Ukraine/Russian tensions return.
Grain futures were sharply higher overnight, with futures following through from Tuesday's substantial wheat gains and soybeans taking back the remainder of Monday's losses. SA weather forecasts are taking some rain from what was a generous forecast for S Brazil/central Argentine over the coming week.
Wheat futures found strength on renewed rumors yesterday on the Ukrainian/Russian tensions, with Russia continuing to empty its embassy in Kiev, Ukraine. They initially started reducing staff on January 5, but they issued orders to essentially vacate the embassy over the weekend. Also, on Monday, Belarus, to the North, did snap joint military exercises with Russian counterparts, putting the threat of Russian strength on a second front to Ukraine. With the wheat trade becoming so oversold on price into January 14, along with a massive managed short fund position built up on wheat, this set the stage for dramatic recovery and unwind of recent price losses. Concerning plains weather is also now becoming a focal point.
World energy prices also pushed higher last night with the active March contract trading briefly over 86.00, after an Iraq-Turkey pipeline explosion took 450,000/barrel a day pipeline off-line. Having become overextended, oil prices retreated quickly over a dollar, but this strength was also supportive to row crop prices overnight on the biofuel aspect.
The US Ag attaché to Brazil lowered his estimate of the 2022 Brazilian soybean harvest to 136 MMT's, 4 MMT's below the USDA's guess put out just last week. Private analysts are already putting the prospect of the Brazilian crop will be down near 131 MMT's, substantially below a month ago record hopes and well below last year's crop sizes well.
South American weather forecasts have extracted some rainfall for the southern half of Brazil and northern Argentina for the next two weeks. Increasingly it appears recent rainfall looks more like an interlude than a pattern change. The dryness has negative implications for Brazil's second corn crop seeding. The improved rains will continue to be focused more on the southern two-thirds of Argentina this week.
Cattle futures mainly were softer to start the week, while live cattle cash trade held a narrow range with feeder cattle under pressure from recovering corn price to back over $6.00. Box beef prices were higher, with the choice cutout gaining $1.63 on Tuesday and more than $11 higher than a week ago. Select was also $1.34 higher on Tuesday. Live cash cattle trade had seen some numbers move in the South add $137, mostly steady with last week, and in the North was also steady at $218.