World events lift grain prices overnight.
After the lower Wednesday evening start across the board in the grain complex, wheat futures initially burst higher in the evening after reports that Russia had increased its troop size by 7000, contrary to prior reports of reductions. But it was the report of mortar fire reported to have broken out in the Donbass region of Ukraine that caused wheat futures to gain strength in the evening. Later, it was reported that troops aligned with Ukraine had utilized mortars. However, the details of the incidents could not be independently confirmed, and the initial reports suggested they were on a similar scale to ceasefire violations that have been common throughout the eight-year conflict. It was also noted that the Ukrainian government-backed troops blew up a Kindergarten in the Lugansk People’s Republic, the other breakaway region, during the exchange.
After tumbling early in the evening, soybean futures reversed in the night and climbed to back over $16.00 as Brazilian soybeans and corn cash markets moved sharply higher and traded well above US values overnight. This is happening during the heart of harvest in Brazil and shows how tight the available crop supplies are with basis pushes that are looking for supplies. It is becoming apparent that a new round of lower crop estimates from analysts will be forthcoming by early March. China is again in buying US soybeans aggressively, unusual this time of year, not because the Biden administration is taking them to task for failing in Phase 1, but because it’s their necessity from being short bought production and will acquire their needs for the US in the coming months because of the shortfalls in Brazil.
Egypt is back in tendering for wheat, and with the tensions between Russia and Ukraine, many are wondering if Egypt may finally return to the US for reliable supply shipment. This is also boosting new strength interest in domestic US values. With the upcoming three-day weekend, the grain price environment is returning to a friendly price trend after the recent correction in pricing.
South American weather forecasts have rain being added into late next week for Argentina with the potential of .25-2.00” of rain anticipated for the southern areas of Argentina, with the northern regions near Rio Grande do Sul in south Brazil likely receiving half those amounts. However, the high temperatures in this region are now back into focus for the next six days before the potential forecasted rains.
Yesterday cattle futures traded in a mixed range while the cash trade picked up in the central and southern plains with cash prices being paid of $142, which was $2 higher than last week. Cattle in the north were priced at $142-143 which was $2-3 higher on a live basis. This is the highest price paid since September 2015. The boxed beef market was lower with choice down $0.75 at $269.62, which is the lowest price in six weeks. The select was down $1.74 at $266.08, widening the choice/select spread to $3.54.