First Thing Today | March 8, 2022
Wheat mostly lower in volatile overnight trade... May SRW wheat was extremely volatile overnight, posting $1.61 1/2 trading range. As of 6:30 a.m. CT, May SRW wheat is trading around 25 cents higher, but other wheat contracts are mostly 7 to 31 cents lower and corn is mostly 9 to 11 cents lower. Soybeans are trading 7 to 14 cents higher this morning. Front-month U.S. crude oil futures are nearly $3 higher but well under Monday’s high and the U.S. dollar index is around 300 points lower this morning.
Russia/Ukraine update... Ukraine and Russia have agreed on one evacuation route so Ukrainians can safely leave the region. Several previous attempts to evacuate civilians failed, with Western leaders accusing Russian forces of continuing to target pre-approved safe routes. The Biden administration is emphasizing that American troops won’t engage directly with Russian forces, and NATO members have also pushed back on calls for a no-fly zone in Ukraine, warning that it could lead to a “full-fledged war in Europe.” But things could swiftly change if Moscow’s attack spills into a NATO member nation — a move that would trigger the alliance’s Article 5 — the principle that an attack on one NATO member is an attack on all members.
World Bank approved $723 million in grants and loans to Ukraine... The aid is intended to keep the government and its services functioning throughout the conflict by, for example, paying pensions, hospital workers’ wages and providing aid. The package includes loans and grants from Britain, Denmark, Iceland, Japan, Latvia, Lithuania, the Netherlands and Sweden. The bank says it is working on a further $3 billion package and support for neighboring countries taking in Ukrainian refugees.
China calls for coordination with Germany and France in Ukraine situation... Chinese President Xi Jinping in a virtual meeting with French President Emmanuel Macron and German Chancellor Olaf Scholz said the three countries should jointly support peace talks between Russia and Ukraine. Xi described the situation in Ukraine as “worrying” and said the priority should be preventing it from escalating or “spinning out of control,” but he has refused to condemn Russia’s actions in Ukraine or to call them an invasion. Xi said France and Germany should make efforts to reduce negative impacts of the crisis and expressed concerns about the impact of sanctions on the stability of global finance, energy supplies, transportation and supply chains. China is reportedly mulling buying stakes in Russian energy and commodity firms.
China favors Russia, censors Ukraine... The Chinese government is scrubbing the country’s internet of accurate coverage of Russia’s invasion of Ukraine or sympathy for the country, and systematically amplifying pro-Putin talking points, Axios notes. “China’s use of its propaganda and censorship muscle helps insulate Beijing from domestic backlash against its support for Putin — and leaves its citizens with an airbrushed, false version of events, similar to what's seen in Putin’s state-controlled Russia.” Chinese media outlets were told to avoid posting “anything unfavorable to Russia or pro-Western” on their social media accounts, and to only use hashtags started by Chinese state media outlets, according to a leaked censorship directive. Online comments expressing sympathy for Ukraine have been deleted.
National average gas price hits record-high... The average price for a gallon of regular gasoline soared to a new record high of $4.14, breaking the previous record of $4.11 set in 2008. But the comparison with 2008 isn’t adjusted for inflation. The earlier record would equate to a price now of about $5.20 a gallon, according to one estimate. Still, the rapid spike in gasoline prices is squeezing household budgets at a time when many employers are starting to make employees return to offices.
U.S. considering lifting sanctions so Venezuela can get its oil flowing... But the reality is that the country’s oil sector is ill-prepared to start churning out more crude and lower fast-rising oil prices, the Wall Street Journal reports. Years of mismanagement, corruption and nationalization of oil ventures caused Venezuela’s oil industry, which in the 1990s produced 3.2 million barrels a day, to crash by 2020, when output fell to just one-tenth of what it had been. Production now is less than 1% of the 100 million barrels dozens of countries produce worldwide daily. Meanwhile, chief executives of some of the world’s largest oil companies and U.S. government officials warned Monday there were no quick-fix solutions to the higher energy prices and market volatility that have followed Russia’s invasion of Ukraine. The chief executives of Exxon Mobil, Hess and France’s TotalEnergies, and presidential climate adviser John Kerry said there was no immediate relief in sight, and even higher energy prices and global economic disruption were likely.
Surging prices encouraging Brazilian corn, wheat exports... Rising corn and wheat prices amid the crisis in Ukraine encouraged Brazilian exporters to recently book corn and wheat shipments, despite tight supplies and strong domestic prices. Export sources told Reuters about 500,000 MT of Brazilian corn was booked for export out of Parana, while 100,000 MT of wheat was sold from Rio Grande do Sul.
Consultant leaves South American crop estimates unchanged... Crop Consultant Dr. Michael Cordonnier made no changes to his South American crop estimates this week. In Brazil, Cordonnier estimates production at 124 MMT for soybeans and 112 MMT for corn. In Argentina, he pegs the crops at 39 MMT for soybeans and 49 MMT for corn. His Paraguay soybean crop remains at 5 MMT.
CFAP payments move higher... Payouts under the Coronavirus Food Assistance Program 2 (CFAP 2) moved up to $19.15 billion ($19.08 billion prior) as of March 6 on an increase in original CFAP 2 payments to $14.32 billion ($14.25 billion prior) while top-up payments remained little changed at $4.83 billion. Similarly, CFAP 1 payments now total $11.83 billion ($11.77 billion prior) as original CFAP 1 payments increased to $10.64 billion ($10.58 billion prior) and top-up payments remained mostly steady at $1.19 billion.
Bird flu found in NW Iowa turkey farm... Highly pathogenic avian influenza was confirmed in a commercial turkey flock in Buena Vista County, Iowa on Monday. Last week, the state reported a case of bird flu in a backyard poultry flock in Pottawattamie County in southwestern Iowa.
Boxed beef prices firm... Wholesale beef prices firmed 38 cents for Choice and $1.81 for Select on Monday. While there are worries about beef demand given high retail prices and growing economic concerns, retailers should start buying for post-Lent features. That could allow the market to find a short-term bottom after an extended price drop.
Cash hog index weakens again... The CME lean hog index is down 29 cents today (as of March 4), the third consecutive daily decline. Recent futures price action signals a late-winter high is in place and now the cash index is suggesting the same. Seasonally, hog prices typically weaken in late winter before rallying to a summertime high.
Overnight demand news... Iran tendered to buy 60,000 MT each of corn, soymeal and feed barley from unspecified origins. South Korea passed on a tender to buy up to 130,000 MT of feed wheat as prices were deemed too high. Tunisia rejected all offers in a tender to buy 125,000 MT of milling wheat and 100,000 MT of feed barley because prices were too high.
Today’s reports
- No USDA reports scheduled
