Wheat Futures Tumble on Russia/Ukraine Politics — Daily Grain Highlights

By Paulo Trevisani

–Wheat for March delivery fell 3.2% to $7.61 1/4 a bushel on the Chicago Board of Trade Monday amid Russia/Ukraine tensions as traders gird for more volatility ahead.

–Corn for March delivery fell 1.6% to $6.26 a bushel.

–Soybeans for March delivery rose 1.4% to $14.90 1/2 a bushel.

HIGHLIGHTS

Politics & Grain: Wheat futures tumbled in what has become an essentially political trade, according to AgResource. “Wheat futures are waxing and waning with the market trying to measure Russian intentions regarding Ukraine,” the research firm said, as the U.S., Russia and other nations brought their concerns to light in a UN meeting. “Comments from Russia that it does not intend to invade Ukraine nearby was taken as slightly bearish. However, no country announces it’s going to invade another beforehand,” AgResource said. “Wheat has become a political market tied to daily flow of Russian intention news regarding Ukraine.”

Lunar Buying: The USDA reported flash export sales of soybeans to China, even as Lunar New Year celebrations get under way, likely offering an added boost to grain prices. The USDA said private exporters reported sales of 129K metric tons of soybeans for delivery to China, with 66K tons for the current marketing year and 63K tons for 2022/2023. Dismal crops in South American and geopolitical tensions also supported prices.

Weather Support: Grain futures got some support from estimates of reduced South American production. “A higher Monday CBOT trade is forecast with acute market volatility persisting,” AgResource said, adding that 50% of the Argentine crop area is still suffering from drought and crop sizes remain in retreat. Moreover, Asia celebrates the Lunar New Year this week and “China is expected to unleash significant demand upon their return,” AgResource said.

INSIGHT

Less Brazilian Soy: Brazilian soybean farmers picked up the pace of soybean harvesting over the past week, said agricultural consultancy AgRural. As of Jan. 27, farmers had finished harvesting on 10% of the estimated area planted with soybeans, up from 5% a week earlier and compared with 2% on the same date a year earlier, the group said. AgRural also said that it cut its crop forecast again, to 128.5 million metric tons from 133.4 million tons because of continuing high temperatures and scant rainfall in Brazil’s three southern states and in the state of Mato Grosso do Sul. The consultancy said late last year that the crop had the potential to reach 145.4 million tons in the 2021-2022 season.

Overbought Beans: The soybean relative strength index is in overbought territory on worries about unfavorable weather for crops and that rising demand for biofuel may have put too much upward pressure on prices, Mizuho’s Robert Yawger said, adding that corn also shows the same signs. “The Soybean RSI is in overbought territory versus 73.55, and the Corn RSI is in overbought territory versus 71.17,” Yawger says. RSI readings above 70 are usually considered an indication that a contract is overbought.

AHEAD

–The USDA will release its monthly grain crushings report at 3 p.m. ET Tuesday.

–The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

–The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

–Corteva Inc. will release its fourth-quarter earnings before the stock market opens Thursday.

–The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

Jeffrey T. Lewis contributed to this article.

Write to Paulo Trevisani at paulo.trevisani@wsj.com

(END) Dow Jones Newswires

01-31-22 1552ET