Morning report: The world waits for China’s reaction to Black Sea grain and oilseed market closures. (Comments are updated by 7:30 a.m. Central Time.)
Corn mixed
Soybeans up 7-16 cents; Soymeal up $4.60/ton; Soyoil up $1.62/lb
Chicago wheat up 29-72 cents; Kansas City wheat up 23-62 cents; Minneapolis wheat up 17-61 cents
*Prices as of 7:00am CST.
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The latest from Ukraine
Even though Russian forces continue to struggle to advance on the Ukrainian capital of Kyiv and second largest city Kharkiv amid fierce Ukrainian resistance, logistical issues, and falling morale, Russian troops made more progress in Southern Ukraine overnight.
The Kremlin is scaling up attacks in an effort to stymie Ukrainian resistance with an increased focus on targeting civilian areas to try to deter Ukrainian citizen’s morale. Western leaders are becoming increasingly concerned that Russia will use siege tactics to further exacerbate the deteriorating humanitarian conditions in the region.
Over a million Ukrainian citizens – largely women and children – have fled the country. It is the largest mass exodus of humans from a single country in this century, according to the United Nations.
More economic sanctions are coming to Russia from the U.S. “The United States is preparing a sanctions package targeting more Russian oligarchs as well as their companies and assets, two sources familiar with the matter said on Wednesday, as Washington steps up pressure on Russian President Vladimir Putin,” a Reuters report stated this morning.
Corn
Corn futures wobbled between gains and losses this morning, trading a penny higher at last glance. But the nearby March 2022 contract soared 1% higher to $7.46/bushel at last glance, suggesting that end user demand remains strong even as prices soar to new heights on fears that spring planting progress for the Ukrainian crop may be hindered by Russian military attacks.
“We do wonder about what might happen with season ’22 pricing,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters. “The world is full of possibility at present. And one of those possibilities is that, somehow, Ukraine and Russia harvests cannot be exported.”
Soybeans
Record highs notched in the Malaysian palm oil market overnight helped lift soyoil prices up along the way. Soybean prices followed $0.07-$0.14/bushel higher as markets continue to await China’s responses to Black Sea grain and oilseed market closures.
Chinese and unknown buyers have gone on a soybean buying spree over the past week, booking over 49 million combined bushels of 2021/22 and 2022/23 sales across four large daily flash sales reported to USDA. Those volumes will likely contribute to favorable numbers this morning’s weekly Export Sales report from USDA.
It also points to a more pressing trend. Some of the soybean shipments – five cargoes worth to be exact – to China were scheduled to be shipped during April and May, which is during peak export season for southern competitor Brazil. But U.S. soybean prices were more competitive against their Brazilian counterparts’ yesterday
“China has been turning to the U.S. since after the Lunar New Year holiday. While prices of U.S. and Brazil beans were almost the same, logistics for U.S. cargoes were faster,” a northern China-based trader told Reuters yesterday. “(Margins) are pretty high. Whoever has beans would make a fortune.”
As the short Brazilian crop begins to dwindle on the export market, U.S. soy growers and exporters may benefit from a late season export boost in the market, especially as crush margins in China come under pressure.
Wheat
Wheat continued to trade at 14-year highs overnight, though gains did not match limit up movement the market has seen over the past few trading sessions. Nearby contracts for Chicago, Kansas City, and Minneapolis wheat futures have all broken past the $11/bushel benchmark on Black Sea export terminal closures amid the ongoing Russian-Ukrainian conflict.
Wheat prices have gained over 28% in just the past four days as international buyers scramble to find new sources for short-term supplies. Officials in the European Union floated the idea yesterday that farmers may be able to farm fallow land this spring to grow feed crops as Black Sea supplies remain inaccessible.
China could resume strong wheat purchases from the U.S. in coming weeks as the Black Sea conflict continues. Chinese wheat prices overnight soared to 3,000 yuan per tonne – a new record high – as global supplies remained squeezed.
“Domestic wheat is rising like crazy,” a manager with a major Chinese grain trader told Reuters overnight. “(The Ukraine crisis) has some play in it, but the fundamental reason still remains in the (domestic) supply-demand imbalance.”
“Domestic wheat prices are expected to rise further, unless the government releases significant amounts of grain from the (state) reserves,” Lv Fengyang, analyst with the agriculture section of Mysteel, a China based commodity consultancy, told Reuters overnight.
“Moreover, there is the uncertainty in the global market with the war. The domestic market was also worried about the quality and output of the new wheat crop,” Lv said, referring to China’s soggy harvest conditions and delayed winter wheat sowings last fall.
Weather
Warm weather is returning back to the Heartland after last week’s wintery spell, according to NOAA’s short-range forecasts. Mostly clear skies are forecast across the Midwest today, though the Northern Plains could see a chance for a wintery precipitation mix falling late this evening.
Financials
Federal Reserve chairman Jerome Powell announced yesterday that the ongoing Russian conflict in Ukraine would have no impact on the Fed’s decision to raise interest rates despite soaring commodity prices since the conflict’s onset and ongoing inflationary pressures.
Powell announced that a 25-basis-point increase in Federal Funds interest rates would proceed as planned in a Senate hearing yesterday. “We’re going to avoid adding uncertainty to what is already an extraordinarily challenging and uncertain moment,” Powell told the Senate Banking Committee.
The rate increase will likely come at the Fed’s next Federal Open Market Committee meeting (FOMC), to be held March 15-16.
Stock markets rewarded Powell’s news yesterday in hopes that an interest rate increase will help curb rising inflation and supply chain disturbances across the economy. Equity indices remained wobbly this morning, with S&P 500 futures drifting 0.02% lower to $4,381 on overarching market sentiments.
Brent crude oil surpassed the $115/barrel benchmark for the first time since 2008 overnight as global buyers spurn Russian energy stocks and seek out new suppliers.
“The inflationary impact of oil and natural gas surges is clear. Inflation is going to be stickier. Interests rates will be pushed up by central banks worried about inflation and that will be bad for growth,” Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald, told the Wall Street Journal this morning. “Stagflation is the big concern for 2023.”
“Russia’s invasion of Ukraine spells further turmoil for global energy markets already reeling from extreme price volatility over the past two years,” Sam Reynolds, an energy finance analyst with the Institute for Energy economics and Financial Analysis, (IEEFA), told Reuters this morning.
Also worth a read on our website, FarmFutures.com:
Advance Trading’s Josh Green lays out the stars that need to align for $8/bushel corn. Spoiler alert – Ukraine has a lot to do with it.
Bryce Knorr points out that marketers should be focused on more than just Ukraine this spring, as history suggests more rallies may be on the way in the grain markets.
Senior editor Ben Potter takes a closer look at the impact of Russia’s invasion of Ukraine in fuel, fertilizer, and grain prices.
The House Ag Committee held its third hearing to review potential fixes for the upcoming 2023 Farm Bill. Here were the key takeaways.
Morning Ag Commodity Prices – 3/3/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
7.6625
7.45
7.5175
0.1275
1.73%
MAY ’22 CORN
$ / BSH
7.52
7.22
7.3075
0.0575
0.79%
JUL ’22 CORN
$ / BSH
7.1275
6.885
6.94
0.0025
0.04%
SEP ’22 CORN
$ / BSH
6.365
6.2
6.2575
-0.0175
-0.28%
DEC ’22 CORN
$ / BSH
6.1975
6.05
6.1125
0.02
0.33%
MAR ’23 CORN
$ / BSH
6.22
6.0775
6.115
-0.0075
-0.12%
MAY ’23 CORN
$ / BSH
6.2275
6.0975
6.1625
0.0175
0.28%
MAR ’22 SOYBEANS
$ / BSH
17.03
16.875
16.875
0.1
0.60%
MAY ’22 SOYBEANS
$ / BSH
16.99
16.6725
16.7675
0.1375
0.83%
JUL ’22 SOYBEANS
$ / BSH
16.6425
16.3625
16.46
0.12
0.73%
AUG ’22 SOYBEANS
$ / BSH
16.1675
15.8975
15.9325
0.0775
0.49%
SEP ’22 SOYBEANS
$ / BSH
15.3425
15.09
15.14
0.1075
0.72%
NOV ’22 SOYBEANS
$ / BSH
14.835
14.5275
14.625
0.1
0.69%
JAN ’23 SOYBEANS
$ / BSH
14.7775
14.4775
14.565
0.085
0.59%
MAR ’23 SOYBEANS
$ / BSH
14.4925
14.2575
14.28
0.04
0.28%
MAY ’23 SOYBEANS
$ / BSH
14.405
14.18
14.195
0.03
0.21%
MAR ’22 SOYBEAN OIL
$ / LB
81.18
81.16
81.16
1.62
2.04%
MAY ’22 SOYBEAN OIL
$ / LB
77.33
75.68
76.2
0.33
0.43%
MAR ’22 SOY MEAL
$ / TON
459.7
459.7
459.7
2
0.44%
MAY ’22 SOY MEAL
$ / TON
458.9
448.4
451.9
3.9
0.87%
JUL ’22 SOY MEAL
$ / TON
450
442.4
444.6
2.1
0.47%
AUG ’22 SOY MEAL
$ / TON
435.6
429.1
430.3
0.4
0.09%
SEP ’22 SOY MEAL
$ / TON
423.2
418
419.2
1.1
0.26%
MAR ’22 Chicago SRW
$ / BSH
11.2425
11.19
11.19
0.605
5.72%
MAY ’22 Chicago SRW
$ / BSH
11.34
10.7
11.3025
0.7125
6.73%
JUL ’22 Chicago SRW
$ / BSH
11.09
10.4375
10.7025
0.29
2.79%
SEP ’22 Chicago SRW
$ / BSH
9.98
9.4225
9.62
0.0625
0.65%
DEC ’22 Chicago SRW
$ / BSH
9.3075
8.65
8.8475
-0.0725
-0.81%
MAR ’22 Kansas City HRW
$ / BSH
11.35
11.35
11.35
0.615
5.73%
MAY ’22 Kansas City HRW
$ / BSH
11.48
10.755
11.21
0.4575
4.25%
JUL ’22 Kansas City HRW
$ / BSH
11.17
10.495
10.805
0.225
2.13%
SEP ’22 Kansas City HRW
$ / BSH
10.455
9.8425
10.035
0.085
0.85%
DEC ’22 Kansas City HRW
$ / BSH
9.7625
9.19
9.3375
-0.0725
-0.77%
MAR ’22 MLPS Spring Wheat
$ / BSH
11.2
11.2
11.2
0.6075
5.74%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.13
10.5275
10.8125
0.23
2.17%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.99
10.42
10.6875
0.24
2.30%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.25
9.8075
10
0.035
0.35%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.0225
9.8
9.805
-0.0325
-0.33%
MAR ’21 ICE Dollar Index
$
97.675
97.44
97.61
0.196
0.20%
AP ’21 Light Crude
$ / BBL
116.57
110.6
113.71
3.11
2.81%
MA ’21 Light Crude
$ / BBL
112.65
107.02
109.88
2.82
2.63%
APR ’22 ULS Diesel
$ /U GAL
3.8416
3.5279
3.603
0.1083
3.10%
MAY ’22 ULS Diesel
$ /U GAL
3.6166
3.3462
3.4183
0.0945
2.84%
APR ’22 Gasoline
$ /U GAL
3.5221
3.3423
3.3929
0.0846
2.56%
MAY ’22 Gasoline
$ /U GAL
3.4811
3.3074
3.3545
0.0796
2.43%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
158.3
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
163
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
140.1
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
136.5
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
106.3
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
111.025
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.1
#N/A
22.24
0
0.00%
APR ’22 Class III Milk
$ / CWT
23.01
23.01
23.01
-0.04
-0.17%
MAY ’22 Class III Milk
$ / CWT
23.07
23.07
23.07
0
0.00%
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