Markets

Daily Market Wire 28 February 2022

Lachstock Consulting, February 28, 2022

Market continues volatile, Friday reverses Thursday’s spike, and trades limit down amid turmoil in the Black Sea region.

  • Chicago wheat May contract down US75cents per bushel to 859.75c/bu;
  • Kansas wheat May contract down 75c/bu to 891c/bu;
  • Minneapolis wheat May down 60c/bu to 960.25c/bu;
  • MATIF wheat May contract down €25.25/t to €289.75/t;
  • Black Sea wheat March contract down $11/t to $315.50/t
  • Corn May contract down 34.5c/bu to 655.75c/bu;
  • Soybeans May contract down 69.5c/bu to 1584.5c/bu;
  • Soybean meal down 3pc;
  • Soybean oil down 4pc;
  • Winnipeg canola May 2022 contract down C$50.80/t to $1001.20/t;
  • MATIF rapeseed May 2022 contract down €36.50/t to €727/t;
  • ASX March 2022 wheat contract unchanged at A$385/t;
  • ASX Jan 2023 wheat contract down $10/t to $395/t;
  • AUD dollar firmer at US$0.722;
  • Brent crude oil futures down 1pc;
  • Dow Jones Industrials Average up 3 per cent.

International

It is hard to rationalize price movements, let alone predict how this conflict develops. With the threat of nuclear attacks President Zelensky has agreed to talks with Russia on Monday on the Ukrainian-Belarusian border. Friday seems like a lifetime ago, but the selling was generated from the idea that food and energy will not be part of the sanctions and, assuming that Russia is only focused on Ukraine, the world from a grain perspective can go back to normal at some point. Hard to believe this to be the case. Russia drives the wheat market and China drives the soybean market, and it’s fair to say the west has little idea how to approach either of them. The most sobering headlines today are focused on Putin’s directive to raise his nuclear deterrent forces status to “Special combat readiness” 

Removing Russia’s central bank from the SWIFT payment system could have meaningful and undesired ramifications on the western banks liquidity profile. By banning the Russian central bank and the transfer agents for Eurobonds, Russia will essentially default on all foreign debt immediately. Smaller Russian banks are scrambling to convert their Ruble position to USD at a rate that represents a 50pc devaluation of the Russia currency 

The US continues to see Russian forces face “stiff resistance” and their momentum slow in Ukraine’s northern part, while forces are having a “little bit more success” in the south, a US defence official says. 

The White House and several EU nations announced the expulsion of certain Russian banks from the SWIFT banking system Saturday evening.

Australia

Friday’s markets continued to firm slightly but only in the zones or delivery windows that the buyers need it. Liquidity was high, with plenty of wheat and canola selling. 

Canola markets were the performer for the week, with values being up $50/mt across Victoria and NSW port zone.

Weather continues to play havoc along the east coast as we have seen substantial amount of rain through Brisbane region in which will have potential to disrupt the supply chain domestically and movements for export program.

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