Black Sea tensions on the front burner.
Grain futures opened firm to sharply higher overnight, on rising political tensions in the Black Sea region between Russia/Ukraine and South American corn and soybean crop estimates which are in decline. Price weakness returned to row crops overnight with macro risk-off selling continuing in the stock equity markets with the anticipation of a hawkish central bank meeting this week as the Fed battles inflation. The US dollar is higher overnight to 95.96 up $0.32, which is the midpoint of its two-month trading range.
NATO is sending military ships/jets to Eastern Europe to stare down Putin as Russia amasses another 25,000 troops along the Ukrainian border, including Belarus. The US advises nonessential personnel to the Ukraine Embassy to leave with only essential personnel remaining. What is unknown is whether NATO will start applying economic sanctions on Russia's military provocation. The US Congress is pushing Biden to place economic sanctions on Russia, including agricultural and energy trade. Political tensions are impacting everything from seed to fertilizer in Ukraine if the conflict persists, reducing spring seeding and potential yields.
South American forecast features showers across the southern half of Argentina over the weekend with 1.50-4.50″ of precipitation. Northern Argentina and most of Brazil were dry with high temperatures in the 100s. Long-lasting extreme heat has cut crop yields almost in half in some areas of Paraguay and southern Brazil. South American weather pattern returns to a trough over the Atlantic/Ridge, which puts February production for northern Argentina/southern Brazil and Paraguay in question.
Cattle futures are anticipated weaker this morning after the Cattle on Feed report showed a placement rate of 106% versus expectations of 103%. Feedlot inventory was at 101% versus a 100% expectation. Placement increase was in the lower weights because of the ongoing drought in the northern Plains and central Plains. Last week, most of the cash cattle trade was $137 across the Plains, mainly a dollar higher in the South and steady for Nebraska. Top prices were paid in the Western Midwest where cattle sold for $137-139.