Bean oil values lift grain complex on Indonesian palm oil ban.
Grain futures were universally lower across the board at 5:30 a.m. this morning until it was announced that Indonesia would be banning Palm oil exports as of April 28. The explosion of Being oil over four cents a pound off of morning lows lifted the grain complex with soybeans rallying $0.30 to within pennies of the February 24 high, except soybean meal moving lower on the news, which will lose on the crush spread in search of more oil stocks.
There are some expectations that the export ban will not be long-lived, as Indonesia is forecast to export 28 MMTs of palm oil in 2021/22, with domestic consumption of just 16.4 MMTs. So the local market would be flooded with supplies that cannot be stored with a long-held and which is why it is likely the Indonesian export ban will only last week’s too, maybe a few months before trade returns. In January, Indonesia placed an export quota on palm oil exports and then lifted it at the beginning of March. Today the political move is bullish initially for soybean oil, which pushed to new all-time highs.
The Argentine corn basis slipped another $.05/Bu to $0.15 under, with reports that trades are occurring at $0.20 under Chicago. US Gulf corn is offered at $1.05 over, which makes US corn extremely expensive to world importers. Brazilian corn for July-August is offered at $0.30 over versus US Gulf at $1.10 over. US corn export demand is currently lacking outside of sales to neighbors, especialy with China again absent.
Central US weather holds out for near to below normal rainfall and near-normal temperatures in the coming week to allow Midwest spring seeding to advance in the next 10 days. A high-pressure Ridge across the Intermountain West will shove the jet stream north in place above normal rain over North Dakota and the South-Central Canadian Prairies, with some areas receiving as much as four-6.00” of rain. Midwest rain in the May 2 is only anticipated to accumulate .25-one .25” potential with rain across the southern and central plains to be less than .15”, deepening the existing drought.
This morning the cattle market is called mixed to higher, as cash market strength and technical buying supported the markets this week. Buyers are likely to stay active going into the COF report this afternoon. The trade is expecting to see feeder placements decline year-over-year, supporting feeder prices for the fall contracts. Overall expectations report has On Feed at 100.4 percent, Placements at 92.2 percent, and Marketings at 98.2% of last year. The actively traded June live cattle contract is challenging the upper chart resistance in the 140.00-141.00 range. Cash trade wrapped up this week with southern live deals in a range of $1 39-$1 41. The North was mostly $228-$236 with the bulk of the action at $230, which was four dollars higher than last week’s weighted average. Box beef cutouts were mixed on the close yesterday with choice up $1.35 and select lower by $0.85.