Russia is banned from SWIFT.
It was another dramatic start for the week in the commodity trade, with prices sharply higher on the opening as Russia has been removed from the SWIFT international banking clearing exchange. Rumors exist that China will allow Russia to work with its international clearing system (CIPS) that it uses worldwide on all its transactions, but this has not been confirmed it will occur. Also, the Ukraine Navy placed mines throughout its ports to prevent Russian vessels to land. This means the mines could take months to remove and provide safe passage for bulk carrier ships transporting Ukraine grain/sun oil.
Throughout the weekend, there is building concern that the fuel, seed, and fertilizer supplies for spring seeding could have widespread shortages with seeding just 3-5 weeks off. A Ukrainian/Russian conflict that becomes extended could dramatically tighten world grain and veg oil supplies longer-term. The war has also halted sun oil crushing, which will also deal with logistic transport delays. Turkey, Southeast Asia, and Europe will have to turn to the US and Argentina for soy oil supplies.
Egypt tendered for wheat overnight with few offers for April delivery and they have extended the deadline to receive offers. It's expected that any offers will be EU wheat priced sharply above prevailing values.
Ukraine and Russian officials have arrived at the Belarus border for talks. The subject of negotiation is an immediate cease-fire and full withdrawal of Russian troops from Ukraine. It's doubtful that Putin will give up and withdraw. The hope for a cease-fire is low, but the communications between warring parties are welcomed.
It is first notice day for the March futures contracts, and deliveries were:
• Only 28 contracts of soy oil.
• 92 contracts on Kansas City wheat.
• 240 contracts for Chicago wheat.
• Two contracts of soybeans.
No corn, soymeal, or oats were tendered.
This week is the holiday for Carnival in Brazil, and hedge selling in the soybean market will be limited all week. New corn import demand will start to arrive to the US very soon, along with soybean exports being maintained when typically, US exports drift this time of year. In addition, there will be a growing list of black Sea grain traders calling for a force majeure on their grain contracts on the Ukraine war. This pushes demand for wheat, corn, and soy oil to the EU, South America, and US.
South American weather had rain falling in southern Brazil and the northern portions of Argentina of .25-one .75 quote over the weekend. The key Argentine corn-producing state of Córdoba and the southern 2/3 of Santa Fe missed the rains. Over the next 10-days, regional thunderstorms will occur across central Argentina and southern Brazil with totals of .5-3.00″. The southern 1/3 of Buenos Aris and most of Central Brazil will hold in a dryer trend with limited rain chances. This creates a growing concern for the winter corn production.
Cattle futures ended lower last week on trading and a lower trade is anticipated this morning on the rising Black Sea tensions. The February Cattle on Feed Report was viewed as neutral relative to trade expectations. The January marketing rate was right at expectations 97%, placements at 99%, while the February 1 feedlot inventory was at 101%. Cattle slaughter last week was 647,000 head, down 2% in the previous week and 3% lower than last year. Box beef prices fell $7.58 on the choice, and select was lower by $7.22. April cattle has major support at 139.00-140.00 that needs to hold this week to maintain upward weekly chart momentum.