May wheat continued its surge higher yesterday, exploring its new limits and remaining limit higher all day. Though the May contract settled at that limit high of $12.94, the contract is said to have traded to $13.25 synthetically. Corn and soybeans were mixed, with beans a touch weaker and spreads unwinding a bit in corn as cash traders continue to work to pin down where values head.
The third round of talks between Ukraine and Russia were held yesterday with little in the way of progress reported. At this point it appears as though Russia has a list of requests they demand be met before they will stop their aggression.
As expected, one of the demands is Ukraine basically build a neutral status into its constitution, never being allowed to join NATO or any other foreign bloc. In addition to the request for neutral status, Russia also wants Ukraine to give up any interest in the territories Russia deemed independent before all of this began, as well as Crimea which they annexed in 2014. Ukraine is a hard no at this point, saying they will continue to fight for their independence.
Overnight China's President Xi held a call with French President Macron and German Chancellor Scholz saying the three must work with both Russia and Ukraine to bring about peace, saying they worry we are on the verge of a humanitarian crisis.
With China reportedly still buying crude and said to be shopping for other commodities from Russia in addition to looking at the value of ownership interest in energy and other commodity groups, it is likely we see them work to take on a bigger leadership role this week and beyond.
Oil and grains aren't the only markets being rocked by supply disruptions coupled with perceived increases in demand, metals have seen a tremendous increase in buying interest. Nickel, a metal responsible for the production of batteries used in a multitude of things, including electric vehicles, has more than tripled in value over the last couple of weeks.
We saw nickel trade 70% higher yesterday, doubling again overnight as a short squeeze has taken hold of the market. The tremendous volatility pushed the London Metals Exchange to stop trading for a short time as hedgers scramble to finance open positions.
It is rumored China's Construction Bank, a large state-owned lender, was given extra time yesterday for its clients to secure additional funding, while the Chinese tycoon said to be holding a large amount of the nickel short is said to have lost billions.
Looking ahead, we will continue to monitor what is happening in the cash market and how it translates back to global demand and trade. Rumors are circulating in China that some grain handlers there may look to export corn thanks to the surge in global prices.
Chinese analyst Sitonia Consulting says it is unlikely anything comes from the current rumors as the act of actually shipping corn out of China goes against high domestic prices, rising food inflation and the desire for self-sufficiency, however it is possible we could see some arbitrage trades start to happen as traders start to look at opportunities into South Korea and Japan.
Corn export shipments were at a marketing year high yesterday at just over 62 million bushels shipped on the week. China was in for 21.9 million bushels, also a marketing year high. Soybean shipments continue to fall off seasonally but continue to outpace the amount needed each week to meet USDA projections. Wheat shipments continue to lag.
Overnight markets were incredibly volatile with the May contract in Chicago wheat trading for the first time in several sessions and managing a range of $1.61 while much of us slept. Volatility will continue as we struggle to put our finger on what happens next.
Corn down 10 to 12
Beans up 10 to 15