by Steve Freed
Soybeans and soyoil ended lower on news that the Biden Administration were considering waivers for biofuel mandates to fight food inflation. Global food prices were up 4 pct in Feb and 24 pct vs last year and at all time highs. Higher energy and grains prices pushed the GSI commodity Index over the 2011 high of 760 and near 780. All time high was 893 in 2008. Crude is testing $110. 2008 high was $146. Trade is expecting USDA to raise US soybean demand on March 9 due to lower South America supply. There was talk that China may have ordered its State owned trade group to buy commodities due to Russia and Ukraine War. Spring US insurance soybean prices was all time high and near 14.33. Soybean/corn price ratio is near 2.43 which could suggest a 3 pct increase in US 2022 soybean acres.
Corn futures ended higher but off session highs. Russia attack on EU largest nuclear power plant in Ukraine sent prices sharply higher. Wheat futures shorts have also been buying corn futures with wheat futures up the limit. Fact back month Chicago wheat, KC wheat and MLS wheat started trading today triggered some selling in corn. Trade will be watching March 9 USDA report. Some feel because the South America corn crop is lower and Ukraine is not shipping corn, USDA should increase US corn demand and lower the carryout. As much as 15 mmt of Ukraine corn may be shipped. South America corn crop could drop 10 mmt. Current dry pattern over C Brazil could drop the supply even more. There was talk that South Korea feed producers declared force majeure and cannot deliver feed to customers underscores the problem with lack of Ukraine corn exports. There is some talk due to the War Ukraine may either not get their 2022 crop or it may be planted late. The challenge is also lack of transportation, logistics destruction, lack of seed, fertilizer and fuel, lack od spare parts and job shortage. US spring insurance corn price was near 5.90 and second highest to 2011. The 2.43 soybean/corn ratio would suggest 1-2 percent lower US 2022 corn acres. That could be why Dec corn futures gained today versus the May. CRB commodity Index had largest weekly gain since 1960. World food prices are at all time highs and up 24 pct from last year.
Ukraine War continues to add risk premium to World wheat prices. There remains concern that 12-14 mmt of Russia wheat and 5 mmt of EU wheat may not get shipped. Most of the World is pulling out of Russia including Fed Ex and Microsoft today. Airline companies are no longer selling Airplane parts to Russia. World Banks and governments are adding sanction to Russia wealth. USDA may have a hard time adjusting World wheat balance sheet given the Black Sea unknown. Trade estimates that US will keep US wheat carryout near 628 mil bu and 278 mmt World wheat end stocks. French wheat prices have rallied to $430, Germany $445, Baltic $445 and US SRW $468. Trade will also start watching US south plains weather. La Nina years, negative Pacific oscillators and 20 year sun cycle years at the same time suggest dry US and Russia spring weather. We will need positive oscillators and less La Nina for normal weather. The 2 month KC futures rally from 7.53 to 12.00 could suggest a test of the 14.00 highs.
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