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Black Sea Trade, Energy and Fertilizers, BC Vote, Markets Update & Rain Days 02/28/2022

Daily Report on February 28, 2022

 

March CBOT futures contracts have no daily trading limit today nor any day until they cease trading. Be careful.


World respected Black Sea grain market analyst Andrey Sizov wrote last evening:

After Friday's 9% decline in the price of wheat, the current Black Sea disruption is huge:

  • navigation is closed / no fresh vessels

  • key Ukrainian terminals in Odessa and Nikolaev (Ukraine) are not running (but apparently no damage)

 

BP announced it will quit doing business with Russia. This is the most aggressive move yet by a company in response to Moscow's invasion of Ukraine.

Two Russian multi-billionaires, Mikhail Fridman and Oleg Deripaska, publicly called for Putin to end his military incursion into Ukraine.

Russia is the world’s largest exporter of energy (crude oil and natural gas combined) and wheat. Let’s not forget the world’s biggest importers of wheat are the Middle Eastern countries who do not need Russian crude oil.

If the Russian economy is destroyed because it cannot sell its products, how will the world economy adjust to massive deficits of energy, wheat, fertilizers, nickel, lumber, etc.?

How will world crop production adjust without Russian fertilizer?

The black market will flourish like never before as Iran, China, North Korea, Cuba, and mobsters launder Russian resources. The Russian people and the very countries who put the sanctions on Russia will be ones to suffer the most from sanctions on Russia. The EU will be begging for electricity and natural gas, all countries with crude oil deficits will be begging for crude oil products, and farmers everywhere will not be able to buy as much fertilizer as they need for decent crop production.

How will the do-gooders who are trying to push Russia into deep economic depression explain to their own people why there is not enough food, energy or jobs?

Russia has used about 35 to 40% of its military resources stockpiled on the borders of Ukraine.

Is it because Putin thought his incursion into Ukraine would be a piece of cake?

Is it because Putin wanted to exhaust Ukraine’s military supplies and will to fight before sending in his first team?

Is it because he did not have enough supplies in place to commit 75% of his forces?

The longer this military action lasts, the better for Ukraine and worse for Russia. Putin will most likely step-up his military efforts early this week if truce talks schedule today do not look promising.

Ukraine exports:

16% of world’s corn exports

3% of world’s corn production

12% of world’s wheat exports

4% of world’s wheat production

On Friday, Gulf basis was steady for corn; the soybean basis was one cent firmer for March, unchanged for April and a penny firmer for May. There were no basis quotes for wheat.

Here is the chart of number of rubles it takes to buy a US dollar:



 

Bullish Consensus Vote


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Market Data


This morning: Crude oil is at $95.53, up 3.94 cents. The dollar index is at 97.16, up 0.55 July palm oil is at 5,755 MYR, up 292. The contract high was made February, 24th at 5,938 MYR. Palm oil owns 32% and soybean oil owns 28% world market share. December cotton is at $99.58, down 75 cents per cwt. . The contract high was made February, 10th at $106.36 per cwt. Cotton competes with soybeans and corn for acres. July natural gas is at $4.718, up 0.140. The contract high was $5.121 at February, 2nd. Natural gas is the primary cost to manufacture nitrogen fertilizer. July ULSD is at $2.7541 per gallon, up 0.0907. The contract high was made February, 24th at $2.8475. ULSD stands for Ultra Low Sulfur Diesel.


 

Rain Days Update


Rondonópolis, Mato Grosso, in the heart of Brazil's most productive soybean area, received 0.0 inches of rain yesterday; 0.3 inches a year ago and 1.1 inches two years ago (one inch = 24.5 mm). Yesterday's high temperature was 93°F. Day time highs the next ten days will range from 86 to 91°F (100°F = 38°C). Yesterday, in the dry areas of South America: Santa Maria high temperature 102°F with 0 inches rain. Cordoba high temperature 92°F with 0.1 inches rain. Salto high temperature 77°F with 5.1 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 1.77 inches, 78 to 94°F. Cordoba 1.42 inches, 77 to 87°F. Salto 1.75 inches, 75 to 87°F. The Western Corn Belt has 4 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 less rain days than yesterday.



Explanation of Rain Days


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