Agricultural News
Wheat futures Surge as markets continue to react to Uncertainty stemming from the Russian invasion of Ukraine
Mon, 07 Mar 2022 07:50:43 CST
Wheat futures surged again this week as markets continue to react to uncertainty stemming from the Russian invasion of Ukraine. March CBOT soft red winter (SRW) futures were up 59 cents to close at $13.48/bu. KCBT hard red winter (HRW) futures were up 60 cents to end at $12.00/bu. MGE hard red spring (HRS) futures fell 10 cents to close at $11.24/bu.
CBOT corn futures were up 5 cents to $7.56/bu. CBOT soybean futures were down 4 cents at $16.76/bu. • Basis this week was up in the Gulf for all classes and mixed in the Pacific Northwest (PNW). Wheat traders said that market volatility was creating poor definition in the cash market. In the PNW HRS and HRW basis were down, while soft white prices were up.
Uncertainty is affecting wheat demand while higher input costs have strengthened basis.
• The National Agriculture Statistics Service (NASS) released state-based Field Crops Report this week.
In Texas, the report rated winter wheat conditions as 8% good, 38% fair to poor, and 54% very poor. Statewide, topsoil moisture was rated 49% very short and subsoil moisture rated 48% very short. In Oklahoma, conditions were 11% good to excellent while 48% was rated fair to poor and another 41% very poor.
Topsoil in Oklahoma is 45% very short compared to 3% last year, but 9 points better than last week. Subsoil moisture is 47% very short. In Kansas, winter wheat conditions are rated 25% good to excellent, 37% fair, and 38% poor to very poor. In Colorado winter wheat is 21% good to excellent and 62% fair to poor. In Montana, winter wheat is rated 21% good, 21% fair, 35% poor and 23% very poor.
• Net U.S. wheat commercial sales of 300,000 metric tons (MT) were reported for the week ending on February 24 for delivery
in 2021/22, down 42% from last week's 516,900 MT and within trade expectations of 200,000 MT to 650,000 MT. Year-todate commercial sales for delivery in 2021/22 total 18.2 million metric tons (MMT), 23% lower than the same time last year.
USDA expects 2021/22 U.S. wheat exports will reach 22.05 MMT, 18% lower than last year if realized.
• Weather this week continued to be dry, similar to last week's report. Conditions remained dry in most wheat growing areas.
In the eastern part of the Dakotas drought has been eradicated as persistently cold weather has kept a solid snow cover on
the ground. Drought conditions expanded over much of Kansas and Nebraska this week while daily temperatures swung
wildly over the course of the week. Weather stations in the region reported the week starting with temperatures below 0
Fahrenheit and ending the week at 73 degrees Fahrenheit in parts of the Plains States. Conditions in Texas and Oklahoma
remained dry. In the western part of the U.S. areas that saw improvements due to moisture in the start of winter have not
seen any moisture since January. Snowpack in parts of southern and eastern Oregon is 70% below normal.
• Argentina's government said it would establish a mechanism to control domestic wheat prices and keep food inflation low
reported Reuters. The government announced it had set up a "trust" with exporters and flour millers which they said will keep
food prices lower. The ongoing war in Ukraine sent prices 19% higher week-on-week in the Argentine grain market. A
representative with CIARA, a professional grain organization, said that the measures were "coercive." Farmers, who were
not included in the government discussions, were said to be opposed to the measures.
• Algeria's state grain buyer, OAIC, said it will allow France to participate in wheat tenders after previously barring their
Mediterranean neighbor. France is the largest wheat exporter in the EU and Algeria is one of the largest wheat buyers
worldwide. Algeria barred French wheat after a diplomatic incident last year. Algeria changed its tender terms to allow Black
Sea origin wheat in its tenders but the weeklong war in Ukraine has prompted OAIC to look elsewhere. May milling wheat on
the Paris-based Euronext exchange was up 7.5% Thursday compared to its Wednesday close.
• Bulgarian customs officials are slowing grain vessel loadings say grain traders who fear that the Black Sea country is trying
to halt wheat exports say producers. The head of the National Association of Grain Producers told Reuters that "unofficial"
instructions from the government to customs agents are in breach of the EU rights for free movement of goods. Customs
officials said they are increasing "customs checks, given the situation in Ukraine." Bulgaria's agriculture minister said that
there is no ban on wheat exports and no vessels are being blocked from docking at Bulgarian ports to load grain cargos.
• Chinese wheat is rising due to the crisis in Ukraine. China's wheat stocks were drawn down in 2021 for use as animal feed
after corn hit a premium against wheat. One analyst said that the government needs to release more grain from state
reserves to cool prices. Beijing has conducted regular auctions of state reserves, but prices are up 15% compared to last
year.
• Wheat traders say that India, after five consecutive record wheat crops, has a "mammoth" inventory to sell. India sold 6.12
MMT of wheat in 2021 compared to just 1.12 MMT in 2020, traders say India is likely to export 4 MMT of grain in the first half
of 2022. The USDA's monthly Supply and Demand Report indicates that India will export 7.0 MMT in the 2021/22 marketing
year.
• The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore,
increased 3% on the week to end at 2,148.
Commercial Sales
· Net U.S. wheat commercial sales of 300,000 metric tons (MT) were reported for the week ending on February 24 for delivery in 2021/22, down 42% from last week's 516,900 MT and within trade expectations of 200,000 MT to 650,000 MT. Year-to-date commercial sales for delivery in 2021/22 total 18.2 million metric tons (MMT), 23% lower than the same time last year. USDA expects 2021/22 U.S. wheat exports will reach 22.05 MMT, 18% lower than last year if realized.
U.S. Drought Monitor
· Weather this week continued to be dry, similar to last week's report. Conditions remained dry in most wheat growing areas. In the eastern part of the Dakotas, drought has been eradicated as persistently cold weather has kept a solid snow cover on the ground. Drought conditions expanded over much of Kansas and Nebraska this week while daily temperatures swung wildly over the course of the week. Weather stations in the region reported the week starting with temperatures below 0 Fahrenheit and ending the week at 73 degrees Fahrenheit in parts of the Plains States. Conditions in Texas and Oklahoma remained dry. In the western part of the U.S. areas that saw improvements due to moisture in the start of winter have not seen any moisture since January. Snowpack in parts of southern and eastern Oregon is 70% below normal.
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