Russia relaxes, grain prices sputter.
Corn, soybean and wheat prices all suffer double-digit setbacks Tuesday
Maybe it wasn’t overly obvious that the threat of a Russian invasion into Ukraine would have such a profound effect on grain prices. But that’s exactly what’s been unfolding in recent sessions and have kept traders’ heads on a swivel as they digest the latest headlines. Today, reports that Russia had withdrawn some troops from the Ukrainian border led to an attitude of technical selling and profit-taking that significantly trimmed prices. Corn prices slumped nearly 3% lower, soybeans dropped 1.25% and wheat contracts were down 2% to 3% by the close.
A cross-country storm (dubbed “Winter Storm Miles” by the Weather Channel) is moving across the country this week and will be dropping rain, snow, ice and high winds across a wide swath of the U.S. along the way. Further out, NOAA’s 8-to-14-day outlook predicts warmer-than-normal conditions for the eastern half of the United States between February 22 and February 28, with seasonally wet weather likely for the Midwest and Plains.
On Wall St., the Dow jumped 388 points higher to reach 34,954 after Russia moved some troops farther away from the Ukrainian border. The move also cooled energy prices, which had soared significantly higher in recent sessions on heightened geopolitical tensions. Crude oil fell more than 3.5% to fall back below $92 per barrel. Diesel also dropped 3.5%, with gasoline down nearly 4%. The U.S. Dollar softened moderately.
On Monday, commodity funds were net buyers of corn (+4,000), soyoil (+500) and CBOT wheat (+1,500) contracts but were net sellers of soybeans (-8,000) and soymeal (-4,000).
Corn
Corn prices stumbled on a round of technical selling and profit-taking on easing tensions with Russia and Ukraine. Spillover weakness from other commodities applied additional headwinds today. March and May futures each lost 18.75 cents to close at $6.37 and $6.3650, respectively.
Corn basis bids were mostly steady across the central U.S. but did firm 3 cents higher at an Ohio elevator today.
Per the latest data from the European Commission, 2021/22 EU corn imports reached 398.4 million bushels through February 13, which is slightly behind last year’s pace so far.
Keep a close eye on the latest ethanol data from the U.S. Energy Information Administration, out tomorrow morning. Production for the week ending February 4 took a moderate hit and fell below the 1-million-barrel-per-day benchmark for the first time since last October.
And is ethanol really “greener” than gasoline? A new study, partly funded by the National Wildlife Fund, claims that total carbon emissions to create and consume ethanol are 24% higher than that of gasoline. But the Renewable Fuels Association disputes that claim, calling the study’s methodology “fundamentally flawed” and pointing to a 2019 USDA report that shows greenhouse gas emissions from ethanol’s entire life cycle are 39% lower than gasoline.
Is there a way to make future supply chains more resilient? Farm Futures executive editor tackles this critical question and comes up with some interesting insights. For example: “Just-in-time production, designed to reduce waste in supply chains, doesn’t necessarily make sense for all industries at all times,” he writes. “If just-in-time means you’re jumping through crazy hoops to get product delivered at crazy costs, is it worth it?” Click here to learn more.
Preliminary volume estimates were for 375,862 contracts, tracking moderately above Monday’s final count of 314,309.
Soybeans
Soybean prices followed other grain prices lower in a choppy session Tuesday after a round of technical selling led to double-digit losses, closing around 1.25% lower. March futures dropped 19.75 cents to $15.5025, with May futures down 19.25 cents to $15.5475.
Soybean basis bids were mostly steady across the central U.S. but did improve 3 cents at an Iowa river terminal on Tuesday.
Private exporters announced the sale of 3.7 million bushels of soybeans to Mexico. Of the total, 53% is for delivery during the current marketing year, which began September 1, with the remainder for delivery in 2022/23.
Brazil’s Anec estimates that the country will export 260.9 million bushels of soybeans in February, which is a reduction of 5.3% from the group’s projection a week ago. Anec also estimates that Brazilian corn exports this month will total 13.8 million bushels.
European Union soybean imports during the 2021/22 marketing year have reached 303.9 million bushels through February 13, trending 10% below last year’s pace so far. EU soymeal imports are also down year-over-year, with 10.15 million metric tons since the beginning of July.
Price prediction is a risky venture, admits Brian Basting, commodity research analyst with Advance Trading, Inc. “What occurred in the soybean market last Thursday alone is a textbook example of the risk in attempting to predict price,” he notes. “As the day began one could have thought the market may have simply ‘turned around’ after the USDA report, as it can do at times. But is that the case?” Basting explores the situation further in today’s Ag Marketing IQ blog – click here to learn more.
Preliminary volume estimates were for 265,149 contracts, which was slightly higher than Monday’s final count of 247,879.
Wheat
Wheat prices were slashed Tuesday on a round of technical selling after easing tensions between Russia and Ukraine make Black Sea export disruptions less likely for now. Spillover weakness from other commodities, including crude oil, applied additional headwinds. March Chicago SRW futures fell 21 cents to $7.7825, March Kansas City HRW futures lost 25.25 cents to $8.0325, and March MGEX spring wheat futures dropped 19.25 cents to $9.4675.
European Union soft wheat exports during the 2021/22 marketing year have reached 634.6 million bushels through February 13, which is trending slightly above last year’s pace so far. EU barley exports are also modestly higher year-over-year, with 236.5 million bushels.
Russian consultancy Sovecon has increased its forecast for the country’s 2022 wheat crop, which it now estimates at 3.116 billion bushels. Sovecon raised its estimate by more than 132 million bushels after noting favorable weather to start the season. If realized, this would be 11.6% above last year’s production but just shy of 2020’s record-breaking effort.
South Korea issued tenders to purchase 3.0 million bushels from the United States and Canada that closes tomorrow. Of the total, 61% is expected to be sourced from the U.S. The grain is for shipment in April.
Japan issued a regular tender to purchase 2.0 million bushels of food-quality wheat from the United States that closes on Thursday. The grain is for shipment between March 21 and April 20.
Egypt, the world’s top wheat buyer, has strategic reserves sufficient for the next 4.2 months, according to the country’s supply minister, Ali Moselhy.
Preliminary volume estimates were for 113,627 CBOT contracts, dropping moderately below Monday’s final count of 150,203.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-Mar
655.5
635.5
638
-18.75
22-May
654.5
635.25
637.5
-18.75
Soybeans
22-Mar
1577
1542.25
1551.25
-19.75
22-May
1581
1546.25
1555.75
-19.25
Soymeal $/ton
22-May
448.8
436.2
437.1
-10
Soyoil cents/lb
22-May
65.82
64.48
65.72
-0.11
Wheat $/bushel
22-Mar
801.75
773
779.75
-21
22-May
808.5
779.5
785.75
-21.5
KC Wheat
22-Mar
830.25
797.25
806
-25.25
22-May
832
800.75
809.75
-24
MPLS Wheat
22-Mar
966
940
953
-19.25
22-May
962
936.75
950.5
-17.75
Live Cattle cents/lb
22-Feb
143.35
142.425
143.05
0.625
Feeder Cattle cents/lb
22-Apr
173.525
171.9
172.6
1.1
Lean Hogs cents/lb
22-Apr
108.125
106.675
108
1.5
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Mar
95.17
90.66
91.76
-3.7
Diesel
22-Mar
2.9533
2.8245
2.8552
-0.1066
Unleaded Gasoline $/gallon
22-Mar
2.7735
2.647
2.6653
-0.1141
Natural Gas
22-Apr
4.336
4.125
4.266
0.106
U.S. Dollar Index
22-Mar
96.29
95.95
96.01
-0.346
Gold $/ounce
22-Mar
1880.1
1844.7
1850.9
-17.1
Copper
22-Feb
4.515
4.4865
4.515
0.0075
Fertilizer Swaps
(as of 02/11)
DAP Tampa-index
810.0
0
DAP-New Orleans
804.7
32
Urea-New Orleans
606.3
-62
Urea-Middle East
665.0
-23
Urea-Black Sea
660.0
-50
UAN (32%) New Orleans
606.3
0
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