A report ripped through the futures market late in the trading day on Friday that a Russian invasion of Ukraine had begun. However, later in the afternoon, it appeared that a White House statement “an invasion could begin any day now” was misquoted. Wheat jumped to 30+ cents higher before settling up about 23 cents in Chicago and KC, up 20 cents in Minneapolis.
Putin and Biden have a phone call scheduled for 11 AM Eastern Time today. Biden will tell Putin for 23rd time that if Russia invades Ukraine, severe economic sanctions will befall Russia. Russian exports more N, P, and K than any other country and provides Western Europe with more than half of its natural gas.
USDA projects Ukraine will export 33 million mt of corn this year. Shipping records indicate about 20 million mt of this year’s corn has already been shipped from Ukraine. If war shuts down Ukrainian ports, 13 million mt of corn would need to be picked-up by the rest of the exporting nations. With Brazil and Argentina out of the corn export business until new crop harvest, that means the 13 million mt would have to come from the US or a barley and feed wheat substitute from the EU.
Meanwhile, the Biden Administration is negotiating with Iran to left all serious economic sanctions even though Iran has restarted its nuclear weapon program. Part of the relaxed sanctions will allow Iran to export an additional million barrels of oil per day. That will be worth couple bucks lower on the world price of crude oil.
Corn basis at the Gulf was down 3 cents for first half February, 2 cents lower for last half February, and a penny lower for March. The soybean basis at the Gulf was down 3 cents for first half February and a penny lower for first half March.
Soybean meal in China set a new all-time high price yesterday.
USDA reported yesterday morning export sales of:
30,000 mts of old crop soybean oil to unknown
108,000 mts of new crop soybeans to China
128,000 mts of old crop corn to Japan
With 61% of Mato Grosso’s soybeans harvested, it is estimated that 94% of Mato Grosso’s safrinha corn (second) crop will be planted within the ideal planting window, which ends February 28th. Mato Grosso produces about 30% of Brazil’s corn.
US soybean export sales are now 84% of USDA's forecast for the marketing year compared to the five-year average pace of 81% USDA projection for the sixth month of the marketing year.
China wants to 2025 meat production to be 25% more than 2020 meat production. Pork production will not exceed the pre-ASF levels as Chinese consumers are increasingly switching to chicken and beef.
Chinese consumers taste for corn fed beef has USA beef exports up 350% in 2021 over the 2020; that would be about 191,000 mt. That compares with 723,000 mt pork imports, down 27% from the previous year. In 2021, the US export to China: Beef $1.6 billion; Pork $1.7 billion
Market Data
Friday settlement:
Crude oil is at $93.9, up 4.02
The dollar index is at 96.03, up 0.48
March palm oil is at 5704 MYR, up 55. The contract high was made on February, 7th, at 5,876 MYR. Palm oil owns 32% and soybean oil owns 28% world market share.
March cotton is at $125.28, down 0.38. The contract high was made February, 1st at $129.37 per cwt. Cotton competes with soybeans and corn for acres.
March natural gas is at $3.941, down 0.018. The contract high was $6.132 at October, 6th, 2021. Natural gas is the primary cost to manufacture nitrogen fertilizer.
March ULSD is at $2.9109 per gallon, up 0.0837. The contract high was made this Friday at $2.9484. Diesel fuel is more important to most of you than oats.
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Rain Days Update
Rondonópolis, Mato Grosso, in the heart of Brazil's most productive soybean area, received 0.1 inches of rain yesterday; 0 inches a year ago and 1 inch two years ago (one inch = 24.5 mm). Yesterday's high temperature was 81°F. Day time highs the next ten days will range from 83 to 90°F (100°F = 38°C). Yesterday, in the dry areas of South America: Santa Maria high temperature 106°F with 0 inches rain. Cordoba high temperature 75°F with 0.7 inches rain. Salto high temperature 96°F with 0.2 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 0.26 inches, 80 to 94°F. Cordoba 0.16 inches, 72 to 92°F. Salto 0.84 inches, 74 to 94°F.
The Western Corn Belt has 2 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 3 less rain days than yesterday.
Explanation of Rain Days