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Commentary
The wheat market turned higher this morning and closed near the day’s highs with double digit gains. More headlines covering the ongoing conflict between Russia and Ukraine as speculation that both nations’ workarounds for export routes will add cost to the world wheat trade. Not surprisingly, the Russian government is playing down the problems and calling Ukraine terrorists and pirates after 116 Russian ships have been attacked in the last 9 days. No attacks on specific grain ships have been mentioned but nonetheless, it has certainly gotten Russia’s attention. Russia has retaliated with larger munitions focused on Kiev. The Union of Grain Exporters and Producers confidently stated that “Russia will fully meet its grain export commitments to foreign partners despite the situation in the Sea of Azov.” Crop Progress putting winter wheat harvest at 67% complete well ahead of the 61% average, Spring wheat conditions improving 1% to 58% good to excellent vs 53% average, #1 Spring wheat producer North Dakota up +8% to 65% Good to excellent with #2 producer Minnesota up +6% to 92% good to excellent. Funds are still short Chicago wheat at approximately 43K and we could see further short covering. The path of least resistance looks higher in my view. No trade recs at this time.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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