Grains, oilseeds surge on Russia, Ukraine
Soybeans were sharply higher on commercial and technical buying, with the most active months notching new contract highs. Rain is slowing down harvest in central and northern Brazil, expected to move into southern Brazil and Argentina later this week. While it’s expected to be beneficial, totals and coverage are unknown. According to AgRural, 33% of Brazil’s soybean crop is harvested, compared to 15% a year ago. China bought 132,000 tons of new crop U.S. soybeans, the fifth business day in a row with an announced sale for a running total of 683,000 tons, most of that new crop to ether China or unknown destinations. Soybean inspections were down on the week, but up on the year, with China and Egypt claiming the top slots. China has reportedly said it will maintain planted area this year, adding it plans to sell an unspecified amount of soybeans from state reserves. Soybean meal was mixed, with nearby months up and deferred contracts down, while bean oil notched new highs on the strength in energies. That’s also connected to Russia and Ukraine. Additionally, Ukraine is a leading exporter of sunflower oil.
Corn was higher on commercial and technical buying, with most months up sharply, establishing a new high in the March contract. Corn responded to Russia moving troops into eastern Ukraine, which could benefit U.S. exports. Both Russia and Ukraine have become major exporters of corn, with some of that coming at the expense of the U.S., including an increase in business between China and Ukraine. China is reportedly allowing corn imports from Myanmar as a hedge against the ongoing military and diplomatic tensions. At last report, there were no restrictions on ship traffic into the Black Sea, but there was some talk movement was slowing down and insurance costs were rising. Second crop corn planting in Brazil is ahead of average at 53% in central and southern areas, but U.S. corn has a price advantage on the export market, for now. U.S. export inspections were more than 1.5 million tons, above a week ago and a year ago, with China and Japan leading the way. The USDA’s new supply and demand estimates are out March 9th, with CONAB’s updated outlook for Brazil slated for March 10th. Ethanol futures were unchanged.
The wheat complex was sharply higher on commercial and technical buying, with a few months nearly limit up. The big supportive feature continues to be the tensions between Russia and Ukraine. Both of those nations are big exporters of wheat and while it’s assumed the European Union would get most of the business if trade were disrupted, at least a portion of it would go to the U.S. Ukraine’s domestic wheat prices have fallen due to the uncertainties about sales and demand. Marketing year to date exports for Ukraine are 17.85 million tons of wheat, with the overall pace for grains well ahead of a year ago. Drought or near drought conditions remain an issue in parts of the U.S. Plains. The USDA’s most recent set of state crop stories showed a decline in conditions for some U.S. hard red winter wheat growing areas and while ratings are generally better in the soft red winter region, excessive soil moisture is a concern for some states. Nigeria bought 120,000 tons of U.S. hard red winter wheat, split between 2021/22 and 2022/23 delivery. Export inspections remained lackluster but did improve from last week and last year, mainly to Japan and Mexico.