Grains closed mixed on Friday:
July Corn +2 ¾ cents/bu (7.28 ¾ )
July Soybeans – 8 ¼ cents/bu (16.51 ¼ )
July Chi Wheat + 32 cents/bu (10.77 ¼ )
Cdn $ +0.00205 (78.59 cents)
WTI Crude Oil +3.31/barrel (109.33)
Grains traded both sides of unchanged in wide ranges again on Friday. July corn had a 16 ¾ cent/bu range, July soybeans had a 30 ¾ cent/bu range, and July Chicago wheat had an 81 ¼ cent/bu range. For the week, July corn closed 7 ½ cents/bu higher, July soybeans were 18 ¼ cent/bu higher, and July Chicago wheat was 98 cents/bu lower. The war in the Ukraine continues to dominate the news wires, as well as grain markets, as traders try to figure out what an extended war means for the flow of commodities. From a grain perspective, corn, wheat, and edible oils continue to be the grains most influenced by the Ukrainian war, with expectations that Russia “friendly” countries like China and Pakistan will likely pick up more shipments of cereal grains from the Black Sea, while other importers will have to look elsewhere for supplies. As we ended the week, those “other” buyers seemed to be a little anxious or aggressive in bidding for wheat and corn. Of course, it appears that an extended conflict is in the cards, so volatility in demand and in prices will be the norm going forward for some time. The United Nations projected on Friday that the Russian/Ukrainian conflict would raise global food prices by 8 to 20%.
President Biden announced on Friday that the USA was stripping Russia of it’s “most favored nation” world trade status. Other G7 countries are following suit in this decision (earlier Canada had become the first nation to take this action). There was also talk to end the week that the World Trade Organization might rescind Russia’s membership. Should that happen, tariffs would be raised on all Russian exports, which raises the price of any such goods.
Bean trade was very quiet, but under pressure for most of the day trading session. Brazil’s soybean basis dropped 13 cents/bu, which allowed South American soybeans to become less expensive that American replacement to China in most old crop shipping windows. In the meantime, world ocean freight rates soared this week, and in the last half of the week, we saw USA domestic rail rates surge as well. The cost of getting goods to market is becoming more expensive, as global energy costs rise. North American soybean crushing margins remain excellent, which should keep values relatively well supported.
Wheat futures staged a nice rally in the last half of the day Friday. Early weakness came from thoughts that North American wheat prices are still too high to generate new export interest. However, with Russia intensifying it’s military activities in the Ukraine going into the weekend, speculators chose to own wheat rather than sell it going into the weekend.
On Friday morning, the USDA confirmed the following Flash Export Sales:
264,000 tonnes of soybeans to China for 2022/23 shipment
128,900 tonnes of corn to Unknown Destinations for 2021/22 shipment
After the close of trading on Friday, the CFTC released their weekly report on fund positions in commodities as of Tuesday evening, March 8th. Funds were slightly less long grain futures than the trade had estimated (less long corn by 1,000 contracts, less long soybeans by 4,000 contracts, and less long Chicago wheat by 9,000 contracts. On the day Friday, funds were estimated to have bought 6,000 corn futures (now long 361,000), while being sellers of 3,000 soybean futures (long 158,000), and sellers of 4,000 Chicago wheat futures (now short 16,000).