Volatility continues to best describe price action for the grain complex, but especially so for wheat. Ever-changing headlines about the Russia/Ukraine war has created so much tension and risk in the marketplace that traders are simply standing aside, with trading volumes sharply lower.
For the week, Chicago wheat lost 26 cents; Kansas City was down 5 and Minneapolis down 39. Corn and soybeans both declined 23 cents. Increased optimism for a peace agreement and rains headed for the plains were cited as reasons for the decline.
The market is also beginning to think about potential pushback on China if they move to support the Russian military. So far, China says they are not planning support, but we know how much we can trust them. Sanctions there would cast a bearish pall over soybeans and corn, spilling over to wheat.
There are also major concerns about the planting season in Ukraine. We do know the government has cleared farmers from military service. We hear that farmers are planning to increase plantings but infrastructure damage and access to fuel and inputs has created a very uncertain outlook for spring crops. So far, winter grains in both Ukraine and Russia are in generally good shape.
In the U.S., much-needed rains are headed to the central plains with both major weather models in agreement for widespread soaking rains to center over the central and western plains. One cannot overstate the importance of this event as the wheat breaks dormancy in extremely poor conditions. It does appear, however, that much of Texas will be missed, where most of their crop is rated poor/very poor. Timely rains in Kansas could offset potential Texas losses, but 38% of the Kansas crop is also rated poor/very poor.
Export sales were just ok last week at 472 TMT with 146 TMT of that being old crop and 326 TMT new crop. Year-to-date sales are 19.0 MMT, down 5.7 MMT from last year, a drop of 23%. We are 87% sold of USDA’s projections, compared to the average of 97%. Unless we see more business coming our way soon, we will likely see USDA continue to ratchet down export expectations.
The next major report is the plantings and stocks report on March 31. The plantings report will be very important as farmers decide what crops to plant. There is huge demand for all crops and price incentives are huge, so the battle for acres will be intense this spring.
Editor’s Note: Louise Gartner owns and operates Spectrum Commodities. She has been in business since 1988, specializing in grains and cattle while providing analysis, risk management, and hedging/trading assistance. You can listen to her podcast on wheat and cattle at http://spectrumcommodities.podbean.com/.
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Volumes plunge as traders run for the sidelines – Successful Farming
