Commodities are sharply lower as truce talks intensify.

Grain futures are sharply lower this morning, as around 6:30 a.m. Chicago time, news filtered in that Russia signaled intent to cut military operations around Kyiv and Chernihiv, and the Russian chief negotiator said Moscow would take military de-escalation steps. Peace talks continue into the evening in Turkey, and it’s this optimism that has commodity futures, grains, energies, and metals sharply lower.

The state by state crop ratings for wheat conditions yesterday showed varied impacts from last week’s rain. Kansas ratings for the GD/EX ratings rose from 7% to 32%. Texas declined 7%, while Oklahoma ratings fell 3% in that category. Texas just showed 7% of its wheat crop in the good category with no excellent. Colorado reported 11% of its wheat crop was good but also no wheat in the excellent category. Next week Monday, the US national ratings are produced by NASS, and they look to be pretty dismal.

The March 31 NASS Stocks/Seeding report is this Thursday, and even if a peace accord could be reached, NATO’s economic sanctions will remain on Russia, and Ukraine will be unable to export grain for months. There are some reports that it will take a year for grain to flow out of Ukraine based on structural port damage. End users will likely take advantage of peace talks that create grain price weakness, and a potential bearish crop report on Thursday will lead to price lows that end-users will finally be stepping into buy. There is a shortfall of soybean production globally, and corn supplies and wheat will not flow out of Ukraine for some time regardless of a piece.

South American weather forecasts remain mostly ideal for the winter corn production, with some bouts of dryness over central Brazil. Seasonal temperatures continue to remain in the 70s/90s. There is no evidence of extreme heat with pollination starting in April.

Cattle futures spent most of the session lower yesterday but closed near the better values of the session. Cash trade was quiet to start the week, which is typical with feedlot inventories known to be record large with the rising percentage of inventory on feed for over 150 days. Packers are making time and gaining leverage every day even as the outlook for beef prices improves. Box beef values were strong with choice up $1.23 with select gaining $4.18. Of note is end-users have been aggressive on deferred purchases for over 22-day delivery sales remain record large. Three of the last four weeks have seen deferred volume sales of 70 Mil pounds.