Escalation of the Russia-Ukraine war is weighing on farmers’ minds as harvest quickly approaches. Those who follow markets are usually comfortable reading charts and tracking fundamentals but how many are comfortable trading on military strategy?
It’s pretty new territory for sure, says Ted Seifried of Zaner Ag Hedge, in the video below. The Black Sea grain movement deal is off the table right now, and there’s escalation of road, bridge, and perhaps even port and boat attacks in the region. Seifried says it’s possible the escalation subsides, but what if it continues?
One of the key issues is Russia wanting the ability to ship fertilizer in order to keep the grain corridor open, but allowing that is a political hot potato.
The big unknown, Seifried says, is whether or not the grain movement deal is resolved by new-crop corn harvest.
Then, there’s the weather market. Traders and farmers alike are more familiar with marketing in weather markets, however the current drought issue dragging down yields over a large swath of Canada and the U.S. is new territory for many.
“It’s a more complicated weather market than we’ve seen for some time,” Seifreid says. There’s tremendous dryness over a large area of the U.S. corn geography, and the extreme heat and dry has shifted slightly north to Canada. “It’s a huge question mark. Three weeks from now we’ll have a much better handle on both the soybean and corn crop.”
Soybean yields are made in August, but the supply margins are razor thin. Seifried says we could be heading to the tightest balance sheet in a time of tight balance sheets. But can we really entice new demand? Soybeans have a high floor for the next few weeks, but there’s no room for error, he says.