- HEADLINES: Russian invasion of Ukraine dominates over everything. Market volatility rises dramatically. soybeans give back overnight gains and close lower: Chicago corn doesn’t know whether to follow wheat/soybeans: World wheat markets leap as much as $60-80/mt.
- The US/NATO imposed economic sanctions today which did not include energy or food. The sanctions targeted Russian banks, high profile individuals, and technology, which was something of a surprise. When/if the Russians place their own political leader into the Ukraine presidency/vice presidency, and produce calm across the country, it is possible that Black Sea grain exports could return. We obviously have no way of knowing whether Ukraine grain would be subject to Russian export taxes, but it is the speed with which Ukraine is overrun which would be key. Note that Black Sea wheat exports are in seasonal decline through June, it is July when Black Sea wheat exports return to prominence.
- Soybean futures rallied to strong overnight gains, reaching $17.65 for an intraday high and stopping short of the 2012 high before ending 13 cents lower. Meal closed lower across the board after trading at the highest price since 2014, while spot soybean oil set a new record high of 74.72 cents/lb.
- The USDA Outlook Forum estimated US soybean planted acres at 88 million acres, just 800,000 more than last year but the largest since 2018. In the last 17 years, acreage in the Planting Intentions report was lower than the Outlook Forum by an average of 1.3 million acres. Recently, acres have declined in the last four consecutive years by an average of 1.3 million. We currently look for a 1 million acre increase this year to 89 million acres on rising fertiliser prices (corn more costly to grow). Right now, our long-held price targets have been reached, but the world has changed with the Russian invasion. Our long-term view stays bullish with extreme volatility.
- Old-crop corn futures were as much 7 cents higher while new-crop contracts dropped as much as 7 cents. Fear of a disruption in old-crop Ukraine exports supported the nearby contracts but a sharp drop in soybean futures dragged new-crop corn contracts lower. It is estimated that there remains a total of 19.3 million mt of Ukrainian corn exports left to ship this marketing year (which ends Sep 30).
- A Turkish cargo ship in the Black Sea was damaged by a munition (presumably launched from a Russian plane) off the Ukraine port of Odessa. Turkey, who is a member of NATO, has expressed support for Ukraine’s territorial integrity. Ukraine has requested that Turkey bar Russian warships passage through Turkey’s Bosporus to the Black Sea.
- Doubts about Ukraine’s ability to ship old-crop corn could trump S American crop prospects for the next few weeks but then S American weather will return as the market’s primary focus.
- Global wheat futures set new highs today, a day on which the world wheat market saw its most serious geopolitical event since the Soviet Wheat Embargo (1980). CME and KC old-crop contracts were up 40-50 cents, MGE old-crop was up 17-29 cents. Matif wheat jumped $60 mt but closed at the midpoint of the daily range after leaving a huge gap on the chart. Egypt’s GASC’s only bid today was $80 mt above last week.
- As of Feb 28, it is estimated that the combined wheat exports from Russia and Ukraine (from all their ports and barge or rail border points) was 38.1 million mt. That is down 17% from a year ago. Based on USDA’s projections for the entire year, that leaves 18.5 million mt left to ship by June 30. Not all of Ukraine’s and Russia’s exports are shipped from their Black Sea ports, but the huge majority or their exports do originate from the Black Sea. There are two questions regarding this situation: 1) will importers be willing to purchase that much wheat from Ukraine/Russia over the next 4 months; or 2) will Ukraine/Russia be able to ship that much wheat.
- Geopolitics is driving the wheat market.