Russian tensions send grains surging. (Comments are updated by 7:30 a.m. Central Time.)
Markets attempt to anticipate grain, energy trade impacts from latest Russian advances
Corn up 1-7 cents
Soybeans mixed; Soymeal mixed; Soyoil up $1.21 /lb
Chicago wheat up 10-11 cents; Kansas City wheat up 13-14 cents; Minneapolis wheat up 8-9 cents
*Prices as of 7:00am CST.
Russia – Ukraine
Overnight, Germany said it would halt production on the Nord Stream 2 natural gas pipeline after Russian president Vladimir Putin ordered troops to move into breakaway regions of Eastern Ukraine yesterday. The move marks a stark retaliation of the West against Moscow’s latest actions.
Energy prices soared, with crude oil prices reaching nearly seven-and-a-half year highs this morning on the news. Natural gas prices held steady on the news this morning, though more price appreciation will likely hit the sector in the coming weeks.
The U.S. slapped trade sanctions on any companies or individuals seeking to pursue investments in Eastern Ukraine yesterday, though the State and Treasury departments, as well as counterparts in Europe, are still working to determine sanctions that match the severity of Russia’s invasion of Ukraine.
U.S. natural gas exporters became the largest global supplier of LNG in December 2021 as shipments to Europe boomed amid tight supply levels. Russia is a key global producer of natural gas, so the Nordic Stream 2 pipeline stoppage will have significant consequences for natural gas consumers around the world.
Furthermore, the surging tensions between Russia and the West in Ukraine will likely limit wheat, corn, and sunflower trading in the Black Sea region. Russia and Ukraine comprise 29% of the world’s wheat exports, 19% of corn exports, and 80% of global sunflower oil shipments.
“Disruptions in supplies from the Black Sea region will impact overall global availability,” Phin Ziebell, agribusiness economist at National Australia Bank, told Reuters. “Buyers in the Middle East and Africa will be seeking alternative sources.”
“Ships are avoiding entering the Black Sea because of the war risk,” one Singapore-based trader told Reuters. “Supply disruptions are already taking place.”
The U.S. and Canada stand to gain from the Black Sea trade disruptions, but it will come at a steep cost to consumers as global food inflation values continue to rise.
Corn
Corn prices rose overnight by $0.01-$0.06/bushel on rising geopolitical tensions in Ukraine. Old crop futures saw the most significant price bump as U.S. export prospects strengthened on potential disruptions to grain flows in the Black Sea. Ukraine is the world’s fourth largest corn exporter.
Speculative investors have increased interest in corn futures and options, adding more bullish price pressure to the corn complex. Surging energy prices and continued weather issues in South America are also playing into pricing dynamics in the corn market this morning.
Soybeans
Soybean prices were mixed at last glance as global tensions with Russia propelled a rally in the edible oils and energy markets. Drought continues to hamper yields in South America, though Southern Brazil will likely see a reprieve from rains this week, allowing harvest to continue unhindered.
Old crop futures rested comfortably above the $16/bushel benchmark this morning while new crop futures edged a few pennies lower.
China announced overnight it would be auctioning off state reserves of soybeans, though few other details were provided. “Soybean arrivals in February might be lower than previously estimated while arrivals won’t be big in March either. The situation could last until April,” Zhu Rongping, agriculture analyst at commodity consultancy Mysteel, told Reuters.
Soyoil prices surged this morning as doubts about Ukrainian trade flows amid escalating tensions between Russia and the West continue to roil markets. Soymeal markets were unphased by frigid temperatures in the Plains and Upper Midwest today.
ADM said overnight that it set a new record for the largest soybean shipment exported out of a Northern Brazil port. At the Ponta da Montanha Grain Terminal (TGPM) in Barcarena, ADM loaded out 3.12 million bushels of soybeans onto a single cargo vessel.
ADM told Reuters that it was the largest volume the company has ever loaded out of an Amazon Basin grain terminal. While it marks a bullish sign for soybean markets, the move shows that Brazilian shipping logistics are becoming efficient enough to compete with American soybean exporters.
“This showed us that we have one more option to move soybeans through the TGPM, using our own vessel… This is definitely something we will do again more often”, ADM’s South America Logistics Director, Vitor Vinuesa, said in a statement.
Wheat
The dollar weakened overnight as global tensions with Russia mounted. Grain flow disruptions are being weighed as the world anticipates Russia’s next actions in Ukraine, sending wheat prices soaring this morning. Chicago soft red winter wheat futures surged past $8/bushel on the prospect.
“The Russia-Ukraine situation is getting serious,” one Singapore-based grains trader told Reuters overnight. “The issue will dominate trading direction.”
Inputs
The agriculture world was rocked last week when Bayer issued a letter to growers notifying them that Roundup and RangerPro products would potentially be back-ordered through this spring after a supplier issue. Bayer declared force majeure, stating that farmers could not hold the German pesticide manufacturer legally liable for delayed chemical deliveries.
In my latest E-corn-omics column, I break down some of the fundamental factors driving tight chemical supplies and soaring prices, as well as strategies to handle this new operating environment.
Farmers may need to hunt for available pre-blends, resort to conventional applications, or load up on pre-emergence treatments and go back and spot spray problem areas to combat the higher costs and availability issues. Before the season ramps up, pencil out a quick analysis of how each scenario could play out on your farm because it’s not certain how the chemical supply situation will play out.
Acreage forecasts heading into the 2022 growing season have been murky at best, reflecting the rampant price volatility on both the cost and revenue side of farm production this year. The key factor impacting acreage this year, according to the January 2022 Farm Futures survey, will likely be input costs.
Wholesale nitrogen costs have eased since the beginning of 2022, though those price breaks have been slow to trickle down to the retailer level as of mid-February. Our team’s survey results suggest that high input costs will lead to higher soybean acreage in to 2022. But if retailer prices do fall in the weeks leading up to planting, corn acres could see a bump.
At any rate, grain prices remain high enough to cover the rising input costs for the time being. Capitalizing on these bullish markets is a sure way to lock in 2022 profits even before the crop is in the ground. Of course, weather will always have the last say in how the chips fall. But even with heightened uncertainty, farming continues to have an optimistic – and profitable – future in 2022.
Weather
It will be bitterly cold in the Plains and Upper Midwest today, according to NOAA’s short-range forecasts. Snow showers will hover over the West-Central Plains over the next couple days as another winter storm system hovers over the Upper Midwest today.
Meanwhile, warmer temperatures in the Eastern Corn Belt will bring rain today from the winter snow system traversing across the Midwest, dropping over an inch of precipitation in its wake.
Financials
Stock markets drifted lower on rising concerns about a Russian invasion into Ukraine. S&P 500 futures edged 2.25 points (0.05%) lower to $4,341.25 at last glance on the overarching sentiments.
It’s National Margarita Day! And also, the best palindrome date EVER! I hope you observe both accordingly and safely!
Earnings season updates:
JBS backs down from an offer to buy the remaining shares it doesn’t already own of Pilgrim’s Pride.
Deere’s profit outlook soars on farm machinery demand boom.
Also worth a read on our website, FarmFutures.com:
Roger Wright explains why prices change after a hedge-to-arrive contract rolls.
Brian Splitt compares market dynamics of 2008 and current day, hinting at a drop in prices for the soybean market.
Darren Frye explains how elevators make money in the latest Finance First column.
Jacqui Fatka calls for the end of food culture wars.
Morning Ag Commodity Prices – 2/22/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
6.7175
6.5775
6.6125
0.07
1.07%
MAY ’22 CORN
$ / BSH
6.695
6.5625
6.59
0.0625
0.96%
JUL ’22 CORN
$ / BSH
6.6275
6.5
6.52
0.05
0.77%
SEP ’22 CORN
$ / BSH
6.1925
6.0975
6.1225
0.035
0.57%
DEC ’22 CORN
$ / BSH
6.06
5.9825
5.99
0.0125
0.21%
MAR ’23 CORN
$ / BSH
6.1225
6.055
6.0575
0.01
0.17%
MAY ’23 CORN
$ / BSH
6.155
6.085
6.0925
0.01
0.16%
MAR ’22 SOYBEANS
$ / BSH
16.32
16.05
16.05
0.035
0.22%
MAY ’22 SOYBEANS
$ / BSH
16.33
16.0575
16.0575
0.0225
0.14%
JUL ’22 SOYBEANS
$ / BSH
16.295
16.035
16.035
0.025
0.16%
AUG ’22 SOYBEANS
$ / BSH
15.9175
15.6975
15.6975
0.0425
0.27%
SEP ’22 SOYBEANS
$ / BSH
15.2025
14.9925
14.99
0
0.00%
NOV ’22 SOYBEANS
$ / BSH
14.83
14.6225
14.625
-0.0125
-0.09%
JAN ’23 SOYBEANS
$ / BSH
14.8
14.5975
14.5975
-0.02
-0.14%
MAR ’23 SOYBEANS
$ / BSH
14.5
14.305
14.34
0.0025
0.02%
MAY ’23 SOYBEANS
$ / BSH
14.3625
14.2725
14.345
0.1125
0.79%
MAR ’22 SOYBEAN OIL
$ / LB
69.9
67.87
68.8
1.23
1.82%
MAY ’22 SOYBEAN OIL
$ / LB
69.9
67.9
68.79
1.18
1.75%
MAR ’22 SOY MEAL
$ / TON
454.2
446.5
446.5
-1.4
-0.31%
MAY ’22 SOY MEAL
$ / TON
451.4
443.7
444
-1.7
-0.38%
JUL ’22 SOY MEAL
$ / TON
450.5
443
443.2
-1.9
-0.43%
AUG ’22 SOY MEAL
$ / TON
441.3
435.1
435.1
-2.5
-0.57%
SEP ’22 SOY MEAL
$ / TON
430.7
427.6
428
0.1
0.02%
MAR ’22 Chicago SRW
$ / BSH
8.2425
8.06
8.06
0.09
1.13%
MAY ’22 Chicago SRW
$ / BSH
8.3175
8.1375
8.1375
0.0975
1.21%
JUL ’22 Chicago SRW
$ / BSH
8.27
8.1
8.1
0.0925
1.16%
SEP ’22 Chicago SRW
$ / BSH
8.2725
8.11
8.115
0.09
1.12%
DEC ’22 Chicago SRW
$ / BSH
8.3075
8.1475
8.15
0.0825
1.02%
MAR ’22 Kansas City HRW
$ / BSH
8.65
8.4975
8.4975
0.145
1.74%
MAY ’22 Kansas City HRW
$ / BSH
8.705
8.545
8.545
0.145
1.73%
JUL ’22 Kansas City HRW
$ / BSH
8.695
8.5425
8.5425
0.135
1.61%
SEP ’22 Kansas City HRW
$ / BSH
8.7175
8.585
8.585
0.14
1.66%
DEC ’22 Kansas City HRW
$ / BSH
8.78
8.6425
8.6425
0.125
1.47%
MAR ’22 MLPS Spring Wheat
$ / BSH
9.7775
9.6825
9.69
0.0825
0.86%
MAY ’22 MLPS Spring Wheat
$ / BSH
9.8
9.6675
9.7075
0.095
0.99%
JUL ’22 MLPS Spring Wheat
$ / BSH
9.755
9.6375
9.6475
0.08
0.84%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.46
9.3975
9.41
0.11
1.18%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.4
9.38
9.3975
0.1575
1.70%
MAR ’21 ICE Dollar Index
$
96.25
95.83
95.945
-0.075
-0.08%
MA ’21 Light Crude
$ / BBL
96
90.35
93.85
2.78
3.05%
AP ’21 Light Crude
$ / BBL
94.95
89.06
93.08
2.87
3.18%
MAR ’22 ULS Diesel
$ /U GAL
2.9098
2.76
2.8776
0.0961
3.45%
APR ’22 ULS Diesel
$ /U GAL
2.8695
2.7237
2.8374
0.0881
3.20%
MAR ’22 Gasoline
$ /U GAL
2.802
2.65
2.7664
0.0968
3.63%
APR ’22 Gasoline
$ /U GAL
2.9375
2.7931
2.9054
0.0935
3.33%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
165.425
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
170.85
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
143.25
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
145.875
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
109.4
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
113.35
0
0.00%
FEB ’22 Class III Milk
$ / CWT
20.86
#N/A
20.9
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.4
#N/A
22.4
0
0.00%
APR ’22 Class III Milk
$ / CWT
22.6
#N/A
22.81
0
0.00%
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