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3 Big Things Today, February 16, 2022

Soybeans, Grains Higher Overnight; China ‘Difficult’ Trading Partner.

1. Soybean and Grain Futures Rise in Overnight Trading

Soybean futures were higher in overnight trading as the price yo-yo continues.

Prices rebounded after yesterday’s sell-off on renewed concerns about South American production.

In Brazil, the world’s biggest exporter of soybeans, rains are expected to slow the harvest as dry weather begins to form again in central and southern areas, said Donald Keeney, an agricultural meteorologist with Maxar.

Rains will favor the major growing states of Mato Grosso, Goias, Minas Gerais, and Sao Paulo through Saturday, the forecaster said.

In Argentina, limited precipitation will cause soil moisture to decline again, mostly in southwestern and northeastern growing areas, Keeney said. Some improvement, however, is expected in southwestern areas.

Wheat futures were again higher overnight on skepticism about Russia’s withdrawing troops from the Ukraine border.

Some of Russia’s more than 100,000 troops reportedly returned to their bases after conducting exercises near the country’s border with Ukraine.

Still, government leaders are skeptical of the withdrawal with many asking for more proof.

NATO said it believes Russia is still sending military assets to the border despite Moscow saying it was sending troops back to their bases.

World leaders continue to call for diplomacy to end the conflict before a Russian attack.

Soybean futures for May delivery jumped 16¾¢ to $15.72½ a bushel overnight on the Chicago Board of Trade. Soymeal was up $4.80 to $441.90 a short ton, and soybean oil futures added 0.7¢ to 66.42¢ a pound.

Corn futures for May delivery gained 4¼¢ to $6.41¾ a bushel.  

Wheat for May delivery rose 1¾¢ to $7.87½ a bushel, while Kansas City futures added 2¢ to $8.11¾ a bushel.

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2. Wheat Whipsawed by Russia-Ukraine Conflict, Surprising Net-Short Positions

What is going on in wheat?

Futures have been up and down – as have the soybean and corn markets – in the past few weeks as investors focus on concerns about Russia’s buildup of troops along the Ukraine border.

Prices shot up after Russia sent 100,000 troops to the border, but eased yesterday after an alleged de-escalation with Russia saying it was sending some troops from the border back to their bases. World leaders have expressed skepticism.

"News that Russia intends to withdraw some troops once military exercises have been completed may also be having a slight calming effect,” though prices are higher in overnight trading as many world leaders don’t trust Moscow, Commerzbank economist Carsten Fritsch said in a report.

It’s not just the ongoing conflict in eastern Europe that’s moving prices, he said.

Speculative investors were holding the biggest net-short position in wheat since July 2020, Fritsch said. That’s remarkable, he said, because of the Russia-Ukraine conflict. The countries are the biggest and third-biggest exporters of the grain, according to the U.S. Department of Agriculture.

“Nor is it the case that wheat is available in abundance, allowing delivery outages to be easily offset,” Fritsch said. “The risk thus lies clearly in higher wheat prices.”

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3. Dry Weather Expected in Southern Plains While Cold Forecast in Northern Plains

Weather maps are lit up again today as extremely dry weather is expected in the Southern Plains while cold weather again dominates in the northern U.S.

Red-flag warnings will again be in effect today from noon to 7 p.m. in the Oklahoma and Texas panhandles amid strong winds and low humidity, according to the National Weather Service.

Winds will be sustained from 20 to 30 mph with gusts of up to 45 mph, the NWS said in a report early this morning.

Relative humidity will drop as low as 10%.

In northeastern Kansas and northern Missouri, winter weather advisories have been issued as a “wintry mix” is expected tomorrow morning and afternoon. Snowfall totals will top out at 2 inches and a glaze of ice is expected, the NWS said.

Winds will gust up to 35 mph.

Wind-chill advisories will take effect tonight in eastern North Dakota and western Minnesota as values are forecast to drop to as low as -30°F., the agency said.

“The cold wind chills could cause frostbite on exposed skin in as little as 10 minutes,” the NWS said.

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