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3 Big Things Today, May 31, 2022

Wheat Futures Drop Overnight; Putin's Allowances For Ukraine Grain Met With Skepticism

1. Wheat Futures Lower in Overnight Trading

Wheat futures plunged in overnight trading amid talks to reopen grain exports from Ukraine.

Russian President Vladimir Putin said over the weekend that he would be amenable to allowing grain shipments from Ukraine, which has been under attack by Russia for several months, to resume.

Global importers have shunned Russian grain, and Ukraine wheat has been stuck in storage in the country since the attacks started back in February.

That's exacerbated a global food crisis as poor countries have fewer options from which to purchase grain, which has in turn driven up prices worldwide.

Also contributing to the declining prices overnight is improved prospects for the U.S. hard-red winter wheat crop, which is growing in the southern Plains.

As much as six times the normal amount of rain fell in central Kansas and central Oklahoma in the past week, according to the National Weather Service's precipitation page.

Parts of the Oklahoma and Texas panhandles also have seen better-than-average rainfall in the past week, NWS data show.

Wheat futures for July delivery plunged 28 ½¢ to $11.29 a bushel overnight on the Chicago Board of Trade, while Kansas City futures lost 28 ¼¢ to $12.06 ¾ a bushel.

Corn futures fell 3 1/2¢ to $7.73 ¾ a bushel.

Soybean futures were higher overnight as rain continues to fall in parts of the northern Corn Belt, further delaying planting of the crop.

Precipitation is forecast today from western Nebraska northeast into northern Minnesota, weather maps show. Last week, 72% of the U.S. soybean crop was in the ground, behind the prior five-year average of 79%.

Growers have accelerated the speed of planting, but producers in the northern Plains may struggle to get the last of their seeds in if wet weather continues. The U.S. Department of Agriculture is scheduled to release its weekly crop progress report this afternoon.

Soybeans for July delivery jumped 10 1/4ٖ¢ to $17.42 ½ a bushel in overnight trading.

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2. Russian Allowance For Ukraine Grain Shipments Met With Skepticism

Russian President Vladimir Putin said over the weekend that he'd be willing to allow grain exports from Ukraine, but his assertion was met with a healthy dose of skepticism.

Putin reportedly spoke at length with French President Emmanuel Macron and German Chancellor Olaf Scholz on Saturday, saying he was "ready to find" ways to get grain out of Ukraine, according to media reports that cited the Kremlin.

Any allowances by the Russians likely will come with caveats including easing or elimination of sanctions imposed on Russia since it began attacking Ukraine in February, said Carsten Fritsch, an economist with Commerzbank.

"Ukrainian ports have been closed since the war started more than three months ago, because they are being blocked by Russia," Fritsch said in a note to clients. "What is more, the access routes to the ports are closed by mines."

About 25 million metric tons of grain are locked in Russia and can't be shipped due to the blockades, he said, citing data from the Food and Agricultural Organization of the United Nations.

It's unlikely the European Union will acquiesce to any demands made by Moscow about easing sanctions, Fritsch said. In fact, EU leaders are preparing another round of sanctions that could further cripple the Russian economy.

"The EU has emphasized that foodstuffs are not covered by the sanctions and therefore continue to be exported," Fritsch said. "The missing grain exports from Ukraine have led to a noticeable tightening on the wheat market and pushed EU wheat prices to a record 445 euros per ton in mid-May. Much the same applies to the corn market, though the EU corn price of 375 euros per ton has not yet regained is early-March all-time high of 420 euros."

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3. Flood Warnings Issued in Parts of Kansas, Oklahoma

Flood warnings and advisories are in effect for parts of southeastern Kansas and northeastern Oklahoma this morning, according to the National Weather Service.

"Multiple rounds of showers and thunderstorms are forecast starting late this afternoon and continuing into Wednesday night as a slow-moving cold front enters the region," the NWS said in a report early this morning.

One to 3 inches of rain with some areas potentially seeing more are expected in the area.

In the northern Plains, meanwhile, strong storms producing heavy precipitation are expected through the night, the NWS said.

"The threat of severe weather and locally heavy rainfall is forecast to rapidly develop from parts of the Upper Midwest into the Southern Plains later on Tuesday," the agency said.

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