March corn surged to within shouting distance of contract highs with December corn setting new contract highs before an unwinding of spreads and farmer selling pushed March corn to close lower on the day. Wheat continued to push higher, finishing up over 10 cents across the complex while beans finished a touch firmer as well, with November 22 leading the way.
The market remains focused on Russia/Ukraine tensions with the U.S. putting 8,500 troops on high alert for deployment to the region. Messages are beginning to become a little mixed however, with even Ukrainian officials saying the hyperbolic talk of an “impending invasion” from U.S. officials last week was a bit exaggerated.
Russian officials continue to contend they are simply performing military exercises in the region, accusing the U.S. and NATO of orchestrating "information hysteria."
Traders are debating the effect of a Russia/Ukrainian conflict to global grain movement as well. With the lion's share of Ukraine's corn and wheat destined to go to China, many are beginning to believe all three countries will do everything they can to avoid disrupting flow.
It is interesting to note while on the topic, Russia shared images and media yesterday of joint Russian/Chinese military exercises performed in the Western Arabian Sea. Dubbed "Peaceful Sea 2022" the two countries performed different at sea maneuvers, working in conjunction to provide specialized training.
Outside of Black Sea tensions we will be waiting to hear from Fed Chair Jerome Powell this afternoon after the Fed announces their rate decision for the month. Many expect an extremely hawkish stance from Powell, as inflation continues to run at far higher levels for far longer than they had anticipated, and political pressure is beginning to mount.
Some have speculated Powell could shock the market with a surprise increase in rates, though many believe he will wait until March to make the first adjustment. Just how aggressive Powell intends to be with rate hikes and monetary moves remains to be seen as markets have been extremely volatile this week ahead of the announcement.
From a fundamental standpoint in grains, we continue to monitor grain flow and cash markets to get an idea of just what is taking place in the countryside. With freight costs continuing to remain elevated with movement being disrupted from barge to rail to truck, many exporters are struggling to get grain from where it is to where it is needed. Some of this is providing conflicting signals to the market and starting to weigh on interior basis values in the nearby.
We will get updated ethanol production figures this morning, with continued decent production expected there. We are seeing continued concerns, though, when it comes to movement of finished product as Midwest ethanol stocks remain record high and producers continue to report logistical issues. Also, lack of demand is forcing them to keep finished product on hand far longer than they would like.
Pre-energy report ethanol stock guesses put stock levels at the highest level seen since May 2020, not something we want to see this time of year if we're going to see continued corn for ethanol demand growth.
Looking ahead, as mentioned we will get updated energy data this morning as well as a potpourri of outside market data. Traders will also continue to monitor what's happening from a geo-political standpoint with much of our focus on the Fed's 2pm policy decision announcement.
Corn down 1 to 2
Beans up 1 to 2