CORN
Corn futures were down overnight, retreating as much as 14-1/4 cents to 7.11-1/2 in the May contract. Dec corn fell 16-1/2 cents to 6.08-1/4. May closed up the 35 cent limit Monday and Tuesday amid fear of of what a prolonged conflict in Ukraine would mean for a country responsible for roughly 17% of the world’s corn exports. The two-day move drew the continuous chart within a short distance of the highs from last spring. Newswires report Ukraine’s ports will remain closed until the Russian invasion ends. Damage from shelling could take months to repair. Look for sustained volatility as supply and demand scenarios unfold surrounding the potential impact on U.S. corn exports. Prior to last night’s price correction, Managed funds were long an estimated long 428,000 corn contracts. 195,000 soybeans, 92,000 soymeal and 102,000 soyoil. Weekly Ethanol Stats will be out later this morning, exports tomorrow. In outside markets, the dollar and crude are making new highs. Stock index futures are firm.
SOYBEANS
The soy complex traded lower overnight. May beans shed 34 cents to 16.57-1/2 before trimming losses. Nov beans were down as much as 18-1/2 cents to 14.58-1/2. May meal slipped back below 4.50 per ton after closing $11.60 higher for the week so far on Tuesday. This is dramatically off the peak from last Thursday at $487.00, which was up $21.00 from Wednesday’s close, as prices could not sustain the strength and closed out the week $3.00/ton lower. The main tie for the soybean complex to the Black Sea region has to do with soybean oil as Ukraine is the largest producer of sunflower oil, and therefore vegetable oils around the world have rallied on news of the conflict. Soyoil, overnight, was down a dollar to 75.21. Prior to last night’s pullback, Managed funds were long an estimated 195,000 soybeans, 92,000 soymeal and 102,000 soyoil. In South America, Brazil is expected to be 42% complete with soybean harvest overall, so the flood of supply out of that region may take some of the edge off U.S. export demand. However, trade estimates for South America’s soybean crop is down 20 mmt from USDA’s estimate of 185.3. USDA estimates South America soybean stocks already at an 8 year low. Overnight, Chinese Ag futures were higher with May soybeans up 132 yuan; Soymeal up 28; Soyoil up 382; Palm oil up 690; Corn up 22. Malaysian palm oil prices overnight were down 102 ringgit (-1.51%) at 6660.
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WHEAT
Winter wheat futures were mixed overnight with nearby contracts staying in rally mode, and back month contracts easing. 75 cent expanded limits remain in place for today. May Chicago wheat gapped higher overnight in-route to a new high of 10.59 per bushel. The actively traded contract is up 40 cents his morning to 10.24. Following Tuesday’s session, Managed funds were long an estimated 34,000 wheat. May KC wheat jumped to a new high of 10.78 before easing to a gain of 31-1/2 cents this morning to 10.43-1/2. May MPLS wheat is down 13-1/2 cents to 10.40-3/4, off last night’s new high of 11.09. With Russia and Ukraine accounting for nearly 30% of the world’s wheat exports, it is easy to see why buying has been so prevalent. The conflict has both closed Ukraine’s ports and put harsh sanctions on Russia, so global wheat buyers will need to shift their focus elsewhere. Egypt, the world’s largest wheat buyer, has cancelled its second tender in four days amid the disrupted markets. In the U.S., warm weather in the U.S. HRW areas this week warrants some concern in case temps were to reverse back lower.
CATTLE
Cattle futures are called mixed. Live cattle were choppy Tuesday, as front month futures are struggling to find footing overall. Weaker retail beef prices and the lack of cash development allowed the technical selling to keep pressure on the front end. Apr live cattle closed under the 100-day moving average for 2nd consecutive day, but traded within yesterday’s trading range as prices consolidated. Cash trade was typically quiet to start the week with bids and asking prices undefined. The cash trade trend will be closely watched this week, as a larger supply on heavy weight cattle may still act as a limit on the cash market. Retail values have been trending lower, also limiting cash bids. At the close, boxed beef prices were lower, (choice: -.83 to 256.68, select: -1.89 to 251.52) with demand light at 144 loads. The strong price movement again on Tuesday in the grain markets keeps the pressured the feeder market. The Feeder Cash Index was .24 lower to 159.67, and trading at a discount to the futures market. The trend is still lower, fueled by the strong move in grain markets and poor price direction. Cattle markets overall are still in an uptrend, the market is experiencing a pullback, and searching for a near-term low.
HOGS
Hog futures opening calls are steady to higher after a sharp recovery off recent lows. Apr hogs tested the 20-day moving average near $103 and held this point again yesterday triggering some short covering and price recovery as the fundamentals in the market outweighed the technical selling. The fundamentals stay supportive overall on a tighter hog supply overall, supported by strong retail and improving cash values. The market is still in a strong uptrend. The key will be follow through on Tuesday’s strong price action. Pork cutout values have been trending higher overall. At the close on Tuesday, pork carcasses were lower, losing 4.08 to 108.19. The load count was moderate at 291 loads. The weak close could pressure prices on the open on Wednesday. Cash was supportive with the National Direct morning trade, marking a base price of 88.59, up .22 from Monday and the Cash Lean Hog Index was 0.69 higher to 99.09. The Apr futures is still holding a 7.110 premium to the index, but feels more manageable give the strength in the cash market.
Author
Matthew Strelow