Ukraine Tensions, Dry Plains Boost Wheat, Corn

4-14-14 – Grain and soybean prices were up overnight as fresh Russia/Ukraine tensions led to concerns about exportability of winter wheat.  More concerns about continued dryness in the US Plains also are lending support.\r\n\r\n   Tensions heated up in Ukraine after a deadline for pro-Russian activists to leave occupied government buildings passed at 1:00 AM Chicago time.  The government had threatened military action if the protestors failed to leave, and with the recent Russian takeover of the Crimean Peninsula and the mass of troops along the border, tensions are high. \r\n\r\n   Russia also has urged Kiev not to use force in the wake of a forcible retake of government buildings in Slovyansk last week.\r\n\r\n   The Black Sea region is a huge exporter of wheat, corn and barley, but the continued unrest is leading to concerns that production this year could be affected as shipments of fuel and fertilizer are disrupted.\r\n\r\n   But the higher prices for grain and soybean futures prices overnight are out of synch with a higher US Dollar Index, and some adjustment could be expected.  This may be a result of financial market flight-to-safety actions, but may keep markets on edge all week.\r\n\r\n \r\n\r\nTRADERS TWITCHY ABOUT FIRST PLANTING REPORT\r\n\r\n \r\n\r\n   Many traders are nervous about the progress of US corn planting and are awaiting the first report of the season on progress from the USDA’s National Agricultural Statistics Service this afternoon with some nervousness.\r\n\r\n   Published expectations indicate the market has about 2% to 5% progress dialed in, compared with an average of about 7%.  Weekend weather was thought to be somewhat conducive to planting in parts of the southern Midwest and Delta, yet rain and cold in more northern sections are keeping the planters parked.\r\n\r\n   Meanwhile, the calendar marches on, and the mid-March deadline for Corn Belt corn planting is approaching.  Corn planted later than that has a statistical tendency toward lower yields.\r\n\r\n \r\n\r\nWHEAT REMAINS AN IFFY SUBJECT\r\n\r\n \r\n\r\n   The cold front that brought rain to the nation’s midsection also is bringing freezing temperatures to the Hard Red Winter wheat in the Plains.  The National Weather Service has issued a freeze warning for eastern Kansas and Oklahoma, nearly all of Missouri, western Arkansas and a chunk of north central Texas.  <a href=\” \”>Your text to link…</a> A hard freeze warning also is in place for western Oklahoma, the Texas Panhandle and southwestern Kansas.\r\n\r\n   Those areas are big HRW wheat producers, and much of the wheat is vulnerable to a hard freeze, especially since the crop already is dry.\r\n\r\n   Weekend rains also appeared to fall short of what Plains growers were hoping for.  Amounts of 0.10 to 0.50 inches were hardly the long soaker that producers are dreaming of.\r\n\r\n \r\n\r\nCASH CATTLE LIGHTLY TRADED\r\n\r\n \r\n\r\n   Cash cattle markets finally traded Friday, but reported volumes were light.  Cattle traded at $147 per cwt on a live basis, down $1 to $3 from the bulk of last week’s action.\r\n\r\n   The lower cash prices after futures closed on Friday may weigh on the market this morning.  Nearby contracts ended last week sharply higher, partly because of the lack of cash trading up to that point.\r\n\r\n   However, April futures remain below the cash market as expiration approaches, so further convergence is likely over the next 2 ½ weeks.\r\n\r\n   The USDA reported its choice beef cutout value Friday at $222.12 per cwt, down $2.88, and select at $212.46, down $1.84.  Reports say grillable cuts are not as popular as are the end cuts cold weather keeps many consumers confined indoors.\r\n\r\n   Slaughter last week was 573,000 head, compared with 583,000 the previous week and 607,000 last year.\r\n\r\n   The CME Feeder Cattle Index for the seven days ended Thursday was $178.30, down $0.01, while the April futures contract settled Friday at $179.50, up $1.22.\r\n\r\n \r\n\r\nIN OUR OPINION\r\n\r\n \r\n\r\n–Black Box funds are looking at $144.65, the 50% retracement of the four-week high, as a place to begin buying more.\r\n\r\n–Drought-stressed wheat pastures will give out earlier than usual and will send swell April feedlot placements at the expense of May placements.\r\n\r\n–Chinese letters of credit are defaulting, and importers are backing out of bean deliveries.