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3 Big Things Today, March 2, 2022

Wheat Futures Surge Overnight; Rural Infrastructure Has Room For Improvement

1. Wheat Hits Fresh 13-Year Highs in Overnight Trading

Wheat futures jumped to a fresh 13-year high as Russian attacks on Ukraine intensify.

Russia continued bombing Kharkiv, Ukraine's second-biggest city, and the capital Kyiv, resulting in dozens of reported deaths.

Traders are realizing that the war between the countries is going to last for a while, and even if it ends sooner rather than later there will be few buyers of Russian wheat, AgResource analysts said in a note to clients on Tuesday, according to The Wall Street Journal.

Grain ports in Ukraine are shut and at least for now Russian wheat seems to be a pariah, which is creating potential shortages on the global market. Buyers will have to seek other suppliers including Australia, Argentina and the U.S.

Russia is the world's largest exporter of wheat and Ukraine is the third-biggest shipper. Australia is second, and the U.S. is the fourth-largest exporter of the grain, according to the Department of Agriculture.

Soybeans, meanwhile, were lower in overnight trading as the Brazil harvest rolls on.

Consultancy AgRural said this week that 44% of the harvest is complete, up from 33% a week earlier and 25% at the same point in 2021.

Quality is an issue in some areas, though dry weather this month should aid with the harvest in southern Brazil, Commodity Weather Group said.

In Argentina, a drier trend in the state of Buenos Aires is expected the next 10 days, but stress on corn and soybeans likely will be "very limited" through mid-March, CWG said in a note to clients.

Wheat for May delivery jumped 55¢ to $10.39 a bushel overnight on the Chicago Board of Trade, while Kansas City futures were up 55 3/4¢ to $10.58 ¾ a bushel.

Corn futures for May delivery gained 1/4¢ to $7.26 a bushel. 

Soybean futures for May delivery dropped 12¢ to $16.78 a bushel. Soymeal was down $3.30 to $451 a short ton and soybean oil futures fell 0.62¢ to 75.59¢ a pound.

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2. Rural Infrastructure Can Be Improved in Several Ways, Fed's Barkin Says

Infrastructure can be improved in rural America in several ways, and not just physically, Richmond Fed President Tom Barkin said in a speech yesterday.

Physical-infrastructure growth is important, he said, but community and business leaders in rural areas also need to focus on workforce, early care and education and housing.

"Unfortunately, community college enrollment has been declining slowly for years, and the pandemic exacerbated these declines, especially for students of color," Barkin said. "I fear that a generation of workers is passing on the opportunity to build their skills."

The Richmond Fed will touch on all of these topics at its Investing in Rural America Conference on March 30 in Greensboro, N.C.

The pandemic has shown how important it is for parents to participate in the workforce. Early child care is important for a child's development, but opening a child-care center can be prohibitively difficult, he said.

Almost 60% of rural areas are in what's called a "child-care desert" where there are few, if any, options for parents who want to work.

A "challenging cost structure" makes it difficult to start and maintain child-care facilities in many parts of the country, Barkin said.

Housing is a challenge everywhere in the U.S. right now, but finding affordable homes in rural areas can be extremely difficult.

There's little older-house inventory, less multi-family options such as condominiums or apartments and the cost of construction is increasing, he said.

"This in turn can influence employer's' location decisions, because they aren't going to set up shop without a workforce to draw from," Barkin said.

At the Investing in Rural America Conference, he said one other topic will be how to encourage entrepreneurs and small-business owners to build in rural areas.

Sole proprietorships and other small businesses generally result in more job growth and better economic health.

"Prior to the pandemic, startup rates (for small businesses) had been declining for decades, but we've seen an encouraging burst of startup activity recently," Barkin said. "I'm optimistic that communities will be able to take advantage of this moment to help build thriving entrepreneurial networks."

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3. Winter-Weather Advisories Issued in Parts of Montana, North Dakota

Winter-weather advisories are in effect this morning for parts of Montana and North Dakota, according to the National Weather Service.

Freezing drizzle will continue this morning resulting in slippery roads and hazardous driving conditions, the NWS said in a report early this morning.

"Mixed precipitation and light snow overnight has created a light glaze of ice," the agency said.

The advisories are in effect until 9 a.m. central.

In northwest Missouri, meanwhile, dry conditions have led to "very high fire danger." Winds will gust up to 25 miles an hour today while relative humidity will fall to about 10%, the NWS said.

 In the southern Plains, wind gusts will come just under 30 miles an hour this afternoon while relative humidity will range from 5% to 10%, creating tinderbox-like conditions.

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