Crude oil trades to $130.00 overnight and retreats.
Oil futures exploded overnight to as high as $130.50/a barrel for spot WTI, while Brent crude traded as high as $139 before retreating on news that the US and other countries like Japan and Europe are contemplating banning imports of Russian energy. This is a nirvana scenario for the green energy proponents of countries with leaders who want to accelerate that agenda. Russia exports some 7 Mil BPD, and if the Iranian nuclear deal is not inked soon, which could bring 1 Mil BPD, there is an indication that crude oil could ultimately trade as high as $180-200/barrel. The Iranian deal is held up, as Russia is insisting its trading partner Iran be allowed to continue to trade together financially. (UPDATE: at release of morning report,it is said Germany is opposing blocking Russian energy due to their Nat Gas needs. Oil is now under $120)
Wheat prices opened sharply higher overnight, with May Chicago again opening at the new expanded 85 cent limit. Then, like a load of first-year heifers being dropped off into a new pasture, the other wheat contracts all went to check out the new fence. Corn and soybean prices made their highs early in the session and drifted in the early morning trade, as there is the risk the Biden administration may follow through with lowering biofuel mandates.
Wheat futures are trading as if the Black Sea region wheat supplies are lost for not only old crop but also new crop status for the 2022/23 crop year. Importers like Egypt will now draw upon their remaining purchased stocks with new crop supplies available within three weeks. This will throw their buying needs into the new crop year, abandoning any current crop status as wheat prices are in speculator utopia. Also, Ukraine is trying to organize rail out of the West into Europe, with 270 rail cars available to collect and dump as much as 17,000 MT/today. The concern is that Russia will target this at some point, but the Ukrainian Ag ministry is trying to create an export allocation program on its rail structure out of the West.
The USDA will release their March crop report on Thursday, projecting their guesses on the South American corn and soybean production. Recent soaking rains now are being accumulated across central Argentina and southern Brazil over the past weekend had totals of .5-3.50” helping stabilize and improve yield potential in those areas. The Argentina yields will likely start to match USDA expectations, with Brazil still likely to be lower than the USDA balance sheet.
A weakening high-pressure Ridge over Northeast Brazil is allowing rains into central Brazil, which can boost their winter corn crop. Rainfall now across central and southern Brazil is estimated to range from .5-2.50” with locally heavier amounts anticipated in the coming week. As a result, no extreme heat is forecast, as late maturing soybeans, and Brazil’s corn crop reflects improving weather into late March, helping grain supplies.
Live cattle and feeder cattle futures fell substantially last week, and a lower opening is anticipated this morning. The cash trade was anywhere from $3-4 lower in the north and $1-2 lower in the South, with the bulk of the cash trade mostly at $140 across the Plains. Cattle slaughter rose to 658,000 head which was 2% more than the previous week at 1% below last year. The year-to-date slaughter is nearly unchanged from last year at 5.8 Mil head. Boxed beef values were again weaker last week, but seasonally bottoms this time of year. The overriding concern for the cattle market is that consumers that are forced to pay for substantially higher gas prices which are going to now be well over $5.00 a gallon soon will reduce red meat purchases.