- HEADLINES: Chicago races higher to add back war premium ahead of the USDA stocks/seeding report; China active booking US soybeans.
- War on/War off — Today the war is on.
- Putin continues to send rocket bombardments into Ukraine and shows no willingness to slow or shift Russia’s military action, contrary to all the talk on Tuesday. The peace talks have broken down and most sources doubt that either president will be willing to speak face-to-face as trust has been lost. Chicago is adding back the war premium that was extracted yesterday on almost a 1:1 basis ahead of the NASS Stocks/Seeding report on Thursday. Putin and the Russians appear resolute in turning Ukraine into a pile of rubble with troops unable to take much Ukraine ground amid fierce fighting and the flow of NATO member military aid to Ukrainian troops. The war is a stalemate except for the structural loss that is produced by Russia’s artillery.
- Chicago grain futures are sharply higher at midday on the addition of war premium. The Ukraine spring planting season has started. And increasingly, Russia is taking aim on energy and export facilities that will cripple the county’s economy for months to come. Russia is taking a long view of the war.
- Chicago brokers estimates that managed money has bought 9,300 contracts of corn, 7,600 contracts of soybeans, and 4,300 contracts of wheat. In the soy products, funds have bought 3,200 contracts of soyoil and 2,900 soymeal.
- The USDA reported the sale of 128,000 mt of soybeans to Mexico this morning. There are also rumours that China has booked 8-12 cargoes of US soybeans for both old and new crop on the break. Private Chinese buyers may have also secured a few cargoes of US corn as import margins returned. Private Chinese buyers are the ones that were stuck in cancelled Ukraine contracts that amounted to more than 6 million mt. The Chicago break stimulated Chinese interest. Additional buying will step forward on any bearish USDA reaction Thursday.
- Questions abound on Ukraine infrastructure and how quickly that damaged ports could come back online. Commercial sources are rather downbeat on Ukraine being able to return as a significant importer until a new crop position. The Odessa port endured considerable damage last week and some fear that it could take 6-12 months of repair to bring any of the loaders or grain storage back online. And the fear remains that Russia could target the port again in the future which could render it useless. Ukraine can only rail 600,000 mt of grain per month to the west. Ocean ports are out of action for months.
- And mines continue to complicate shipping in the Black Sea with few wanting to insure cargoes in a war zone. If a mine downed a ship in Turkey’s Bosporus it would take months to remove and snarl Black Sea shipments. The Russian war is causing new complications for Black Sea energy, grain, or metal transit. This adds another layer of angst for importers and users that are looking to others for their needed supply.
- The midday GFS weather forecast is consistent. Limited rains are forecast for the Western Plains with 2 systems producing 0.5-2.50” for the E Plains and the Midwest. A secondary shift of cold air drops southward into the Plains during the 11–15-day period with Plains dryness maintained.
- The Russian war is back on in full force as the latest peace attempt failed. The lack of trust and ongoing Russian bombardment of Ukraine will make it difficult for any member of NATO to drop sanctions if Putin is the Russian President. The USDA Stocks/Seeding Report is less than 24 hours away and position squaring will be featured into Thursday. However, with the war back on it makes it difficult to sustain any lasting bearish trend heading into a new Northern Hemisphere growing season. We hold to a bullish outlook on Chicago with the weather risks growing as Ukraine farmers struggle to seed spring crops. The duration of the war is a key price price driver.