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3 Big Things Today, April 6, 2022

Grains, Beans Lower Overnight; Russia to Limit Food Exports to ‘Hostile’ Countries.

1. Grain and Soybean Futures Drop in Overnight Trading

Wheat futures plunged in overnight trading on prospects for Ukraine exports and as investors who were long the market sell contracts and liquidate their positions.

The Ukrainian Grain Association, or UGA, said in a statement the government should lift any export curbs on wheat and that shipments should begin again amid high domestic stockpiles.

The government lifted restrictions on shipments of corn and sunflower oil in late March, but curbs on wheat shipments remain. The association said there are about 12 million metric tons of wheat in storage in Ukraine.

Domestic consumption is forecast at about 1.5 million metric tons, the UGA said.

Ukraine is expected to export about 20 million metric tons of wheat in the 2021-2022 marketing year, the U.S. Department of Agriculture said in a monthly report in March. That’s down from a prior outlook for 24 million metric tons.    

Production in the country was pegged by the USDA at 33 million metric tons, but APK-Inform, an agribusiness consulting agency in the Commonwealth of Independent States, has said it expects output to fall by more than half to around 15 million metric tons.

Prices also may be falling this morning as investors sell contracts and take profits.

Wheat futures, even after the overnight drop, are still well above the $10 mark after dipping heading into this week. Concerns about Russia’s ongoing attacks on Ukraine and how grain shipments from both countries will be affected are underpinning prices.

Russia is the world’s largest exporter of wheat, while Ukraine is now forecast to be the fourth-largest, according to the USDA.

Wheat for May delivery dropped 11¼¢ to $10.34 a bushel overnight on the Chicago Board of Trade while Kansas City futures lost 12¼¢ to $10.70½ a bushel.

Corn futures fell 6¢ to $7.53¾ a bushel. 

Soybean futures for May delivery were down 2¢ to $16.29 a bushel. Soymeal fell 50¢ to $465.40 a short ton, while soybean oil futures added 0.15¢ to 72.56¢ a pound.

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2. Russia to Be ‘More Prudent’ About Food Exports, Putin Says

Russia will be more judicious about shipping its food supplies to countries that it feels have been antagonistic since its attack on Ukraine, Russian President Vladimir Putin said in a speech yesterday.

The reduction in exports to some countries was framed as a way to keep food supplies inside Russia, according to the speech.

“It is clear that this year, against the backdrop of a global food shortage, we will have to be more prudent in our food supplies abroad, namely, to monitor carefully the parameters of such exports to countries that are clearly hostile towards us,” Putin said at an ag industry meeting.

Signs of Russia limiting agricultural exports are already showing, Commerzbank economist Carsten Fritsch said in a note to clients.

Russia suspended rapeseed and sunflower seed exports from the beginning of April through the end of August, Russian media reported last week, citing a government statement, Fritsch said.

“Russia appears to be considering selling its agricultural products only to ‘friendly countries.’ These do not include Europe or North America,” he said, citing Russian Security Council deputy secretary Dmitry Medvedev.

Putin said in his speech that food prices in Russia will be lower than on the world market because of ample supply.

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3. Strong Winds, Low Humidity Make For Dry Conditions

Strong winds and low humidity are creating very dry conditions in much of the central U.S., according to the National Weather Service.

Red-flag warnings have been issued for most of the Texas panhandle, almost all of Oklahoma, and parts of eastern Kansas and western Missouri, NWS maps show.

In the Oklahoma and Texas panhandles, winds are forecast to be sustained from 25 to 35 mph with gusts of up to 60 mph today, the agency said.

Relative humidity will drop as low as 9%.

“Conditions will be favorable for rapid rates of fire growth and spread today and again Thursday,” the NWS said.

In South Dakota, meanwhile, winds will be sustained from 30 to 40 mph with gusts of up to 55 mph.

The same conditions are expected in much of Nebraska today and tomorrow, the agency said.

“Damaging winds will blow down trees and possibly power lines,” the NWS said. “Power outages are possible. Travel will be difficult, especially for high-profile vehicles.”

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