Morning report: More market fallout from the Russian war in Ukraine. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 7-13 cents
Soybeans 8-14 cents; Soymeal up $5.80/ton; Soyoil up $0.08/lb
Chicago wheat up 18-22 cents; Kansas City wheat up 21-25 cents; Minneapolis wheat up 9-14 cents
*Prices as of 6:55am CDT.
Corn
Corn prices in Chicago saw a $0.06-$0.13/bushel rise overnight as Ukrainian export concerns and smaller than expected 2022 U.S. corn acres continue to fuel global supply concerns for the next marketing year.
Grain is moving out of Ukraine, according to Ukrainian agricultural consultancy APK-Inform. However, the agency notes that railcars of grain are currently backlogged as railways are the only available mode of transportation for grain shipments as Russia continues its blockade of Ukraine’s Black Sea export terminals.
Ukrainian Railways have made 12 rail terminals available to grain shipments. Capacity has quickly filled, creating a two- to three-week backlog before the grains can be shipped. Some analysts predict that only 1 million metric tonnes (MMT) of Ukrainian grain will be shipped through the end of the 2021/22 marketing year amid constraints stemming from the Russian war. Prior to the war, analysts forecasted grain shipments of 22MMT for the same time period.
“Traders are continuing to search for the possibility of redirecting exports to the EU by rail or via Romanian ports, but the key barriers remain limited bandwidth logistics ability and its high cost,” APK-Inform said.
Shipping costs to the Black Sea prior to the war were a mere $40/tonne. But rail shipments diverted to Black Sea ports in Romania typically charge $133-$166/tonne – up to a 315% markup.
To add insult to injury, Russian forces are taking aim at Ukrainian grain storage facilities. U.S. officials announced last week that Russia has targeted and severely damaged grain storage facilities in Eastern Ukraine. “As of late March, at least six grain storage facilities had been damaged as a result of these attacks,” the official told Reuters.
Deputy Secretary of State Wendy Sherman confirmed Russia’s tactics last Tuesday at a U.N. Security Council meeting, noting that “Russia is actively targeting grain silos and food storage facilities.”
Prior to the war, Ukraine was the world’s fourth largest exporter of corn, fifth largest exporter of wheat, and top global supplier of sunflower oil.
Soybeans
Soybean prices gained $0.08-$0.13/bushel during the overnight trading session, as new crop futures broke through price resistance at the $14/bushel benchmark on ongoing supply concerns resulting from South American crop shortfalls and the Russian-Ukrainian war.
“A war risk premium is again being added to wheat, corn and soybeans today with no real signs that the fighting in Ukraine is set to end soon,” Matt Ammermann, StoneX commodity risk manager, told Reuters.
“The continued conflict means markets are again having to face the prospect that Ukraine’s grain and oilseed exports will not normalize in the foreseeable future and Ukraine’s spring grain sowings could be significantly disrupted by the fighting.”
International ag consultancy Strategie Grains expects reduced vegetable oil shipments from Ukraine will continue to tighten global edible oil supplies. Strategie Grains projects Ukraine will not ship any edible oil exports through at least June due to the war.
“Damage to industrial, logistics and port facilities is very significant in much of the east of the country,” Strategie Grains said in a monthly report.
Wheat
Saudi Arabia closed on a 23.0-million-bushel wheat tender overnight, snapping up available supplies from the European Union, Australia, South America and North America. The purchase combined with lingering supply worries amidst the Russia-Ukrainian war to send Chicago and Kansas City wheat futures $0.21-$0.25/bushel higher.
Minneapolis futures posted a $0.09-$0.14/bushel gain, slightly offset by good spring wheat growing conditions in top exporter Russia.
“Markets had reacted to news about Ukrainian peace talks last week but hope is sadly fading this week,” Ammermann said. “Meanwhile, importers are having to buy despite elevated prices as shown by the Saudi Arabian wheat tender today, with corn also still receiving support from forecasts last week of reduced U.S. planted area.”
Kazakhstan is considering a temporary export ban on grain and flour shipments, following its neighbor Russia’s plans to restrict international access to its grain supplies. No further details about potential plans were available at press time.
Kazakhstan is the world’s ninth largest wheat exporter. It typically also imports wheat supplies from Russia as it exports to neighboring Central Asian and Middle Eastern countries
Dmitry Medvedev, a personal ally to Russian President Vladimir Putin, suggested last Friday that Russia’s agricultural supplies could potentially be rationed for only “friends” of Russia in the near future. Russia is traditionally the world’s largest wheat exporter though recent economic and banking sanctions levied by the West has left Russia’s food and feed supplies inaccessible to many international buyers.
Medvedev outlined “some simple but important points about food security in Russia,” via social media in regard to the Western banking sanctions.
“We will only be supplying food and agriculture products to our friends. Fortunately we have plenty of them, and they are not in Europe or North America at all.”
Middle East and African buyers are typically Russia’s top wheat customers prior to its unprovoked invasion into Ukraine. Medvedev hinted that future trading partners would transact in rouble denominations, following Putin’s demands last week that all international natural gas payments going forward be denominated in roubles instead of dollars or euros.
Russia’s rouble added strength last night, sending its wheat prices lower. Russia’s currency problems have not completely turned off international demand for its wheat as Black Sea terminals continue to churn out large shipment volumes.
“Russia continues to ship wheat fast,” said Sovecon, a Russian agricultural consultancy. Sovecon noted that Russia shipped 400,000MT of grain two weeks ago and another 560,000MT last week.
Sovecon also reported that spring wheat sowing in Russia has progressed at a fast clip thanks to favorable spring planting conditions, with no issues of fertilizer availability impacting growers. Sovecon found nearly 1.3 million acres of spring wheat had been planted in Russia as of last Thursday, up from nearly 838K acres the same time last year.
Inputs
Tunisia doubled its phosphate production in the first three months of 2022 compared to a year ago, according to a senior official in state-run Gafsa Phosphate. The official told Reuters yesterday that Q1 phosphate production surged to 1.3 million MT.
Gafsa Phosphate plans on mining 5.5 million MT of phosphate in 2022. The company produced 3.7 million MT last year.
Expansion signals have been priced into global fertilizer markets for nearly a year now. With Russian and Chinese supplies constricted due to international sanctions and domestic export bans, Tunisia’s production uptick could help reduce some of the global supply tightness facing farmers around the world.
Weather
Snow is back in the forecast, according to NOAA’s short-range forecasts. Scattered showers are possible today in the Northenr Plains and Great Lakes region, though any accumulation is likely to be light.
Consistent with La Nina weather patterns, the Eastern Corn Belt will see rain showers today, though total accumulation over the next 24 hours is not likely to top a quarter inch. Storms developing in the Southern Plains will drop over an inch of rain on the region in the next 24 hours.
Financials
S&P 500 futures are up 6 points this morning (0.13%) to $4,545.25, following overnight rallies in the European stock markets. Corporate earnings results for Q1 2022 helped to distract focus from the Russian-Ukrainian war. Energy prices ticked up this morning, though West Texas Intermediate crude futures faced resistance at the $100/barrel benchmark on Chinese COVID lockdowns and plans to release strategic U.S. reserves to the market.
Also worth a read on our website, FarmFutures.com:
Our team was all over USDA’s reports last week! Here is our team’s coverage of acreage and grain stock readings.
Plus, I analyzed market impacts from the reports in a Farm Progress 365 session last Thursday!
My latest E-corn-omics column has five graphs explaining the March 31 USDA reports. I see you, visual learners!!
This is where it all started: Check out our 2022 acreage projections from our March 2022 Farm Futures survey
Morning Ag Commodity Prices – 4/4/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.4825
7.3475
7.455
0.105
1.43%
JUL ’22 CORN
$ / BSH
7.355
7.2275
7.34
0.1225
1.70%
SEP ’22 CORN
$ / BSH
7.0675
6.9675
7.0475
0.0875
1.26%
DEC ’22 CORN
$ / BSH
6.97
6.885
6.96
0.08
1.16%
MAR ’23 CORN
$ / BSH
6.985
6.91
6.9775
0.0725
1.05%
MAY ’23 CORN
$ / BSH
6.9875
6.9125
6.975
0.0625
0.90%
JUL ’23 CORN
$ / BSH
6.95
6.87
6.935
0.0625
0.91%
MAY ’22 SOYBEANS
$ / BSH
15.96
15.7675
15.9475
0.12
0.76%
JUL ’22 SOYBEANS
$ / BSH
15.7875
15.605
15.7775
0.11
0.70%
AUG ’22 SOYBEANS
$ / BSH
15.425
15.2625
15.405
0.0875
0.57%
SEP ’22 SOYBEANS
$ / BSH
14.63
14.5025
14.63
0.1025
0.71%
NOV ’22 SOYBEANS
$ / BSH
14.1975
14.0475
14.1875
0.12
0.85%
JAN ’23 SOYBEANS
$ / BSH
14.17
14.0375
14.1675
0.11
0.78%
MAR ’23 SOYBEANS
$ / BSH
13.97
13.8525
13.97
0.0925
0.67%
MAY ’23 SOYBEANS
$ / BSH
13.9475
13.87
13.945
0.0775
0.56%
JUL ’23 SOYBEANS
$ / BSH
13.9525
13.9075
13.9525
0.0775
0.56%
MAY ’22 SOYBEAN OIL
$ / LB
71.94
70.9
71.2
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
70.11
69.22
69.52
0.02
0.03%
MAY ’22 SOY MEAL
$ / TON
457.1
448.5
456.2
6.2
1.38%
JUL ’22 SOY MEAL
$ / TON
449.5
441.6
448.8
6
1.36%
AUG ’22 SOY MEAL
$ / TON
440.6
434.4
440.1
5.1
1.17%
SEP ’22 SOY MEAL
$ / TON
426.2
421
425.5
4.3
1.02%
OCT ’22 SOY MEAL
$ / TON
410.6
405.2
410.6
5.4
1.33%
MAY ’22 Chicago SRW
$ / BSH
10.115
9.8475
10.0075
0.1625
1.65%
JUL ’22 Chicago SRW
$ / BSH
10.11
9.85
10.02
0.1775
1.80%
SEP ’22 Chicago SRW
$ / BSH
10
9.76
9.9275
0.1825
1.87%
DEC ’22 Chicago SRW
$ / BSH
9.895
9.6625
9.8425
0.1975
2.05%
MAR ’23 Chicago SRW
$ / BSH
9.7175
9.5775
9.6775
0.195
2.06%
MAY ’22 Kansas City HRW
$ / BSH
10.4025
10.165
10.3175
0.1875
1.85%
JUL ’22 Kansas City HRW
$ / BSH
10.415
10.185
10.3275
0.19
1.87%
SEP ’22 Kansas City HRW
$ / BSH
10.4
10.1575
10.3075
0.19
1.88%
DEC ’22 Kansas City HRW
$ / BSH
10.375
10.17
10.3025
0.19
1.88%
MAR ’23 Kansas City HRW
$ / BSH
10.18
10.18
10.18
0.145
1.44%
MAY ’22 MLPS Spring Wheat
$ / BSH
10.9125
10.7
10.7875
0.135
1.27%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.905
10.68
10.765
0.1125
1.06%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.635
10.435
10.4975
0.09
0.86%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.6
10.3975
10.5725
0.1975
1.90%
MAR ’23 MLPS Spring Wheat
$ / BSH
10.405
10.38
10.405
0.09
0.87%
JUN ’21 ICE Dollar Index
$
98.875
98.515
98.86
0.233
0.24%
MA ’21 Light Crude
$ / BBL
100.74
98.05
100.35
1.08
1.09%
JU ’21 Light Crude
$ / BBL
99.41
96.83
99.03
1.13
1.15%
MAY ’22 ULS Diesel
$ /U GAL
3.545
3.4249
3.5259
0.1019
2.98%
JUN ’22 ULS Diesel
$ /U GAL
3.3137
3.2145
3.2915
0.067
2.08%
MAY ’22 Gasoline
$ /U GAL
3.1957
3.118
3.1746
0.0211
0.67%
JUN ’22 Gasoline
$ /U GAL
3.1488
3.0762
3.1285
0.0196
0.63%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
161.575
0
0.00%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
166.125
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
138.65
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
135.85
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
101.3
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
113.175
0
0.00%
APR ’22 Class III Milk
$ / CWT
23.68
23.67
23.67
-0.02
-0.08%
MAY ’22 Class III Milk
$ / CWT
24.46
24.45
24.45
-0.1
-0.41%
JUN ’22 Class III Milk
$ / CWT
24.35
24.34
24.35
0
0.00%
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