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3 Big Things Today, April 20, 2022

Soybeans Higher in Overnight Trading; Corn Fundamentals Not Looking Rosy.

1. Soybean Futures Higher in Overnight Trading

Soybean futures were higher in overnight trading on concerns about global cooking-oil supplies.

Grain futures were mixed.

The ongoing Russian attacks on Ukraine have left buyers of cooking oils in a bit of a lurch as the countries are the two largest producers of sunflower oil. The countries combined account for 73% of sunflower oil exports, according to data from the Council of Palm Oil Producing Countries (CPOPC).

The conflict has increased demand and pushed up prices for palm oil and soybean oil.

In early March, when Russia began attacking Ukraine, the CPOPC said in a note to clients that the mostly likely solution to any sunflower oil shortage would be increased demand for palm oil, and when palm oil prices go up, soybean oil futures usually follow.

Grain futures, meanwhile, were modestly lower in overnight trading.

Corn was still trading near $8 a bushel amid bullish fundamentals due partly to the ongoing war in Ukraine, but also due to some planting concerns in the U.S.

Wheat also has been underpinned by the fighting in Ukraine.

Still, investors are taking a step back in the overnight session and likely booking some profits as prices remain lofty.

Winter-wheat ratings declined to 30% good or excellent from 32% a week earlier, according to a weekly report from the U.S. Department of Agriculture. At this point last year, 53% of the crop had earned top ratings, the USDA said.

About 7% was headed at the start of the week, up from 5% seven days earlier but well behind the average of 12%.

U.S. spring wheat was 8% planted as of Sunday, up from 6% a week earlier but just behind the average of 9% for this time of year, the government said.

Soybean futures for May delivery rose 6¾¢ to $16.98½ a bushel overnight on the Chicago Board of Trade. Soymeal rose $3.70 to $463.30 a short ton, while soybean oil futures lost 0.09¢ to 78.11¢ a pound.

Corn futures fell 3¼¢ to $7.96½ a bushel. 

Wheat for May delivery lost 2½¢ to $11.06½ a bushel while Kansas City futures added 6¾¢ to $11.83 a bushel.

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2. Bleak Corn Fundamentals Continue to Underpin Prices

Corn futures continue to hover around $8 a bushel after topping that price earlier this week for the first time since 2012, pushed higher by the ongoing Russian attacks on Ukraine.

Exports of corn from Ukraine in the 2021-2022 marketing year were forecast earlier this month at 23 million metric tons by the USDA in its monthly World Agricultural Supply and Demand Estimates (WASDE) report.

Before the war started, Ukraine was expected to ship 33.5 million metric tons of corn, which would have made it the fourth-largest exporter of the grain behind only the U.S., Brazil, and Argentina.

It’s not just exports that will be affected by the war.

“Sowing for this year’s crop is also likely to be hampered considerably by the hostilities,” Commerzbank analyst Carsten Fritsch said in a note to clients on Wednesday. “The shortfall in Ukrainian corn supplies will increase demand for corn from alternative suppliers such as the U.S. and Brazil.”

U.S. corn exports were forecast in the April WASDE report at 63.5 million metric tons, while Brazilian shipments were pegged at 44.5 million metric tons.

Those estimates are up from the pre-war report in February that projected U.S. exports at 61.6 million metric tons and Brazil shipments at 43 million metric tons.

In the U.S., concerns are growing that persistent cold weather will slow planting, Fritsch said.

Some 4% of the U.S. corn crop was planted as of Sunday, behind the prior five-year average for this time of year of 6%, the USDA said in a report on Monday.

While mid-April is a little early to be overly concerned about the corn crop, U.S. farmers plan to reduce area planted with the grain by 4% to 89.5 million acres, according to the Ag Department’s prospective plantings report released at the end of March. Corn planting is expected to be down in 43 of the 48 states surveyed by the USDA.

“Assuming that yields remain unchanged, that alone would result in 17.5 million tons less corn being harvested,” Commerzbank’s Fritsch said.

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3. Red-Flag Warnings Issued in Parts of Nebraska Amid Dry Weather

Red-flag warnings have been issued for the western half of Nebraska and a few counties in Colorado amid extremely dry weather, according to the National Weather Service.

Winds today will be sustained from 15 to 20 mph with gusts up to 30 mph, the NWS said in a report early this morning.

Relative humidity is pegged at about 20%.

“Any fires that ignite may spread rapidly and exhibit extreme fire behavior,” the agency said. “Use extreme caution if engaging in activities that could result in fire ignition.”

In the Texas panhandle, meanwhile, winds today will gust up to 35 mph with humidity falling as low as 6%.

In parts of North Dakota, a winter-storm watch will take effect Friday and last through the weekend as more snow is expected in the area, the NWS said.

Up to 12 inches of snow and 0.10 inch of ice is possible with the storm system, and winds could gust as high as 45 mph, the agency said.

“Travel could be very difficult,” the NWS said. “Widespread blowing snow could significantly reduce visibility.”

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