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3 Big Things Today, June 2, 2022

Wheat Futures Rise Overnight; Southern Plains Rain Too Late For Some Fields.

1. Wheat Futures Surge in Overnight Trading

Wheat futures were higher in overnight trading as talks concerning Ukraine grain exports drag on.

The United Nations has been saying for the past few weeks that it was in talks with several countries to move grain exports from Ukraine port cities that have been under siege by Russian forces to the open market.

Since then, Russian President Vladimir Putin said he would be amenable to allowing grain shipments from Ukraine, though Moscow in recent days has claimed its ships are not blockading shipping routes.

Ukrainian officials, however, have said that not only is Russia blocking grain shipments, it had intentionally aimed to make worse food shortages worldwide in a bid to destabilize the global economy.

"The expectation that this might happen in the foreseeable future is already causing wheat prices to fall noticeably," said Carsten Fritsch, an economist with Commerzbank, in a note to clients this morning. "Because its ports have been blockaded for a good three months, Ukraine still has ample grain stocks earmarked for export."

Still, prices have been falling since mid-May on prospects that Ukraine grain will flood the world market once a deal has been reached, but thus far it's been a lot of talk with little action.

"It is unlikely that a decision on the resumption of Ukrainian grain shipments is imminent," he said.

Wheat futures for July delivery rose 4 1/2¢ to $10.92 a bushel overnight on the Chicago Board of Trade, while Kansas City futures gained 8¢ to $11.73 ½ a bushel.

Corn and soybean futures also were higher overnight on prospects for some rain in the central Plains that could keep farmers planting their fields from heading to the finish line.

About 86% of the U.S. corn crop was planted as of Sunday and 66% of soybeans were in the ground, according to data from the Department of Agriculture. After being behind most of the year, producers have finally caught up with the respective prior five-year averages of 87% and 67% for corn and beans.

Corn futures rose 4¢ to $7.35 ¼ a bushel.

Soybeans for July delivery gained 9 1/2¢ to $16.99 ¾ a bushel in overnight trading.

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2. Southern Plains Rain Too Late to Ease Some Drought Pain

It wasn't the worst week in terms of moisture for the southern Plains where the hard-red winter wheat crop is growing, according to weather data from the U.S. Ag Department.

About a half-inch to an inch of rain fell in parts of the southern Plains in the seven days through May 28, the USDA said in a report issued yesterday.

Precipitation was sparse but beneficial through western Kansas and the Oklahoma and Texas panhandles where the bulk of the crop is grown, the agency said. Still, it likely was a case of too little, too late for some wheat fields.

"In drought-affected areas of the central and southern Plains, rain greatly aided rangeland, pastures, and summer crops, but arrived largely too late to benefit winter wheat," the USDA's World Agricultural Outlook Board said.

Pasture and rangeland conditions in Kansas, the biggest producer of winter wheat in the U.S., was 37% good or excellent as of May 29, up from 30% a week earlier, the USDA said in a separate report. In Oklahoma, the second-largest grower of winter varieties, 35% earned top ratings versus only 31% seven days earlier.

About 72% of the U.S. winter-wheat crop was headed as of Sunday, just behind the prior five-year average of 76%, data from the USDA show. About 29% of the crop was in good or excellent condition at the start of the week, which was actually up from 28% a week earlier but well behind the 48% that received top ratings a year earlier.

The entire Texas Panhandle is seeing extreme drought, the worst-possible rating, while the Oklahoma Panhandle is suffering from severe drought, the second-worst rating, according to data from the National Oceanic and Atmospheric Administration.

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3. Severe Weather to Lead to Flooding in Parts of Kansas, Missouri

Severe weather is expected to rumble through parts of the central Corn Belt today with storms stretching from southern Oklahoma northeast into northern Illinois, according to the National Weather Service (NWS).

Flood warnings have been issued for parts of southeastern Kansas and north-central Missouri as rivers and streams overrun their banks, the NWS said in a report early this morning.

The Mississippi River at Hannibal, Missouri, was at 17.1 feet late Wednesday and likely will rise to about 17.4 feet this morning. Flood stage is 17 feet, the agency said.

Further north in parts of western South Dakota, meanwhile, isolated thunderstorms are possible late tonight, though no severe weather is in the forecast.

"Chances for thunderstorms will increase late Friday and continue through the weekend," the NWS said. "Widespread severe storms are not expected at this time, but a few stronger storms are possible during this period, especially from northeast Wyoming to the Black Hills and southwest South Dakota."

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