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The race is on.
(Markets gone rogue.)
What's next? The only thing we know that is certain: More volatility. Let's see which markets can make or will make new all-time highs like our gas prices.
It is clearer now this week that this war will not go away quickly, and it is widely believed and conveyed that it will actually get worse before it gets better. Tensions are increasing and the world is uneasy with Russia's reckless attack and takeover of Europe's largest nuclear plant in Zaporizhzhia, Ukraine. So, buckle up. We are truly in unprecedented times with unprecedented commodity prices.
Lots of things are changing hour by hour and it's not much different behind the scenes at Farmbucks. This week we released new timestamps shown on bids! Now you know exactly when that price was captured and entered into our system. This is only the start of something great. We are continuously working on a range of new products and features to help you and your operation. Get the edge and power your farm up with connections and information you need to improve efficiencies, profitability and reach your max potential!
Please let us know if you need help using Farmbucks or getting started. We'd also love your feedback on what topic areas you're most interested in and how we can make our services even better!
Weekly Market Recap:
Where to begin? Even if the war was to stop today, there are long-term implications from the damages sustained thus far. Russia is the world's largest wheat exporter and together with Ukraine, they make up 30% of global wheat exports. Wheat is the crop with the most at risk from this war, hence why Chicago and Kansas markets are on fire, reaching levels we haven't seen since the great bull move in 2008. Ukraine also grows a lot of corn, barley, and sunflower. Together with Russia, they account for 75% of global sunflower oil exports. Ports and processing plants are shut down and getting overrun by Russians. The Ukrainian labour force has focused its efforts on fighting and winning the war. Spring is coming and there is growing uncertainty that any crop will be planted in Ukraine. Will farmers have access to any fuel, labour or inputs required? Is the infrastructure in sufficient shape? Every day this war drags on, the worse the situation becomes and the longer it will take to rebuild.
Troops seized Europe's largest nuclear power plant in Zaporizhzhia, but not first without causing a fire just outside the plant. Mariupol is under heavy fire with no water, heat or electricity.
Russia halts fertilizer exports.
Here, CP rail workers voted in favour to go on strike starting March 16, if an agreement isn't reached. Nutrien is asking the federal government to intervene. With supply chains already stretched thin and spring seeding around the corner, we cannot afford any more disruptions.
Deals of the week:
(Targets were a key tool to hit some of these highs)
CANOLA - $25.50+ old-crop and even $21.00 new-crop
CWRS - $14.50+ old-crop or $12.50+ new-crop
CPSR- $13.50+ old-crop or $13.00+ new-crop (briefly - Feb. del.)
Canola: Canola and soybeans arent largely affected by the war across seas as reflected in the markets.
Looking at this week's action, both nearby and new-crop canola futures saw some nice gains Tuesday before bouncing in the upper range of charts. Nearby futures, in particular, came close to reaching last week's high. Canola has veg oil support as Ukrainian sunflower oil processing plants are shut down. Oil prices continue to climb, lending support to canola's use as biofuel. Canola crush margins have also improved which has crushers looking to increase capacity and crush more. There is evidence of this happening in seeing that some locations have 'opened' up some previously 'filled' months. Thursday, and for the first time in 4 years, the Bank of Canada raised its key interest rate by 0.25%. The current rate is now 0.5%. This sent our dollar higher and pressured canola markets briefly.
Some great bids are upon us and markets have given us a chance to price canola at last week's highs so be sure to follow and/or set targets.
Soybean future charts are lacklustre this week. Limiting its move higher and stabilizing this market is better weather for S.America. There's wetter weather forecasted for Argentina's developing crop and dryer weather in Northern Brazil where harvest is underway. S. American production totals are on the decline with StoneX reporting 121.2 MMT (vs the previous USDA estimate of 126 MMT) but much of this is not new news. Additional support is coming from more U.S. soybean exports sales to China this week.
Wheat: On fire!!! These markets are surging to new highs like a torpedo. Chicago market keeps hitting limit-up $0.75 moves and has reached new all-time highs and Kansas isn't too far behind it. Incredible gains!! The Minn. futures arent quite making the same gains but is still follow the charge higher. Some CPS bids were higher than CWRS wheat bids this week! Also noticing some buyers rolling to months such as September for pricing cash bids due to the volatility experienced in May and July futures.
The war continues with no quick end in sight and world wheat movement just hit a huge roadblock with the Russian/Ukrainian war. Both countries make up a tremendous amount of the world's wheat exports and with ports shut down and 'the worst to come', markets are soaring higher. Chicago and Kansas in particular, as Ukraine grows mostly winter wheat. Countries are now scrambling to source their wheat needs or other alternatives. Where does it go from here??? We will soon find out. A word of caution, wheat markets are wild and we all know markets turn down harder and faster than they climb so be sure to stay on top of these prices!! Check 'em out right now!
Australia releases its production estimates and raised its wheat production to a record large amount. Looks like they have very good crops this year as their estimates for canola, barley, and lentils were revised higher too. In other news, the EU released a statement that they will allow some set-aside acres to be planted to wheat (although no one knows how many acres that is). The U.S. Southern Plains still are experiencing widespread drought and poor winter wheat ratings.
Barley: Barley sees strength with many specials released for both old and new crop. Looks to be new export demand. Check bids out! Also note, feed barley bids are creeping up closer to malt barley values.
Corn is charging higher. It's not making the same gains as wheat but still, it's moving higher. May futures made a new high. Ukraine grows and exports a decent amount of corn. No one knows how much will get planted this spring. Then there's oil. As oil prices increase as does the need for ethanol/fuel. The U.S. also made a big sale of corn to an unknown source this week. Could it be China looking for other feed sources other than wheat? Brazil's second corn crop is off to a good start and they could grow a record large crop. This would eventually weigh on markets when things calm down.
Peas: Pea bids gained strength this week.
Oats: Oat cash bids steady. Old crop demand appears to be mostly filled.
Around the farm: Hosted my youngest's 5th bday party which was as wild as these markets! A little sugar in these kids and it's a zoo. Anyhow, what a crazy week for markets and the world! I spent time watching, analyzing, and marketing my own grain.
I also ended up locking in my fall diesel needs. I went through Bluewave as they are the only ones in my area that provided me with the flexibility of making forward contracts that I was looking for. My Co-op doesn't do any forward contracting and UFA only does it on a minimum purchase of 75,000 Litres. So a big shout out to Bluewave! I thought I'd share that with you in case you were unaware that you could lock in future diesel delivery and purchases.
Last but not least, I look forward to racing my dad's old 'Pink Powder Pounder' in our local sled races tomorrow. Take a look at this beauty! Wish me luck! Happy weekend ya'll!
Cheers.
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