The US dollar approaches multi-year highs.
Grain futures opened higher last night and turned sharply lower on row crops while wheat futures trimmed gains, as crude oil dropped over four dollars a barrel, with gold also down over $30 as the US dollar pushed to the highest price in two years. The dollar has rallied to the highest value since the pandemic price explosion on the likelihood of the Fed's more aggressive interest rate hiking stance in next week's meeting. The US dollar is at 101.50, with 2020 highs near 104.00. Eclipsing that, then the dollar would be carrying its highest value in 20 years, being a detriment to exports more than it already has been over the past five months.
Ukrainian exports are likely thwarted for the rest of the year, with the Russian invasion destroying elevator legs at the important export part of Odessa. Despite that, the higher price strength in the Sunday night session was quickly sold on the extreme lockdowns measures over Covid that China's taking in the cities of its two largest ports that are circumventing imports and exports and lowering their GDP. As a result, Chinese corn and soybean buying are expected to slow dramatically.
Overnight strength and soybeans went to sharp losses of over $0.20 as soybean oil went from sharply higher to sharply lower in the early morning hours. Indonesia is refined their ban on palm oil exports. The export ban was for refined/bleached and deodorized palm oil and will not affect basic crude palm oil exports. This pressed soybean oil to values lower than last Friday when the announcement was made.
Heavy rain/snow hit the Northern Plains as a strong storm system passed eastward with moisture totals of .25-2.00″. Some reports of North Dakota flooding are widespread. Dry weather now prevails across the Central US into Thursday before wet weather trends return. The storms will center from the Northern Plains southward to the Gulf with rain totals of 1.00-3.50″. The HRW wheat area stays dry with limited precipitation into the middle of May. Crop concern is side for the Western US HRW wheat with ratings anticipated again to decline this afternoon, while US corn seeding pace is pegged at 7% versus an average of 15%. Soybean seedings are expected now at 4%.
Cattle futures are called over a $1.00 lower for the start of the day off of the heavier than expected on feed cattle numbers for the second straight month in last Friday's COF release. The total cattle on feed was at 102% of last year, well above market expectations, with placements at 100% on an estimate of 92.2%. The report shows heavier cattle supplies than anticipated, and the cash market will be looked to along with the expiring April cattle contract for any strength to limit market weakness. The cold storage report also showed some slight product build as total pounds of beef and freezers were up 1% from the previous month and up 11% from last year. This was a reflection of above-average carcass weights being processed, adding more pounds into the cooler is the overall demand has been good.