New highs notched across the grain and oilseed complex as Russia launches a full invasion into Ukraine
Plus – a preview of this morning’s USDA Ag Outlook Forum
Corn up 22-35 cents
Soybeans up 30-80 cents; Soymeal up $19.20; Soyoil up $3.66/lb
Chicago wheat up 50 cents; Kansas City wheat up 50 cents; Minneapolis wheat up 60-63 cents
*Prices as of 2:00am CST.
Good morning – Today’s newsletter deviates from the usual format in light of last night’s Russian invasion into Ukraine. Today you’ll find all the key highlights of the Russian invasion (as of 2:00am CST) as well as potential grain, oilseed, energy, and financial market impacts.
I’ve been following feeds on the Wall Street Journal and Bloomberg for the latest market information. Additionally, the Associated Press (AP) and Reuters are also providing valuable insights from on the ground sources. Good reporting matters and these outlets are doing a stellar job of covering these issues.
Breaking overnight
Russian president Vladimir Putin announced late last night that Russian troops would begin advancing on the Eastern Ukrainian region of Donbas as part of a “special military operation” as well as executing missile attacks on other areas at the Ukrainian-Russian borders.
Map courtesy of Wall Street Journal
U.S. president Joe Biden deemed it an “unprovoked and unjustified attack by Russian military forces.”
“President Putin has chosen a premeditated war that will bring a catastrophic loss of life and human suffering,” Biden said in a statement issued overnight. “Russia alone is responsible for the death and destruction this attack will bring, and the United States and its allies and partners will respond in a united and decisive way.”
Explosions, believed to be from missile attacks, were reported in the Ukrainian capital of Kyiv last night as well as other parts of Ukraine. Ukrainian President Volodymyr Zelenskyy pleaded with the Kremlin yesterday to prevent a war, but his calls went unanswered.
“The Ukrainian people want peace,” Zelenskyy pleaded to no avail. Zelenskyy ordered martial law across Ukraine as citizens close to explosions were ordered to seek shelter. The airspace above Kyiv was closed off to prevent further conflicts with potential Russian missiles.
What to expect in the markets today
In short, major price movement, largely derived from the Russian-Ukrainian conflict. USDA’s first look at 2022/23 balance sheets could potentially also move markets (see preview below or on our website for more details), though expect much of the market focus to remain centered on Ukraine.
The U.S. and other countries issued soft sanctions in response to Russia earlier this week. Biden spoke with Zelenskyy overnight and assured the Ukrainian president that the U.S. and its allies “will be imposing severe sanctions on Russia.” Expect harsher sanctions today, with Congress potentially revoking Russia’s access to the dollar after a meeting scheduled for this afternoon.
Potential sanctions expected today that would be a significant increase in severity relative to those levied earlier this week include sanctions on large Russian banks, bans on Russian energy projects, and export bans.
The Russian economy has already suffered from previous sanctions levied during the 2014 annexation of the Crimean Peninsula. These more stringent measures could further cripple the country’s economy, especially at a time of soaring global inflation.
Here’s a great podcast from the Wall Street Journal on how sanctions could impact Russia and the global economy (and dairy farmers). It explains the impacts of kicking Russia out of trading in U.S. dollars – which is highly relevant to global grain flows – in one of the best formats I’ve heard/read in the past couple days.
Spoiler alert – kicking Russia off the dollar could be painful in the short run, but it could open the door to more international trading denominated in yuan – China’s currency. I cannot recommend this podcast episode enough for fellow market watchers.
Overnight, Australia slapped Russian operatives in Putin’s inner circle with a new round of sanctions. The German foreign minister noted that additional sanctions against Russia would be forthcoming. U.K. prime minister Boris Johnson said that its allies will “respond decisively” to Russia’s invasion. Even China, who is widely believed to be economically partnered with Russia, called for Russian restraint in Ukraine.
Equity indices across the world tumbled overnight as Russia began advancing into Ukraine. S&P 500 futures took as much as a 2.5% hit overnight while Nasdaq stocks fell 3% at one point. Euro Stoxx also opened 3% lower overnight.
Crude oil futures surged past $100/barrel for the first time since 2014. Russia is one of the world’s largest oil producers. It is increasingly likely the U.S. will release strategic oil reserves to offset the soaring prices following Russia’s invasion into Ukraine.
At the farmgate, nearby futures contracts for corn, soft red winter wheat in Chicago, and hard red winter wheat in Kansas City all triggered circuit breakers overnight after rising to daily limits. Many of you are waking up this morning to $7 corn, $17 soybeans, $9 SRW, and $10 spring wheat.
Corn hit an eight-month peak overnight. SRW reached a nine-year high and HRW notched an 11-year high in overnight trading. Soybeans nearly traded up the limit to a nine-and-a-half year high.
Russia and Ukraine are slated to be the second and fourth largest global wheat exporters in 2021/22. Ukraine is the world’s fourth largest corn exporter. It also produces 70% of global sunflower export supplies at a time when global edible oil stocks are growing increasingly scarce.
The Russian invasion will likely curb any hopes U.S. farmers may have for lower fertilizer prices as the conflict is likely to tighten global trade flows. Russia trails Canada as the world’s second largest potash producer.
Natural gas prices surged up to 6% higher overnight. Russia is a key player in the global natural gas trade, so the ongoing conflict will likely lead to higher – not lower – fertilizer production costs that will inevitably be passed down to the farmgate.
Keep an eye on China today. I would not be surprised if China ramped up its rhetoric on limiting grain and oilseed imports in the coming days as it strategically aligns itself with Russia.
China has issued statements of support for Russia in recent days, especially as Russia condemned past actions of the U.S. in his Monday night speech. That could trigger bearish price action in the grain markets, so be ready for that possibility.
Also happening today in the markets
USDA kicks off its annual Agricultural Outlook Forum this morning at 7am CST. USDA’s 2022 Commodity Outlook reports will be released to the public at 6am CST.
We are publishing the morning newsletter early today so our team can focus on the latest USDA data as it is released. There will not be any information about the outlooks in today’s morning newsletter but keep an eye on our website (FarmFutures.com) for coverage on the report’s release over the next couple hours.
And if you can’t wait for our analysis, you can read USDA’s 2022 Commodity Outlooks – which feature USDA’s first guess at 2022 acreage – at the Office of the Chief Economist website here.
In the meantime, here is what you can expect from today’s AOF sessions, which will feature USDA’s first look at 2022/23 corn, soybean, and wheat production and demand forecasts in the 6am CST release of the commodity outlook reports. I provided a more in-depth preview of today’s reports on our website, so check it out here if you want to nerd out with me this morning!
Keep in mind that these are unofficial balance sheet forecasts, which means that National Agricultural Statistics Service surveys were not used to calculate acreage. Rather, USDA will use economic models and forecasting to calculate today’s figures. These are not the preferred methods USDA uses to forecast balance sheet estimates, thus why they are deemed unofficial.
Morning Ag Commodity Prices – 2/24/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
7.1875
6.82
7.1875
0.35
5.12%
MAY ’22 CORN
$ / BSH
7.1625
6.79
7.1625
0.35
5.14%
JUL ’22 CORN
$ / BSH
7.095
6.7225
7.095
0.35
5.19%
SEP ’22 CORN
$ / BSH
6.595
6.2725
6.595
0.3075
4.89%
DEC ’22 CORN
$ / BSH
6.395
6.0975
6.395
0.2825
4.62%
MAR ’23 CORN
$ / BSH
6.4475
6.1625
6.445
0.265
4.29%
MAY ’23 CORN
$ / BSH
6.455
6.19
6.455
0.24
3.86%
MAR ’22 SOYBEANS
$ / BSH
17.585
16.69
17.55
0.8
4.78%
MAY ’22 SOYBEANS
$ / BSH
17.5375
16.645
17.49
0.78
4.67%
JUL ’22 SOYBEANS
$ / BSH
17.34
16.5325
17.305
0.705
4.25%
AUG ’22 SOYBEANS
$ / BSH
16.82
16.1125
16.81
0.635
3.93%
SEP ’22 SOYBEANS
$ / BSH
15.905
15.2725
15.8825
0.5275
3.44%
NOV ’22 SOYBEANS
$ / BSH
15.37
14.78
15.3525
0.4775
3.21%
JAN ’23 SOYBEANS
$ / BSH
15.3075
14.7475
15.2775
0.4325
2.91%
MAR ’23 SOYBEANS
$ / BSH
14.9575
14.44
14.8875
0.345
2.37%
MAY ’23 SOYBEANS
$ / BSH
14.7575
14.3825
14.7275
0.3
2.08%
MAR ’22 SOYBEAN OIL
$ / LB
74.72
70.65
74.38
3.66
5.18%
MAY ’22 SOYBEAN OIL
$ / LB
74.58
70.51
74.57
3.99
5.65%
MAR ’22 SOY MEAL
$ / TON
493.1
469.4
490.3
19.2
4.08%
MAY ’22 SOY MEAL
$ / TON
487
463.9
484
18
3.86%
JUL ’22 SOY MEAL
$ / TON
481.7
461.1
478.7
15.2
3.28%
AUG ’22 SOY MEAL
$ / TON
468.5
452
465.5
12.7
2.80%
SEP ’22 SOY MEAL
$ / TON
453.4
437
450.6
11.8
2.69%
MAR ’22 Chicago SRW
$ / BSH
9.26
8.7725
9.26
0.5
5.71%
MAY ’22 Chicago SRW
$ / BSH
9.3475
8.855
9.3475
0.5
5.65%
JUL ’22 Chicago SRW
$ / BSH
9.2875
8.795
9.2875
0.5
5.69%
SEP ’22 Chicago SRW
$ / BSH
9.2475
8.7525
9.2475
0.5
5.72%
DEC ’22 Chicago SRW
$ / BSH
9.265
8.77
9.265
0.5
5.70%
MAR ’22 Kansas City HRW
$ / BSH
9.635
9.1225
9.635
0.5
5.47%
MAY ’22 Kansas City HRW
$ / BSH
9.68
9.17
9.68
0.5
5.45%
JUL ’22 Kansas City HRW
$ / BSH
9.6625
9.1525
9.6625
0.5
5.46%
SEP ’22 Kansas City HRW
$ / BSH
9.665
9.16
9.665
0.5
5.46%
DEC ’22 Kansas City HRW
$ / BSH
9.7025
9.2
9.7025
0.5
5.43%
MAR ’22 MLPS Spring Wheat
$ / BSH
10.64
9.975
10.64
0.63
6.29%
MAY ’22 MLPS Spring Wheat
$ / BSH
10.6275
9.9825
10.6275
0.6
5.98%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.605
9.97
10.605
0.6
6.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.35
9.6975
10.2875
0.53
5.43%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.3
9.6775
10.3
0.57
5.86%
MAR ’21 ICE Dollar Index
$
96.765
96.255
96.585
0.397
0.41%
AP ’21 Light Crude
$ / BBL
98.46
92.5
97.26
5.16
5.60%
MA ’21 Light Crude
$ / BBL
96.49
91.07
95.39
4.7
5.18%
MAR ’22 ULS Diesel
$ /U GAL
2.9723
2.8427
2.9532
0.124
4.38%
APR ’22 ULS Diesel
$ /U GAL
2.9445
2.8015
2.9136
0.1202
4.30%
MAR ’22 Gasoline
$ /U GAL
2.8644
2.7262
2.8459
0.1206
4.43%
APR ’22 Gasoline
$ /U GAL
3.02
2.879
2.9937
0.1177
4.09%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
162.775
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
168.275
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
143.05
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
144.75
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
108.025
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
112.65
0
0.00%
FEB ’22 Class III Milk
$ / CWT
20.89
#N/A
20.89
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.72
22.25
22.66
0.64
2.91%
APR ’22 Class III Milk
$ / CWT
23.23
22.92
23.23
0.75
3.34%
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Russian invasion triggers circuit breakers for corn, wheat. (Comments are updated by 7:30 a.m. Central Time.)
