut off shipping exports, but Ukraine is shipping some goods through Western borders by train. Adding to the global woes, Russia is also struggling to get its crops through the Black Sea. By one estimate, the country’s grain shipments are down 60% from normal levels.
Farmers in Paraguay have completed their soybean harvest, which the Soybean, Oilseed, and Cereal Produces Association of Paraguay deemed the worst in the country’s history. South American Consultant Dr. Michael Cordonnier lowered high Paraguay soybean crop estimate by 1 MMT to 4 MMT. He left his production estimates unchanged for Brazil and Argentina. In Brazil, Cordonnier estimated production at 123 MT for soybeans and 112 MMT for corn. In Argentina, he estimated production at 39 MMT for soybeans and 49 MMT for corn.
The Argentine government extended the State of Emergency for the Parana River for 90 days. The original declaration was for 180 days and it was set to expire at the end of this month. Dryness in the Argentine provinces of Formosa, Chaco, Corrientes, Santa Fe, Entre Rios, Misiones and Buenos Aires, along with dryness in Paraguay and southern Brazil, has led to the lowest water levels in 78 years. A big issue for agriculture is the low water levels at the ports near Rosario, which is responsible for approximately 85% of Argentina’s ag exports.
Brazilian meat processor JBS SA reported earnings of $1.31 billion in the final quarter of 2021, beating analysts’ expectations behind sales to China. JBS recorded consolidated net revenue of 97.2 billion reais ($19.69 billion) in the fourth quarter, up 28% from the same period a year ago. In the U.S., where JBS generates most of its revenue, demand for beef remained above supply capacity, benefiting its domestic and export business. In particular, Asia’s demand for U.S. beef remained so strong last year that the overall volume of U.S. beef exports to the continent exceeded exported volumes by more than 16% from 2020, JBS said.
U.S. confirmed cases of highly pathogenic avian influenza (HPAI) stand at 50 with additional finds in commercial poultry operations and backyard flocks, according to USDA’s Animal and Plant Health Inspection Service (APHIS).
CORN: May corn traded within yesterday’s range overnight after rising 14 1/2 cents yesterday to $7.56 1/4. A push above initial resistance at yesterday’s high at $7.65 may have bulls targeting last week’s high at $7.67 1/2 and the contract high at $7.82 3/4. Corn traders will continue to look to wheat for direction. Exports have improved as the war drove business to the U.S., but shipments still lag last year’s levels.
SOYBEANS: May soybeans overnight reached $17.20 3/4, the contract’s highest intraday price since $17.34 on March 9. Renewed bullish momentum may prompt bulls to target the March 9 high as well as the contract high of $17.59 1/4, reached Feb. 24. Gains may be limited by signs of slower export demand. Before today, USDA hadn’t reported a daily soybean sale from China or unknown destinations since March 11.
WHEAT: May SRW wheat overnight reached $11.69 1/4, the contract’s highest intraday price since $12.21 1/4 on March 10. The lead contract surged 55 1/2 cents yesterday to $11.19 1/4. Initial support is seen at last week’s low of $10.31 3/4. The Russia/Ukraine conflict continues to dominate trade focus, though precipitation in the HRW belt earlier this week may provide some relief to dry crops. Rains ranging from 0.25 inch to over 2 inches fell over most of Oklahoma, the eastern two-thirds of Kansas and the Texas Panhandle over the past day, World Weather Inc. said.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firmer
CATTLE: Live cattle may see some followthrough pressure from a weak close yesterday but selling may be limited by expectations for further cash strength this week. Cash cattle trade averaged $139.10 last week, up 80 cents from the previous week. With USDA’s next Cattle on Feed Report out Friday, it’s likely the bulk of this week’s cash trade will be pushed deep into the week, possibly until after the report. Firmer wholesale beef should also support futures. Choice cutout values rose 34 cents yesterday to $258.50, the highest daily average since Feb. 24. Select values jumped $1.85 to $252.50. Movement totaled 90 loads.
June live cattle fell 72.5 cents yesterday after rising earlier to a three-week high at $137.50. Initial resistance is seen at the 50- and 40-day moving averages around $138.00 and $138.20, respectively.
HOGS: Lean hog futures may extend yesterday’s gains behind continued strength in the CME lean hog index. The benchmark is up 44 cents today (as of March 18) to $101.80, the third straight day of gains and the highest price since late August. Even with Monday’s strong gains, April lean hog futures still finished more than $1 below the cash index, suggesting followthrough buying is possible if not probable today. However, wholesale pork started the week on a soft note. Pork cutout values fell $3.34 yesterday to $101.61, the lowest daily average since Feb. 10, with declines led by hams and bellies. Movement totaled 306 loads.
June lean hogs rose $3.75 yesterday to $119.825. A push above resistance around last Friday’s high at $120.85 may have bulls targeting the contract high of $122.00, posted March 16.