Markets Unsettled As Russia Prepares To Annex Crimea

Commodity markets remain unsettled this morning as Russian President Vladimir Putin prepares to address Parliament about annexing the Crimean peninsula into the Russian Federation over the objections of the US, EU and others.  \r\n   However, much of the world is beginning to see the event as a foregone conclusion and is starting to relax.  Spot gold fell to its lowest level in almost a week in European trading after rallying strongly in a safe-haven bid during the height of the Ukranian unrest.\r\n   Putin’s address follows Sunday’s 93% referendum vote to secede from Ukraine and join the Russian Federation.  On Monday, Putin signed a decree recognizing the region as a sovereign state.\r\n   It does not appear that Russia will leave things alone and NOT annex Crimea.  Doing so likely would calm the region and bring lighter sanctions from the west, but it also would leave Crimea in a sort of gray area politically. \r\n   What appears to be on the minds of Putin and the Russian Parliament is full annexation.  This likely would draw increased ire from the US and EU and bring tougher economic and travel sanctions.\r\n   At this point, it seems unlikely that Russia will invade the rest of Ukraine unless Ukraine follows through on threats to shut off water and gas to the peninsula if full annexation proceeds.\r\n   Whatever the outcome, in the Russian Parliament today, it appears that grain exports will not be affected unless farmers hold their inventory as a hedge against inflation.  There are reports of this happening already, but Ukranian and Russian ports remain open.\r\n\r\nUS WINTER WHEAT CONDITION DROPS\r\n\r\n   US winter wheat is up overnight after the various state Agricultural Statistics Services Monday reported deteriorating conditions from winter’s harsh cold and continued dryness.\r\n   The Kansas wheat crop was rated 34% good to excellent, down 3% from a week ago, and 13% of the Texas crop was rated good to excellent, a decline of 15%.  The Oklahoma crop was rated 18% good to excellent, down 4%.\r\n   AgResource said the Texas and Oklahoma ratings had slipped below a year ago.\r\n   The Plains weather forecast also doesn’t hold much hope for relief, with computer models showing only scattered showers for the next 10 days and some reports calling for another round of very cold temperatures as the crop is trying to exit dormancy.\r\n\r\nSOYBEANS CONTINUE FIRM \r\n\r\n   US soybean export inspections were at the top end of trade estimates, and market support continues to grow.  This increases the likelihood that Brazilian beans will come to the US as it widens the spread between US values and Brazilian beans.  If the spread remains wide, Chinese crushers may be able to sell previously purchased Brazil beans rather than import them.\r\n   Chinese crushers have very negative margins and abundant imported bean supplies.  Some reports have the margins hitting a 21-month low.  Many have been trying to get out from under Brazilian commitments, and there are reports of a few loads already committed to the US for spring or early summer delivery.\r\n   Technical buying appears to be in vogue for soybeans this morning as cash basis bids firm in response to slower farmer selling after prices declined nearly $1.00 from recent highs, market analysts said.\r\n\r\nBEEF BOOSTS CATTLE PROSPECTS\r\n\r\n   Cash cattle market prospects got a small boost Monday from firmer choice beef prices, although a weaker select trade likely trimmed the support.\r\n   Cash cattle last week were steady at $148 to $152 per cwt on a live basis and mostly $240 dressed.  \r\n   Cattle traders this week will be watching the monthly Cattle-On-Feed report Friday and markets could remain unsettled until its release Friday afternoon.\r\n   Slaughter rates Monday were up from a week ago at 116,000 head, compared with 105,000 a week ago and 120,000 a year ago.  If retail grocers are planning early April beef features, packers could be ramping up slaughter to meet the orders.\r\n   The USDA reported choice boxed-beef Monday at $242.85 per cwt, up $2.41 and select at $236.06, off $0.44.  The choice/select spread widened to $6.79, and the number of fabricated loads sold into the spot market was only 67.\r\n   The CME Feeder Cattle Index for the seven days ended Friday was $173.73, down $0.15 while the March futures contract closed Monday at $174.75, up $0.15.\r\n