By Kirk Maltais
--Wheat for May delivery rose 5.7% to $9.34 3/4 a bushel on the Chicago Board of Trade Thursday, closing limit up after slightly backing off from gains stemming from increased Russian aggression in Ukraine.
--Corn for May delivery rose 1.3% to $6.90 1/4 a bushel.
--Soybeans for May delivery fell 1% to $16.54 a bushel.
HIGHLIGHTS
Attack Sets Off Surge: CBOT grain futures surged overnight in reaction to the Russian escalation of hostilities in Ukraine. Corn and wheat were both limit-up in pre-market trading Thursday, by 35 cents per bushel and 50 cents per bushel, respectively. The Russian attack of the Ukrainian city of Kyiv overnight was the main driver for the uptick, grain traders said--with developments throughout the day being the main mover of prices.
Overshadowed: The USDA's annual Agricultural Forum, where the USDA issues its first forecasts for the 2022/23 marketing year, was generally overshadowed by the escalated Russia-Ukraine conflict. The USDA says that it cannot yet assess what the hostilities will mean for world agriculture. "It's quite too early to understand the effects on global trade," said USDA chief economist Seth Meyer at the forum, being held virtually Thursday and Friday. Overall, the USDA is projecting tighter global markets, but at the same time expecting average prices for crops to fall from the previous year, with the average corn price expected to sink 8.3% and wheat expected to fall 6.8%. Even so, Meyer adds, these prices are still seen as strong for farmers.
INSIGHTS
Bracing for Fallout: The conflict in Ukraine is expected to bring sanctions that may limit the amount of grain exports out of both Ukraine and Russia--but that isn't likely to filter all the way down to U.S. consumers, said U.S. agriculture secretary Tom Vilsack. "We in the U.S. are fortunate, we have tremendous production capacity," Mr. Vilsack said. He adds that U.S. domestic farming is likely to mitigate any of the price increases that may occur for grains overseas, while European consumers are more at risk for higher prices. "I don't forsee a circumstance where U.S. consumers will feel the uptick," said Mr. Vilsack.
Looming Risks: The U.S. agricultural economy is expected to have another strong year in 2022, but there are significant factors that could add pressure, said Nathan Kauffman of the Federal Reserve Bank of Kansas City. "There are reasons to be optimistic, but there are notable risks," said Mr. Kauffman, speaking at the USDA Ag Forum Thursday. Mr. Kauffman points out that government payments during the Covid-19 pandemic helped prop up farm incomes, and that support has likely faded as government payments have slowed. Inflationary pressures are also expected to impact farmer incomes, amid higher costs for inputs such as fertilizer. "These costs likely will weigh on profit margins and incomes, " said Mr. Kauffman.
Open for Business: Last week's trade mission to Dubai made clear that other nations that are not normally large buyers of U.S. agriculture have a bigger interest in going into business, said Daniel Whitley of the USDA's Foreign Agricultural Service. "The overwhelming enthusiasm for American agricultural products, in my perspective, was unprecedented," said Mr. Whitley. "They are very skittish about their current suppliers." Grain exports in fiscal year 2021 set a record at $172.2 billion, according to the USDA--which is up 23% from the previous year and up 10% from the previous record set in 2014. The USDA forecasts that exports in 2022 will again break that record.
AHEAD:
--The USDA will release its monthly Cattle on Feed report at 3 p.m. ET Friday.
--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.
--The USDA will release its weekly grains export inspections report at 11 a.m. ET Monday.
--The USDA will release its monthly agricultural prices report at 3 p.m. ET Monday.
Write to Kirk Maltais at kirk.maltais@wsj.com
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Kirk Maltais
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(END) Dow Jones Newswires
02-24-22 1547ET
