Malaysian palmoil pulls bean oil higher.
Grain futures continued higher in the night session, with wheat maintaining yesterday’s gains and Malaysian palmoil again setting new historical highs on supply tightness, pulling soybean oil higher in its wake, which also carries beans to new contract highs. Last night the March bean contract got within $0.12 of the 2021 spot contract high.
The current situation in Ukraine has many are wondering if Russia will stop just with the annexation of two Eastern Ukrainian states, or will this lead to a more full-blown occupation for the entirety of Ukraine? The market is dealing with this, with the media implying the latter. Real-world tactics have shown that Russia waits for independent states of Ukraine to choose to join Russia (Crimea in 2014). Major grain export ports are open for business in Ukraine, with grain prices substantially below world values, which can lure back former customers with the disparaging difference in grain values of having escalated over the past several weeks.
Overnight May corn futures in China settled $.08/Bu higher at $11.18, while March soymeal rose $5.80/MT to $618.904/MT. Malaysian March Palm oil futures rallied 152 ringgits/MT to close at 6,506, a new historical high. The rally on Palm oil prices has been vertical, with charts reflecting an extreme overbought condition which could lead to swift corrections at any time. There are three days left before the first notice day of the March grain contracts. With exporters short bought in South America, they have been rolling their shorts forward into May/July and November soybeans, causing the extreme bull spreading.
The South American weather forecast calls for a pattern change and needed rains will fall in Argentina and southern Brazil over the next two weeks. A Ridge of high pressure will take a more normal position over E Brazil, which shunts tropical upper air moisture southward towards S Brazil and Argentina. This produces a dryer trend in northern Brazil to advance the rest of the harvest. The rains start across Argentina later today and push northward into S Brazil through Friday. 10-day totals are forecasted to range from 1.50-4.50” inches of rain.
Yesterday cattle futures had a mixed trade with live cattle holding firm and feeder cattle prices tumbling on the higher feed costs. Cash cattle were quiet, but better interest is expected to surface today. The midweek outlook is no worse than steady cash trade with expectations of $1-3 higher potential this week. The box beef trade was mixed on Tuesday, with the choice value falling $2.45 to $261.64, and the select value gained $1.80 to $263.64. This put the choice for select spread to a rare two dollars select premium. The last time this occurred was in May 2022, at the near peak of the pandemic beef rally. April cattle futures have significant support at 143.00-143.50, with an objective into spring of 151.00-152.00.