Profit-takers enter the fray. (Comments are updated by 7:30 a.m. Central Time.)
Corn, soybean and wheat prices all spill into the red overnight
Corn down 13 to 14 cents
Soybeans down 34 to 36 cents
Wheat down 22 to 28 cents
*Prices as of 6:50am CST.
The recent Russian invasion into Ukraine has created a lot of upward volatility for grain prices in recent sessions – primarily through worries that there will be export disruptions in those two countries, which are both major grain exporters. CBOT wheat contracts jumped to the highest levels in more than a decade, while corn prices etched out eight-month highs yesterday. But prices have reached high-enough levels to attract some technical selling and profit-taking as traders begin to wind down activity for the week. Corn, soybean and wheat contracts all faced overnight losses of 2% to 3%.
Overseas stock markets are trying to recover from the bearish sentiment churned up earlier this week by the Russian invasion of Ukraine. Asian markets were mixed but mostly higher, anchored by Japanese gains of nearly 2%. European markets were up 1.5% to 2% in midday trading. On Wall St., Dow futures were trending 234 points lower to 32,934 as investors are watching whether Ukraine’s capital, Kyiv, will soon be under siege by Russian troops.
Energy futures have seen a bull run in recent sessions but were lightly mixed overnight. Crude oil saw fractional gains to stay just below $93 per barrel. Diesel eased slightly, and nearby gasoline contracts dropped 0.4%. Volatile natural gas prices fell 2.25%. The U.S. Dollar softened slightly.
The latest 72-hour precipitation map from NOAA shows drier weather ahead for the Midwest and Plains between today and Monday, with very few areas likely to see any measurable precipitation over the next three days. Official 6-to-10-day forecasts show a return to mostly warmer-than-normal weather for the central U.S. between March 2 and March 6, with seasonally wet weather likely for large portions of the Midwest and Plains during that time.
On Thursday, commodity funds were net buyers of corn (+17,500), soyoil (+6,500) and CBOT wheat (+21,000) contracts but were net sellers of soybeans (-13,500) and soymeal (-3,500).
Corn
Corn prices faced some downward momentum from technical selling and profit-taking heading into Friday’s session. Farmers have been eagerly watching the race to $7 per bushel, but passing that benchmark isn’t a guarantee even though supply and demand fundamentals remain generally bullish for now. Overnight losses topped 3%, so be watchful for plenty of future volatility in either direction.
On Thursday, corn basis bids were steady to mixed after falling 2 to 4 cents at two interior river terminal and dropping 2 cents at an Indiana elevator while firming a penny higher at two other Midwestern locations.
Prior to the next export recap from USDA, out later this morning, analysts expect to see corn sales ranging between 19.7 million and 47.2 million bushels for the week ending February 17.
Yesterday, the U.S. Energy Information Administration noted ethanol production rose for a second consecutive week, reaching a daily average of 1.024 million barrels through February 18. That was favorable compared to the prior week’s tally of 1.009 daily barrels but still well below seasonal highs captured earlier in 2022.
Taiwan passed on all offers for its international tender to purchase 2.6 million bushels of animal feed corn that closed earlier today after prices moved steeply higher earlier this week. European traders speculated that some Asian importers will delay purchases as they assess fighting in Ukraine in hopes that prices will soon cool off.
The preliminary report from the CBOT showed daily futures volume moving to 904,744, with open interest dropping 24,818. Options volume moved to 281,968 and moderately favors calls (171,425) versus puts (110,543). Implied volatility for near-the-money May contracts is already up to 34.2%, which don’t expire for another 55 days.
Soybeans
Soybean prices face the same dilemma as other grains heading into Friday’s session – they have enjoyed a bullish run in recent sessions, but prices have now moved high enough to trigger some technical selling and profit-taking. Speculation that more U.S. acres will move away from corn due to high fertilizer prices and potential shortages is generating additional headwinds right now. Prices dropped more than 2% ahead of Friday’s open.
Oilseed prices saw massive volatility this week. Palm oil prices climbed to record highs earlier this week but plummeted 7% on Friday. And India halted shipments of sunflower oil from the Black Sea region and is now facing possible shortages through at least April as it searches out alternatives.
On Thursday, soybean basis bids tumbled 16 to 25 cents lower at two interior river terminals while firming 2 cents higher at an Ohio elevator and holding steady elsewhere across the central U.S.
Ahead of this morning’s export report from USDA, analysts think the agency will confirm soybean sales landed between 34.9 million and 75.3 million bushels for the week ending February 17. Analysts also expect to see between 100,000 and 500,000 metric tons of soymeal sales last week, plus 8,000 MT to 60,000 MT of soyoil sales.
Analysts are concerned that Brazilian farmers, who lean on Russia as their biggest supplier of NPK, could face a supply pinch and suffer soaring fertility costs after Russia invaded Ukraine earlier this week. “Brazil has the most to lose among the world’s largest producers of soy,” Agrinvest Commodities analyst Jefferson Souza told Reuters yesterday. Some groups have already begun exploring alternative supply sources.
The preliminary report from CBOT showed daily futures volume moving to 487,719 and open interest dropping by 32,796. Options volume was at 205,038 and still moderately favors calls (117,945) over puts (87,093). Implied volatility for near-the-money May contracts moved to 24.5% and expire in 55 days.
Wheat
Wheat prices captured multiyear highs earlier this week and now face some downward pressure, with more technical selling and profit-taking likely on Friday. Most contracts slumped around 2.5% lower in overnight trading. Still, don’t downplay the dramatic gains that were grabbed earlier this week, pushing MGEX contracts back above $10 per bushel and sending winter wheat contracts north of $9 per bushel.
CME Group reported Thursday afternoon that daily price limits for wheat futures will expand today after moving sharply higher in recent sessions. Starting today, Chicago SRW and Kansas City HRW contracts will now have a 75-cent limit, which will revert back to 50 cents on Monday if prices fail to post another limit move today.
Yesterday, the Ukrainian military suspended shipping and movement of commercial vessels at five ports until further notice as it assesses risks amid this week’s Russian invasion. Ukraine is a major exporter of both corn and wheat, and its total grain exports typically average between 5 to 6 million metric tons per month.
Prior to this morning’s export report from USDA, analysts expect the agency to show wheat sales ranging between 3.7 million and 20.2 million bushels for the week ending February 17.
French farm office FranceAgriMer estimates that 93% of the country’s soft wheat crop is rated in good-to-excellent conditions through February 21, dropping two points below the prior week’s ratings but still above year-ago ratings of 87%.
The preliminary report from CBOT showed daily SRW volume moving to 293,290, with open interest dropping by 7,571. Options volume moved to 59,435 and favors calls (41,324) over puts (18,111) by a more than 2:1 ratio. Implied volatility for May near-the-money options moved to 44.9% and expire in 55 days.
Volume in HRW wheat moved to 114,593, with open interest trending 3,176 lower. Options volume is at 5,382 and still favors calls (3,629) versus puts (1,753).
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