Posted on February, 18, 2022 at 09:03 am
Wheat for March delivery rose 2.2% to $7.98 a bushel on the Chicago Board of Trade on Thursday, in reaction to the situation at the Russia-Ukraine border worsening ahead of a three-day weekend in the U.S.
--Corn for March delivery rose 0.5% to $6.50 a bushel.
--Soybeans for March delivery rose 0.3% to $15.92 a bushel.
HIGHLIGHTS
Worsening Situation: "Wheat leads the Ag sector higher ... as traders worry that war may be imminent in Ukraine, which may shut down trade from the region," said Arlan Suderman of StoneX. Russia and Ukraine are major sources for wheat exports. The Wall Street Journal reported that Ukrainian buildings have been damaged by pro-Russian shelling, with Russian-backed separatists and authorities in Kyiv trading accusations over cease-fire violations along the front line separating the two sides.
Dry Spell: The Russia-Ukraine border tensions and a new purchase of wheat by Egypt's grain-buying authority supported wheat futures, but so did new forecasts by government agencies for dry weather in the U.S. "Still no improvement ahead for the Plains," said Rich Nelson of Allendale. "Spring rains are the largest determinant of winter wheat yields." The latest NOAA forecasts show a new outlook of warmer-than-usual temperatures in U.S. growing areas, as well as a continued dry outlook in wheat-growing areas like Kansas and Colorado.
Defensive Posture: Grain traders took a largely cautious stance, with uncertainty in Russia coming ahead of a holiday weekend in the U.S. "Traders understand a 3-day U.S. weekend provides extra time to be in a wrong position should Russian President Putin decide to step across the Ukraine border," said AgResource. "Cutting market risk will be their focus thru Friday amid uncertain geopolitical moves." Markets will be closed on Monday in observance of Presidents Day.
INSIGHTS
As Expected: Export sales of U.S. grains fell within the expectations of traders surveyed by The Wall Street Journal this week. The USDA reported that for the week ended Feb. 10, export sales of soybeans totaled 2.89 million metric tons across the 2021/22 and 2022/23 marketing years. Corn sales totaled 933,500 tons and wheat sales totaled 118,100 tons in 2021/22. "Year to date commitments for soybeans, corn, wheat, and soybean oil are still lagging year ago," said Terry Reilly of Futures International.
Barge Backup: A slowdown in barge traffic on U.S. rivers continues to be snarled by winter weather, the USDA said. In its latest grain transportation report, the agency said winter weather has made it harder for barges to travel down river over the past month. However, this poor weather looks to soon end, which will allow barges to resume their normal schedule. "The industry is optimistic that navigation will continue to improve in mid to late February, with the arrival of warmer temperatures," said the USDA. For the week ended Feb. 12, the USDA said downbound barged grain movements through the Mississippi River locks dropped to 426,106 tons, 38% lower than the same week last year.
Source: Market Screener