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The conflict between Ukraine and Russia has been ongoing for over three weeks which raises questions concerning exports and availability of grain in the Black Sea Region. The big unknown centers around spring planting of corn. Ukraine’s Deputy Ag Minister has said that planting will begin in May. However, fuel and fertilizer shortages caused by the disruption puts a question mark around their production. Some estimates are for their planting to be down 40 percent. This may put the monkey on the back of the U.S. to pick up the slack. That said, if the planting intentions report at the end of the month is below expectations, it could create quite a firestorm. Meanwhile, in other matters, export inspections were sluggish last week at 45.0 MB. However, the pace has been rising since December with China having an increased interest.
Bullish enthusiasm caused by the drought in southern Brazil has largely passed with traders currently factoring in the loss of production. Conab recently reduced Brazil’s soybean crop to 122.7 million tons, which is below USDA’s current estimate of 127.0 million tons. This would be their smallest crop since 2018. Later this month, traders will eyeball the planting intentions report to see how many acres of corn might be switched to soybeans because of increased fertilizer costs. Meanwhile, in other developments, export inspections last week were mostly mundane at 28.3 MB. China took 14.2 MB or 50 percent of shipments. While traders are keeping close tabs of their purchases, the pace of shipments to them has fallen 78.6 percent since November.
The wheat market is not for the faint of heart to say the least as its volatility has increased astronomically during the past few weeks. While the focus is centered around Ukraine and Russia, the U.S. winter wheat crop is coming out of dormancy and is in its most vulnerable stage of development. Conditions in the southern Plains are dry which could add to the volatility. In other matters, export inspections last week were disappointing at 10.3 MB. While exports may improve because of disruptions in the Black Sea Region, it has not happened so far.
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