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What a week.
(One for the history books)
I know we have all been watching Ukraine and Russia for weeks, even months. Now, our worst fears have finally erupted and war has begun across Ukraine. I’m not sure how to feel or even what to say about the war that is currently happening so I will just stick to speaking about the markets.
It has been an absolutely wild week with markets, offers and deals. With extreme market moves higher to the steep declines we saw today, I'd argue that it has been the most volatile week of 2022. It is no doubt driven by the war that instilled fear into the markets and pushed them higher, even limit up for some. Today, after sanctions were revealed, the markets pulled back hard.
If you missed making a sale during the latest moves higher, do not panic. I am almost certain that more opportunities are on the way. Even though no sanctions were placed on grain and fertilizer exports (as I wrote this), it does not mean that exports are not disrupted in the Black Sea region. I am hearing of vessels being hit in the area, Ukraine ports are shut down and insurers are now demanding high premiums to do business there. Who will want to do business there in the region with such unrest? How will everything unfold and how will it affect our grain, fuel and fertilizer prices?
I know it can be hard to want to sift through prices right now given the state of the world. However, by simply downloading the Farmbucks app (your first month is free!) you can quickly set price triggers and let us automatically alert you when your price hits! It makes it easier to spot the premiums and you can find buyers for your grain in the timeframe of interest to you and your operation.
We shall see what the weekend brings.
Weekly Market Recap:
WILD. Russia invades Ukraine Wednesday evening. Markets surge limit up in evening trading and Thursday based on fear. Most basis levels widened instantly. Today, Friday markets slammed lower as sanctions were announced and morning news stated that Putin was 'ready' for talks with Ukraine in Minsk, Belarus. Now whether that actually happens is anybody's guess.
Deals of the week:
(Targets were a key tool to hit some of these highs)
CANOLA - $25.00+ old-crop or even $20.50+ new-crop
CWRS - $13.50+ old-crop or $12.00+ new-crop
CPSR- $12.50+ old-crop or $11.50+ new-crop
Canola: Canola rocketed higher Thursday then took a HUGE hit today giving up all those gains and then some. Lots of technical selling occurred today (just check out May 22' chart shown above). Before this, canola was being supported by fears over disrupted sunflower oil movement out of the Black Sea region. These countries export the majority of the world's sunflower oil. On top of this, fuel/biofuel demand is supportive.
Canola cash bids reached over $25/bu briefly and I saw new crop prices almost touch $21/bu! WOW! It's important to have targets in place to catch these! If you hesitated just a minute too long, you may have missed it all. Futures gave back strength and basis levels widened. Of note, new-crop futures held up a bit better than old-crop futures today.
Soybeans hit new highs Thursday too before slamming lower today. To date, the size of the South American crop has been declining but nearby weather looks to be improving for Argentina, harvest is progressing in Brazil and the crop is heading out to buyers. Slightly bearish news for soybeans.
Wheat: Wheat runs wildly higher then slams lower. Its movement is the most impacted by the Russian/Ukrainian war. Both countries make up a tremendous amount of the world's wheat exports. This will remain a bullish factor supporting wheat. As noted above, the Black Sea region isn't safe and although no sanctions are placed on commodity exports, it only makes sense that movement in the area is interrupted. Wheat today slammed lower on technical selling. We shall see if it is able to regain some strength next week.
In the back of minds, there is still widespread drought in the U.S. Southern Plains and poor winter wheat ratings.
Thursday, wheat prices reached exceptional levels but almost immediately basis levels widened.
Barley: Barley is sitting on the backburner. Not many changes have been seen across barley prices.
Like Wheat, corn surged higher Thursday after Russia invades Ukraine then slams lower today. Corn exports out of the Black Sea are not of primary concern as other countries export a lot more. As previously mentioned, world corn supplies are still adequate and at comfortable levels. The USDA estimates that corn acres in the U.S. will decline slightly from the year prior. With high fertilizer prices, U.S. farmers may be more willing to stray away from planting corn. Meanwhile, corn production estimates in Brazil have crept a bit higher this week.
Peas: Some small movement in pea prices was noticed this week. Be sure to check daily for your local offers.
Oats: Some old-crop bids increased briefly then pulled back with today's sell-off.
Around the farm: It’s a busy one! My brain feels like it’s about to burst! I am jammed marketing all things like grain, fertilizer, chemicals and fuel. I reviewed plans, tweaked blends, and locked in most supplies. FYI, I was informed yesterday that urea prices may be increasing again and that diesel is going up 5 cents next week. For reference, my local diesel price (in Alberta) is currently sitting around $1.12 to $1.14 (taxes incl.).
On another note, I am grateful to be where I am and only have these things to worry about! My heart goes out to all the innocent people and children of Ukraine caught in the middle of this awful fight.
‘Til next week...
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