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March 15th - Morning Market Commentary

03/15/2022
March 15th - Morning Market Commentary

Grains are mixed in overnight trading:

July Corn – 11 ¾ cents/bu (7.06 ¾ )

July Soybeans – 24 cents/bu (16.2 ¾ )

July Chi Wheat + 6 ½ cents/bu (10.76 ½ )

Cdn $ -0.00085 (77.88 cents)

WTI Crude Oil -7.84/barrel (95.17)

Row crops taking a breather this morning, as the world continues to try to assess global supply and demand outlooks in light of the ongoing hostilities in the Ukraine.  Russia continues to tighten their noose around the capital city of Kyiv with heavy artillery bombardment of the city.  Peace negotiations broke off yesterday, but the two parties are scheduled to meet again today.  Ukrainian officials have indicated that there has been movement in the talks, with some indicating better chances for a settlement than has been seen at any time since the conflict started.  APK-Inform estimated last night that Ukraine’s 2022 spring plantings would fall 39% from last year to 4.7 million hectares (from 7.7 million in 2021).  They also estimated that 2 million hectares of winter crops would be damaged due to the war.

High prices are said to be the cure for high prices, and there are some concerns that the rapid run up in corn and soybean prices could stifle demand.  It is still very early to be pessimistic about grain prices, but current prices relative to where the market sat just 6 weeks ago is mind boggling.  Old crop corn is over a dollar a bushel higher, old crop soybeans are $1.50/bu higher, and old crop wheat is over $3.00/bu higher than where we sat on January 31st.

Yesterday saw heavy liquidation of crude oil futures by funds, with more selling today.  The volatility in commodity markets, and specifically in crude oil has made derivative markets extremely expensive, and several fund managers reported last night that they wanted to exit the market in order to lock in profits from long positions.  The threat of reduced demand due to high prices, and the possibility of an widespread economic recession were also cited as reasons for the sell off.

Argentinian weather forecasts are a little wetter for the end of this week, and again for their 6 to 10 day forecast.  Meanwhile, Brazilian rains look to be confined to northern production zones for the balance of this week before shifting southward for their 60 to 10 day window.

Floyd Howard

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