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Turner's Take Ag Marketing | Peace Talks Send Wheat Lower

By: Craig Turner, Senior Risk Management Consultant

Turner's Take Ag Marketing
 
Craig Turner
Senior Risk Management Consultant
Turner's Take Podcast

RUSSIAN/UKRAINE | Peace talks have started between Russia and Ukraine in Turkey today and the market thinks this time there is a chance for real progress.  Russia's defense ministry just announced they will "drastically" cut back on military activity toward Ukrainian cities of Kyiv and Chernihiv to help with peace talks.  Winter wheat should be the downside leader today.  The peace talks should dominate the ag market (up and down depending on how it goes) between now and the Thursday USDA Planting Report and Quarterly Stocks release.  

 

GRAINS | Winter wheat crop ratings by US States are out with mixed results.  The rains helped Kansas GD/EX by 7% and is now 32%.  TX is now just 7% GD/EX.  CO has only 11% GD/EX, OK is 18%, and NE is 27%. Starting on Monday the USDA will start updating wheat conditions for all states in their Crop Progress report.  Up until now we have been relying on individual state reports.  The HRW ratings on Monday could be ugly.  For now, the market will be more concerned about the peace talks in Turkey between Russian and Ukraine and then the US acres report on Thursday.  

 

Corn is a follower of wheat that could change on Thursday.  The trade estimates 92mm acres of US corn while the futures market is trying to encourage more acres this spring.  In years past we would have bumped up corn acres based on prices but input costs are high and availability is in question for farms farther away from the heart of the corn belt. 

 

OILSEEDS | Soybeans are down 20 cents in the overnight and a follower of wheat.  Soybean oil is down over 1 cent per lb, canola is down $20 per tonne, but palm oil closed higher and is now over 6300 ringgits/MT.  Oilseeds are range bound until Thursday and will be pulled higher and lower depending on the wheat and the Ukraine/Russia peace talks. 

 

Heading into Thursday I think it makes sense to looking into short dated weekly/monthly puts for corn and soybeans.  The markets are elevated, funds and spec traders are long, and the market is encouraging the US and the world to plant as many acres as possible.  Just like everyone else, we don’t have a crystal ball.  We do know that the USDA can throw curve balls and when they do it is usually when the funds and specs are all on the same side of the boat.  For those reasons the greatest risk is to the downside on Thursday.

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