Commodity prices move sharply higher
Grain futures moved sharply higher as Vladimir Putin pushed into Ukraine overnight on what he calls a Special Military Operation, but the rest of the world calls an invasion. He is moving to demilitarize Ukraine and to assure NATO advancement does not occur on his Western front. This has caused world commodity markets to explode upward in price, with crude oil touching $100. Interestingly, Putin made sure his military forces did not create damage to any southern grain export facilities of Ukraine, and all natural gas lines that flow through Ukraine into Europe were left untouched. Putin knows that the commodities are the real currency and power, and in the current environment, knows that it's likely those items will not be sanctioned.
Egypt tendered for wheat overnight and found just one offer of wheat at $399/MT. Corn futures and China were $0.15/Bu higher at $11.33, a new historical high, while their soymeal was also up $19.50/MT to a record high of $638.40/MT. Malaysian palm oil closed above 7,000 on the biggest rally day in 13 years.
Lists of sanctions will be put out against Russia today, and they will be numerous. But what is likely to surface is that necessities like agricultural commodities and energy will likely be left off the sanctioned list, and Putin can create a black market and make sales, likely instituting cryptocurrencies like Bitcoin if he cannot use the Swift banking system.
The USDA Annual Outlook Conference forecast for 2022 US crop seedings reflected 48 Mil acres of wheat, 92 Mil acres of corn and 88 Mil acres of soybeans. Ending stocks are forecasted at 1,965 Mil Bu for corn, 731 Mil Bu of wheat, with US soybean stocks at 305 Mil Bu. All USDA stocks forecasts are bearish relative to current prices and do not reflect massive export demand that will be coming to the US via South American shortfalls in production.
South American weather forecasts have a pattern change with needed rains that have started over southern Brazil will push northward with time. In addition, a high-pressure Ridge takes a more normal position over E Brazil, which shuns tropical upper air moisture southward to Argentina/S Brazil. This produces a dryer trend over in Brazil, helping advanced harvest. The next two weeks' rains for Argentina and southern Brazil can total 1.50-4.50″. The rain should help stabilize the South American crops that have been on a constant decline.
Yesterday cattle futures were lower and anticipate a sharply lower opening for feeder cattle with the advance feed values overnight. Cash market yesterday with thinly traded with limited sales quoted at $1 42-144 across the Central and Northern Plains. This was mostly steady with last week, with more active interest expected to develop today. Box beef values were weaker on Thursday with the choice/select spread back to premium choice. The choice cutout was down $0.76 at $260.88, and the select value fell $4.68 two $258.96.
The February Cattle on Feed Report will be released on Friday. Average trade estimates have the January marketing's at 97% of last year, the placement rate at 99% and feedlot inventory at 101%. If realized, the placement rate was just under last year while the February inventory would be record large. April cattle may be targeting major support at $100 43.00.