Black Sea turmoil sends wheat prices soaring.
Some contracts jump more than 5% higher Thursday; corn moves moderately higher
The global threat that has been simmering for the past several weeks is now a reality: Russia has invaded Ukraine. The impact to commodity prices were immediate. CBOT wheat contracts quickly went limit-up overnight and spent most of Thursday’s session at that level. Corn also went limit-up but trimmed those gains to around 1% by the close. And soybeans saw a 1% decline after some technical selling and profit-taking pushed prices into the red.
Much of the Plains will be completely dry between Friday and Monday, while there’s a chance of additional rain or snow along the eastern Corn Belt during this time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts warmer-than-normal conditions returning to the lower Midwest between March 3 and March 9, with
On Wall St., the official Russian invasion of Ukraine spooked investors and pushed the Dow down 408 points in afternoon trading to 32,723. In contrast, some bargain-buying on the Nasdaq helped lift that index 178 points higher to 13,215. Energy prices spiked overnight but settled into more moderate gains today. Crude oil shifted 0.6% higher this afternoon to stay above $92 per barrel. Diesel jumped nearly 2% higher, with gasoline up around 1.5%. The U.S. Dollar firmed substantially. (Also worth noting – the Russian ruble hit a record low against the U.S. Dollar earlier today.)
How will war in Eastern Europe affect your business? It’s an important question to be asking today, according to Bill Biedermann, hedging strategist with AgMarket.net. “This may have a significant impact on food, fuel, and shipping sectors,” he offers, for starters. Biedermann goes into much greater analysis in today’s Ag Marketing IQ blog – click here to learn more.
On Wednesday, commodity funds were net buyers of all major grain contracts, including corn (+15,000), soybeans (+17,000), soymeal (+9,000), soyoil (+2,000) and COT wheat (+15,000). It was the second consecutive session where funds were net buyers of these five commodities.
Corn
Corn prices tested limit-up gains overnight but cooled off as Thursday’s session progressed and traders digested as much news as they could about Russia’s invasion into Ukraine. Prices ultimately closed 1% higher from a day ago, with March futures rising 6.75 cents to $6.9050 and May futures adding 5 cents to $6.8625.
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 on Thursday.
At this week’s Ag Outlook Forum, USDA offered fresh estimates on 2022 acreage estimates. Corn plantings are expected to fall from 93.4 million acres in 2021 to 92.0 million acres. In contrast, soybean plantings are expected to improve from 87.2 million acres last year to 88.0 million acres in 2022. Prior to the USDA estimates, analysts expected the agency to show projected corn acres at 91.8 million and soybean acres at 89.2 million acres. Click here for more exclusive coverage from Farm Futures grain market analyst Jacqueline Holland.
USDA expects U.S. farm exports to see a record-high value of $183.5 billion in FY 2022. The top two destinations of U.S. agricultural goods this year are expected to be China ($36.0 billion) and Mexico ($27.0 billion).
Ethanol production shifted higher for the second consecutive week, per the latest data from the U.S. Energy Information Administration. Production averaged 1.024 million barrels per day during the week ending February 18, up from a daily average of 1.009 million barrels a week earlier.
Ahead of tomorrow morning’s export report from USDA, analyst expect to see corn sales ranging between 19.7 million and 47.2 million bushels for the week ending February 17.
The European Commission raised its forecast for 2021/22 EU corn production to 2.854 billion bushels, up 5.1% from its prior projection. EU corn import estimates for the current marketing year are unchanged, at 570.8 million bushels – however, it should also be noted that Ukraine is the EU’s top corn supplier.
Preliminary volume estimates were for 866,454 contracts, which nearly doubled Wednesday’s final count of 449,852.
Soybeans
Soybean prices stumbled on a round of technical selling and profit-taking Thursday after testing big overnight gains. Soymeal prices also sagged more than 1% lower, while soyoil prices jumped to record highs on global vegetable oil supply concerns. For soybeans, March futures dropped 16 cents to $16.59, while May futures lost 18.25 cents to $16.5275.
Soybean basis bids tumbled 16 to 25 cents lower at two interior river terminals on Thursday while firming 2 cents higher at an Ohio elevator and holding steady elsewhere across the central U.S.
Ahead of tomorrow morning’s export report from USDA, analysts think the agency will show soybean sales ranging 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, plus 8,000 MT to 60,000 MT of soyoil sales.
Preliminary volume estimates were for 460,742 contracts, moving well above Wednesday’s final count of 351,365.
Wheat
Wheat prices soared on worries that Russia’s invasion of Ukraine will dampen export abilities for both countries – which combined account for nearly 30% of the world’s wheat exports. March Chicago SRW futures jumped 49.75 cents to $9.2575, March Kansas City HRW futures climbed 39.5 cents to $9.53, and March MGEX spring wheat futures rose 25.5 cents to $10.2650.
The Ukrainian military has 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 grain exports tend to be around 5 to 6 million metric tons per month.
USDA projects all-wheat plantings for 2022/23 will reach 48 million acres, trending 1.3 million acres higher than 2021/22 totals, fi realized. Favorable prices are expected to keep wheat acres on the rise for the time being. If production reaches USDA’s estimate of 1.940 billion bushels next season, that would bump up 2022/23 ending stocks to 731 million bushels.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-Mar
718.75
682
695
6.75
22-May
716.25
679
690.25
5
Soybeans
22-Mar
1765
1656
1661.5
-16
22-May
1759.25
1648.25
1654
-18.25
Soymeal $/ton
22-May
487
453.4
455.6
-10.5
Soyoil cents/lb
22-May
74.58
70.51
71.97
1.27
Wheat $/bushel
22-Mar
926
877.25
926
49.75
22-May
934.75
885.5
934.75
48
KC Wheat
22-Mar
963.5
912.25
963
39.5
22-May
968
917
966
38
MPLS Wheat
22-Mar
1100
997.5
1030
25.5
22-May
1062.75
998.25
1020.25
12.75
Live Cattle cents/lb
22-Feb
143
140.1
140.1
-2.95
Feeder Cattle cents/lb
22-Apr
166.05
162.025
163.8
-4.475
Lean Hogs cents/lb
22-Apr
114.125
110
110.35
-2.3
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Mar
100.54
91.45
92.94
0.84
Diesel
22-Mar
3.0474
2.8427
2.9076
0.0784
Unleaded Gasoline $/gallon
22-Mar
2.9149
2.7262
2.7808
0.0555
Natural Gas
22-Apr
4.938
4.588
4.643
0.05
U.S. Dollar Index
22-Mar
97.735
96.255
97.125
0.937
Gold $/ounce
22-Mar
1976.5
1878.6
1880
-29.4
Copper
22-Feb
4.4785
4.4785
4.4785
-0.003
Fertilizer Swaps
(as of 02/18)
DAP Tampa-index
835.0
25
DAP-New Orleans
837.8
33
Urea-New Orleans
584.2
-22
Urea-Middle East
600.0
-65
Urea-Black Sea
550.0
-110
UAN (32%) New Orleans
606.3
0
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