Wheat Wakes Up on Russian News
Geopolitics heavily influenced wheat this week. Russia cut back on oil production, which could hurt Ukraine if it limits shipping out of the Black Sea. They are unhappy with the execution of the export deal, emphasizing that most of the wheat being exported through the Black Sea is headed for wealthy European countries instead of the most needy, such as those in Africa. Retaliation has included more drone strikes on Ukraine and threats to cut oil supplies. The USDA released a report on global agricultural supply and demand on Thursday. It stated the hard red wheat states will have very dry weather, and that some of the wheat that should already be coming out of dormancy has not yet even emerged.
Random length construction lumber for March delivery lost over $100 per thousand board feet in just two weeks from a high of $533.70 on the first of February to a low of $422.40 on Friday. Slowdown in new construction because of higher mortgage rates was the main reason, although COVID-driven remodeling has waned a bit as homeowners’ appetites for new kitchens may be satiated. Copper, which is also used in construction, declined this week.
Senate Ag Committee Looks at Legislation
Farm bill discussions were heated this week. Food security, credit, crop insurance, commodity prices, profit-sharing, and absentee and foreign—especially Chinese—ownership of agricultural land were among topics debated. Many of the “safety nets” provided to farmers enable them to plan and plant next year’s crops. A large portion of our ag budget—80 to 90%—goes toward nutrition programs. Senator Marshall of Kansas, a top wheat producing state, serves as the Committee Chair of the Senate Ag Committee.
Weekly Winners and Losers
Wheat contracts were the winners this week with March Kansas wheat up a whopping 30 cents per bushel on the week closing at $9.08. Chicago soft wheat and soybean meal were also sharply higher. March
Beans closed at $15.30 up 25 cents on the week. Petroleum was strong led by nearby gasoline futures up about 23 cents per gallon.
Big losers were lumber, then the metals, Euro currency, and NASDAQ stock index futures. Early afternoon saw April gold trade at $1,875.00 per ounce down about $40.00 on the week.
Hogs and cattle chopped sideways within last week’s range and settled with little change.
Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.