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3 Big Things Today, March 7, 2022

Wheat Futures Jump Overnight; Investors Reduce Bullish Bets on Grains

1. Wheat Futures Surge in Overnight Trading

Wheat futures again jumped the most allowed in Chicago trading overnight and corn and soybeans surged as the conflict between Russia and Ukraine continues.

Russia has increased its shelling in Ukraine even as foreign ministers from the countries are scheduled to meet, according to media reports.

A third round of talks between the countries is set to begin today.

Cease-fires were announced to allow civilians to leave Ukraine’s major cities, including the capital of Kyiv. This is the third attempt at a cease-fire to allow civilians to leave war-torn areas.

Russia is the world’s largest exporter of the grain while Ukraine ranks third, according to the U.S. Department of Agriculture. Australia is the second-biggest exporter of wheat and the U.S. is the fourth largest, USDA data show.

Ports in Ukraine are shut due to the attacks, and Russia already has taken over several cities where shipping facilities are located. Few countries are buying Russian wheat.

The Food and Agriculture Organization of the United Nations, or FAO, said in a report Friday that its food-price index hit a record 140.7 points in February, up almost 4% month-to-month and 21% year-over-year.

Cereal prices were up 3% from January and about 15% from February 2021. World wheat prices rose by 2.1%.

“In February, prices of all major cereals increased from their respective values” in January, the FAO said. Rising wheat prices “largely reflected new global supply uncertainties amidst disruptions in the Black Sea region that could potentially hinder exports from Ukraine and the Russian Federation, two major wheat exporters.”

Wheat for May delivery jumped 85¢ to $12.94 a bushel overnight on the Chicago Board of Trade, while Kansas City futures were up 85¢ to $12.99½ a bushel.

Corn futures for May delivery surged 22¢ to $7.76¼ a bushel. 

Soybean futures for May delivery rose 35¾¢ to $16.96½ a bushel. Soymeal was up $8.70 to $469.10 a short ton and soybean oil futures gained 2.18¢ to 74.98¢ a pound.

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2. Investors Curb Net-Long Positions in Corn, Beans

Money managers reduced their net-long positions, or bets on higher prices, in corn and soybeans in the seven days that ended on March 1, according to the Commodity Futures Trading Commission.

Investors lowered their bullish bets in corn to 344,790 futures contracts last week, down from 344,790 contracts the previous week, the CFTC said in a report.

Speculators curbed their net-longs in soybeans to 166,058 futures contracts.

That’s down from 171,384 contracts the previous week and the lowest since the week that ended on February 8, the agency said.

In wheat, investors were more bullish on hard-red winter contracts, raising their net-long positions to 44,807 futures contracts last week from 40,364 contracts a week earlier.

That was the largest bullish position since the week that ended on January 4, the government said.

In soft-red winter wheat, fund managers cut their net-short positions, or bets on lower prices, to 8,843 contracts through March 1, marking the smallest such position since the week that ended on December 7, the CFTC said in its report.

The weekly Commitments of Traders report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting futures will decline.

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3. Winter-Weather Advisories Issues From Iowa Through Michigan

Winter-weather advisories have been issued from southwestern Iowa through northern Michigan as snow and freezing rain are forecast, according to the National Weather Service.

In central Iowa, freezing rain is expected before changing to snow this morning, the NWS said in a report.

Snow accumulations in the area likely will top out at about 3 inches.

In northern Illinois and southern Wisconsin, wet snow is expected this morning, making roads slippery, the agency said. Up to 4 inches of snow is expected.

Up to 5 inches of snow is expected in central Michigan this morning as a “burst of higher intensity snow” is moving through the area, the NWS said. Another burst of snow is expected this afternoon.

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