Morning Comments February 14, 2022

Farmer and a child walking toward a combine during harvest season

Though Friday started out slightly mixed, talk from U.S. and European leaders that a Russian military advancement could happen sometime this week pushed wheat, corn and beans higher. Corn was up 10 on the day, with March corn closing at its highest level for the contract, March wheat was up over 20 cents across the board, and soybeans were up 8, gaining 51 cents on the week.

As mentioned, markets were spooked to the high side Friday after UK and U.S. officials instructed all private citizens to leave Ukraine by the end of the weekend, with the U.S. adding they would be unable to aid departure after an attack were to take place. 

In addition to concern over an inability to rescue private citizens in the face of a conflict, the U.S. National Security Advisor continues to contend an attack is likely to happen this week, with some pointing to Wednesday as the planned launch.

In what can only be described as odd, both Russia and Ukraine continue to contend the situation is not as dire as is being painted by the West. Late in the weekend we received news that President Biden and Ukrainian President Zelensky had held a phone conversation, during which, according to Zelensky's office, the Ukrainian President invited Biden to travel to Kyiv sometime this month. The White House declined to comment on the report or on whether Biden will make the trip.

In addition to confusing rhetoric from all sides, we continue to hear rumors or mixed reports of air traffic and export loadings being interrupted due to Russian military and naval presence in the area. According to those actually trading grain in the region, though there are concerns all shipments appear to be continuing as scheduled, with sales and trades still being entered.

Overnight we got news that Ukraine has made a formal request to talk directly with Russia with presidents of both countries set to talk to the German Chancellor today and tomorrow. In addition to continued talks, Ukraine's Ambassador to Britain said over the weekend that Ukraine may drop their bid to join NATO if that would provide de-escalation.

Outside of Black Sea tensions, we will continue to monitor what is happening in the outside markets. Late last week we started to see some concerning economic indicators showing signs that inflation running at 40-year highs is starting to impact purchasing habits and consumer confidence. 

As we mentioned last week, the majority of the middle class has seen a major reduction in purchasing power as of late, and with grocery inflation running at 15-year highs consumers are starting to have to make tough choices on where their money goes.

Looking ahead, we will get updated export inspections this morning. Interesting to note, even with all of the excitement and fanfare regarding Chinese bean purchases, the cash and freight markets seem mostly unimpressed. 

We will continue to monitor corn export shipments, particularly to China as we still have around 8.3 mmt on the books left to ship and the more that's put on a boat each week, the less there is to worry about them cancelling in the months ahead. 

There were some decent rains that fell in portions of Argentina Friday, with warm and dry conditions expected much of the week into next. Some signs of cooler, wetter conditions continue to show in the 10–15-day forecast, but we need to see these moisture signs roll forward with models as time goes on to feel comfortable.

Corn down 5 to 6

Beans down 12 to 16