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Wheat Futures Off to Sharply Lower Start

MORNING OUTLOOK

*Late Headline: Wheat futures are sharply lower on reports Ukraine Grain Exports to Transit Black Sea Corridor Thursday*

Grains are mixed. SF is up 1 cent and  near 14.49. SMZ is near 424.3. BOZ is near 74.39. CZ is down 2 cents and near 6.95. WZ is down 5 cents and near 8.97. KWZ is unch and near 9.89. MWZ is up 3 cents and near 9.94. US Dollar is lower. US stocks are higher. Crude, gold, silver, copper, cocoa and cotton are higher.

The big news yesterday was that China might drop its Covid zero policy. Overnight, China lockdown city of Zhengzhou and Hefei. Soybean futures rallied on the end of China strict Covid lockdown policy. SF tested 14.57 overnight. Some demand Bears considered 14.50 as key resistance. Soyoil continues to gain on soymeal. World vegoil prices are higher on talk of increase demand. Global Bird Flu outbreak could be reducing demand. Argentina is dry. C Brazil is also dry but rains are forecast for next week. Brazil truckers continue to strike on over 200 locations. This despite their Supreme Court ordering a halt to the blockades.

US wheat continued to trade Black Sea politics. Yesterday, futures spent most of the session little changed amidst positive comments from various UN, Ukraine and Turkish officials on the future of the export corridor, before rallying in the last 2 hours of trade when Putin said that he would only consider a resumption of the grain deal after a full investigation into the Sevastopol attacks. Russia has said explicitly it cannot guarantee vessel safety, insurers have pulled out, and owners will risk neither their ships nor their crews’ lives. However there is talk this morning that Turkish flag vessels will continue to operate the corridor which has taken the overnight trade down 2-5¢. In Argentina, the Govt is expected to announce measures this week that will allow exporters to delay/defer the use of their export licenses. Exporters own almost all of the sales which is way below their license position, but the picture is further complicated by the old crop situation where official figures show exporters having bought 18 mmt against just 15 mmt of licenses.

Ukraine war escalates. More Russian bombing of key Ukraine infrastructure. Like wheat, corn futures were flat until there were unfounded rumors final 2 hours if trading after talk that Russia, Ukraine, US and UK might attempt a peace chat. In response Russia said that there will be no negotiations without a full investigation of the attack on Russia mine sweeper. US corn export basis is down due to low river logistic. NEB US feedlots corn bids are near 8.00. There is talk of Ukraine farmers are keeping crop in fields due to higher drying cost and record low cash bids. US south plains 30 day flu outbreak. US NOAA Midwest 30 day outlook calls normal temps and normal.

US Dollar is lower. US stocks are higher. Crude, gold, silver, copper, cocoa and cotton are higher.

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