Written Commentary
MORNING OUTLOOK
2-22-2022. Grains are higher. SK is up 23 cents and near 16.26. SX is near 14.78 and new high. SMK is near 450.0. BOK is near 69.51 and new high. CK is up 12 cents and near 6.65 and new high. CZ is near 6.03 and new high. WK is up 22 cents and near 8.26. KWK is up 27 cents and near 8.67. MWK is up 15 cents and near 9.77.
US stocks are lower but well off session lows. US Dollar is lower. Crude is higher.
Much of market action or reaction is focused on Putin’s speech that declared Ukraine states of Donetsk and Luhansk free and independent. Putin also ordered peace keeping troops into those states. US has not yet imposed sanctions against Russia but Congress is calling for strong sanctions. Fact Ukraine Presidents is calling for peaceful resolution may be helping US equity markets. Corn and wheat are up and adding concern over potential slowdown in Black Sea exports. EU corn prices are higher as Ukraine supplies corn to EU.
Argentina and S Brazil will be warm and dry over the next week. 8-15 day maps call for Argentina rains. Long range maps return to warm and dry Argentina and S Brazil. N and C Brazil will be drier and should help soybean harvest. Trade will be watching 2nd crop Brazil corn conditions. N Africa, SE EU and Italy remains dry.
There is talk that Brazil soybean crop could be 124 mmt vs USDA 134 and Argentina 39 vs USDA 45. Parana crop could be 14 vs 21 expected. RGDS 11 vs 20. 33 pct of Brazil soybean crops is harvested. Key will be how much World soybean demand shifts to US. China remains slow buyer of US old crop soybeans. China feed margins and crush margins are negative. Matif rapeseed is 3 week high. Dalian soyoil and palmoil are higher. Malaysian palmoil is at all time highs.
Corn futures are higher. CZ is trading over 6.00. Talk of higher demand for US corn is supportive. Talk that March- June demand for US corn could be record high is supportive. Most of the overnight trade is reaction to Russia/Ukraine events. Some doubt USDA will make a lot of bullish changes to US 2022/23 supply and demand at this week’s Outlook Conference. Futures could still be undervalued if US 2021/22 carryout is lower and 2022 US Midwest weather is less than ideal.
Wheat futures are higher on events in Ukraine. World buyers are short and need Black Sea exports. EU exportable supplies are down. N Africa and SE EU remains dry and looks like need increase imports. US rains are moving across US Midwest and Delta. SW plains will miss the rains. KWK gapped open higher overnight. 8.67 KWK could be still undervalued if US HRW crop conditions are below average. Heavy snows for US north plains. Flooding possible in Manitoba, Canada.
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