This Week in Commodities 2-25-2022

New crop corn lower on the week

May CBOT corn futures added 3 cents this week to close at 655-3/4. New crop December 2022 futures shed 18 cents this week to close at 579-3/4. The most volatile week of the year for front month corn, when all said and done, resulted in a three-cent gain week over week for front month futures. New crop corn futures, while also extremely volatile this week, managed to close lower this week for the first time in 2022.

Ukraine suspended shipping at all of its ports this week. Ukraine on average was exporting about 4.5 million tons of corn per month. Russian warships shelled multiple vessels this week in the black sea. On Friday a tanker carrying over 600 tons of diesel and a Panamax ship heading to load grain were both hit. Both ships were hit near the Ukrainian port town of Odessa. Many questions have yet to be answered on the situation in Ukraine and its impacts on the global commodity markets.

Soybeans trade briefly above $17 this week

May CBOT soybean futures shed 19 cents this week to close at 1584-1/2. New crop November 2022 soybean futures shed 48-3/4 cents this week to close at 1415. Front month soybean futures traded over 10% lower than their weekly high late in the day on Friday. This magnitude of volatility lower has only happened a handful of times in the last two decades. After trading well above their 2021 highs on Thursday morning, front month soybeans managed to close lower on the week establishing a rather larger bearish weekly reversal.

Chinese soybean meal prices hit a record high last week topping over 4,000 yuan per ton. This converts to about $630 US dollars per ton. Soybean inventories were low heading into the end of January, a current lack of supply will cause Chinese soybean crush plants to slow or even suspend production. Chinese hog producers are experiencing negative margins with the record high input costs. China’s latest round of US soybean purchases have been mostly for new crop soybeans and have avoided the much higher priced old crop stocks.


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Wheat extremely volatile this week

May CBOT wheat futures added 55-3/4 cents this week to close at 859-3/4. May KC wheat futures added 51 cents this week to close at 891. May spring wheat futures shed 1 cent this week to close at 960-1/4. Speculative money poured into the wheat market this week as the Russian invasion of Ukraine began. After trading its full limit 50 cents higher on Thursday Chicago wheat took full advantage of its expanded 75 cent daily limit and traded limit lower on Friday. After trading above its 2012 highs this week the sharply lower close the end the week for CBOT wheat looks very poor technically. Ukraine and Russia combined account for more than a quarter of the global trade in wheat. Expect recent volatility to remain in the weeks to come.


Class III Reverses Hard Friday

After yesterday’s strong push to the topside, many commodities fell back to end the week and milk was no exception. In the Class III trade, the soon-to-be second month April contract closed 38 cents lower Wednesday, limit up 75 cents yesterday, and 75 cents lower today which was 18 cents off the daily low with expanded limits. Along with the heavy losses in the feed markets, the spot market added to the pressure. Spot cheese closed 6.1250 cents lower at $1.9225/lb, falling again just beneath the $2.00/lb mark. This totals 3.8750 cents lower on the week after entering Friday’s trade higher. Spot whey was unchanged at $0.78/lb today but is down 3 cents on the week. While the outside markets certainly add to the volatility, the Class III complex has clearly struggled at $23.00 milk on the second month at $2.00/lb in the block/barrel average so far through two months of the calendar year.


Keegan Madigan

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