Grains back in the green after yesterday’s selloff. (Comments are updated by 7:30 a.m. Central Time.)
Plus – a recap of yesterday’s Illinois Production Costs report
Corn up 2-4 cents
Soybeans up 12-17 cents; Soymeal up $5.60/ton; Soyoil up $0.97/lb
Chicago wheat up 11-12 cents; Kansas City wheat up 5-6 cents; Minneapolis wheat up 3-5 cents
*Prices as of 6:55am CST.
Good morning! Monday is Valentine’s Day! So if you need to find a gift, this weekend is your time to make an investment in that special someone in your life!
Not to brag, but on a recent trip back to my parents’ farm, I smuggled back some ribeye steaks through TSA. And these aren’t just from any cows – they are the first harvest from my brother’s Holstein-Wagyu crossed herd.
And I will brag here – these steaks are big, tender, and marbled exquisitely. It’s some of the best steak I have ever had the honor of eating (I worked for a meat processing company – I have a LOT of credibility behind this statement). I will be cooking them up (medium rare, of course) as my gift to my husband for Valentine’s Day.
Chocolates are wonderful, but steak is the best way to show love if you are looking for ideas!!
Inputs (U.S.)
Updated Illinois production data became available yesterday and the results were somewhat unexpected for this analyst. I’ve been watching wholesale urea prices at the U.S. Gulf slip $235.90/ton lower since the start of the year (-28%), settling at $606.27/ton which is a five-month low for wholesale urea prices.
As I’ve noted in previous columns, the selloff reflects a few different dynamics. First, seasonal demand has allowed inventories to begin stockpiling ahead of spring planting season. Second, fertilizer companies have lots of economic incentive to be expanding production right now – and they certainly are doing so. Finally, this potential price correction could be showing the market that these fertilizer producers (not to be confused with ag retailers) are able to accept much lower market prices.
But why has the selloff not reached the retailer level yet? Nitrogen prices in Illinois remained elevated in this week’s report, with slight gains (0.1%-0.4%) found in Illinois’ bi-weekly production costs report. Anhydrous ammonia prices continue to hover just shy of the $1,500/ton benchmark while urea prices flirted with the $900/ton level.
Timing and inventory management are certainly playing significant roles here. Many retailers are changing their inventory management practices to ensure that adequate supplies are on hand for the spring season. These retailers are clearly not yet receiving a price break from the producers, as evidenced in this week’s report.
Wholesale prices are likely to remain elevated as spring planting season approaches, which may not provide a lot of relief at the retail level. Remember – supply will not likely be an issue for accessing inputs this spring, but logistics could possibly create delays. Proactive and open communication with your ag retailer about your spring fertilizer needs sooner rather than later could be the key factor that keeps planting progress on schedule for your farm this spring.
Corn
Dry weather concerns in South America and an ongoing rally in the soybean market lifted corn futures $0.02-$0.04/bushel higher this morning. New crop futures are within $0.03-$0.10/bushel of brushing the $6/bushel benchmark as the corn complex attempts to compete with soybean futures for 2022 acreage. Meanwhile, old crop futures continue to fight back to $6.50/bushel levels traded during yesterday’s morning session.
Soybeans
Soymeal prices in China soared to record highs overnight as the world worries about supply shortages amid South American crop shortfalls and China forecasts a 15% increase in meat consumption over the next three years.
“Soybean imports in the second half of last year were low, and importers were waiting for margins to improve,” Darin Friedrichs, co-founder of agricultural research firm Sitonia Consulting, said of soy market dynamics in China this morning. “But now there are production issues. U.S. futures have rallied a lot, and Dalian meal is playing catch-up.”
“Crushing plants aren’t receiving sufficient cargos,” a manager based in southern China with a top crusher told Reuters, noting that soy crush margins have largely returned to the red again after a brief reprieve into profitable territory over the last few months. “We did not make much purchases earlier as margins were low.”
After yesterday’s selloff, U.S. soy prices returned to the green, rising $0.09-$0.13/bushel this morning on tight global supply pressures and strong demand for derivative soymeal and soyoil products. It will likely be the fourth straight week of gains for the soy market, if today’s bullish price run continues.
Crop damage reports from Brazil and Argentina continue to become more widely known as harvest progresses. One farmer cooperative in Brazil expects farmer sales and resulting stocks to fall by 40% from original forecasts because of drought in the South and untimely rains in the North.
Meanwhile in Argentina, the Rosario Grains Exchange evaluated current dry weather conditions and a parched upcoming forecast only to draw comparisons to 2018’s “productive disaster” for the country’s soybean crop.
“There’s new bad news for Argentina concerning the weather. ‘La Nina’ has gained ground and it’s impact will not be diminished, like we thought up to just some days ago,” the exchange stated in a monthly report. “The ghost of the productive disaster of 2018 is surrounding 2021/22 soy.”
Lower crop estimates for both soybean and corn crops in both countries are likely to continue falling in, exacerbating tight global grain and oilseed supply conditions.
Wheat
A weaker dollar lifted wheat prices overnight. Wheat markets were especially jittery on Russian military exercises being conducted in Belarus this week, which provided the biggest boost to Chicago wheat futures during the early morning trading session. Dry conditions in the U.S. Plains propelled Kansas City and Minneapolis futures to a $0.04-$0.06/bushel gain.
Mild weather conditions in Europe has kept wheat acreage in good shape, though spring wheat acreage hangs largely in the balance of high fertilizer prices. Frost risk is not yet off the table for Europe’s winter wheat crop. While other smaller producers have increased wheat acreage, top European soft wheat grower France expects 4.3% fewer winter wheat acres were planted last fall, which could tighten 2022/23 exportable supplies.
Weather
Temperatures will cool today after spring-like weather (!!!) dominated forecasts across the Heartland over the past week, according to NOAA’s short-range forecasts. Snow showers in the Northern Plains today will drop temperatures into the single digits.
Temperatures will likely hover between the 40s-50s through the Midwest and Central Plains today while heating up into the 60s-70s in the Southern Plains and Southeast.
Snow will settle over the Great Lakes region today, with rains lining the southern edge of the system in the Eastern Corn Belt. But those systems should largely dissipate by tomorrow afternoon.
Financials
Yesterday’s selloff in the stock market continued overnight, with S&P 500 stocks shedding 5 points (0.11%) to land at $4,492.50 at last glance.
St. Louis Fed President James Bullard reportedly expressed favor for raising the Federal Funds rate by a full percentage point by July 1 yesterday. The statement scared markets, as traders feared that the Federal Reserve may move too aggressively too quickly on interest rates. Bullard also floated the idea that the Fed could raise interest rates outside of monthly Federal Open Market Committee (FOMC) meetings – a move that is typically only reserved for emergency action.
To be clear, Bullard’s comments are not largely aligned with current plans in place by Fed Chairman Jerome Powell. Powell has been incredibly transparent about the Fed’s plans to raise interest rates in an effort to keep markets stable, so Bullard’s comments easily disrupted that dynamic.
There is a lot of hype in these markets. But Powell has a proven track record of acting in the best interest for the broader markets – which benefits farmers. An interest rate hike is certainly coming, with Powell’s latest forecasts suggesting a half point rise in rates will hit next month. But don’t sell the farm on the rampant speculation about rates that is seething through the marketplace.
Also worth a read on our website, FarmFutures.com:
2021 ag exports shattered all previous records, soaring to $177 billion.
Naomi Blohm shares three reasons why wheat prices could go even higher.
Did you miss the Farm Futures Ag Business Summit a few weeks ago in Iowa? No problem! Here are 11 great takes from the 2022 Summit!
Check out our team’s coverage and analysis of the February WASDE report.
We are one year away from a new Farm Bill! Jacqui Fatka summarizes recent House Ag Committee hearings evaluating the current Farm Bill.
Morning Ag Commodity Prices – 2/11/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
6.485
6.3775
6.4625
0.045
0.70%
MAY ’22 CORN
$ / BSH
6.47
6.365
6.45
0.045
0.70%
JUL ’22 CORN
$ / BSH
6.415
6.31
6.395
0.045
0.71%
SEP ’22 CORN
$ / BSH
6.0275
5.9375
6.0075
0.0375
0.63%
DEC ’22 CORN
$ / BSH
5.9025
5.81
5.8825
0.035
0.60%
MAR ’23 CORN
$ / BSH
5.9675
5.88
5.9425
0.025
0.42%
MAY ’23 CORN
$ / BSH
6
5.9125
5.97
0.02
0.34%
MAR ’22 SOYBEANS
$ / BSH
15.88
15.685
15.8675
0.125
0.79%
MAY ’22 SOYBEANS
$ / BSH
15.91
15.71
15.8925
0.1275
0.81%
JUL ’22 SOYBEANS
$ / BSH
15.86
15.655
15.845
0.1325
0.84%
AUG ’22 SOYBEANS
$ / BSH
15.535
15.355
15.535
0.1325
0.86%
SEP ’22 SOYBEANS
$ / BSH
14.8275
14.665
14.8275
0.12
0.82%
NOV ’22 SOYBEANS
$ / BSH
14.45
14.26
14.445
0.125
0.87%
JAN ’23 SOYBEANS
$ / BSH
14.4025
14.225
14.4025
0.12
0.84%
MAR ’23 SOYBEANS
$ / BSH
14.115
13.9475
14.115
0.1175
0.84%
MAY ’23 SOYBEANS
$ / BSH
13.965
13.8925
13.965
0.09
0.65%
MAR ’22 SOYBEAN OIL
$ / LB
65.39
63.89
65.29
0.78
1.21%
MAY ’22 SOYBEAN OIL
$ / LB
65.37
63.91
65.37
0.87
1.35%
MAR ’22 SOY MEAL
$ / TON
459.3
452.4
458.5
4.5
0.99%
MAY ’22 SOY MEAL
$ / TON
456.4
450.4
455.7
3.9
0.86%
JUL ’22 SOY MEAL
$ / TON
455
449.5
454.1
3.5
0.78%
AUG ’22 SOY MEAL
$ / TON
445
439.1
444.2
3.4
0.77%
SEP ’22 SOY MEAL
$ / TON
430.5
427.5
430.4
3
0.70%
MAR ’22 Chicago SRW
$ / BSH
7.8325
7.6475
7.8225
0.1075
1.39%
MAY ’22 Chicago SRW
$ / BSH
7.9025
7.72
7.8925
0.105
1.35%
JUL ’22 Chicago SRW
$ / BSH
7.8725
7.6875
7.87
0.12
1.55%
SEP ’22 Chicago SRW
$ / BSH
7.8775
7.6975
7.8775
0.1175
1.51%
DEC ’22 Chicago SRW
$ / BSH
7.9125
7.7375
7.9125
0.115
1.47%
MAR ’22 Kansas City HRW
$ / BSH
8.0775
7.915
8.0675
0.0575
0.72%
MAY ’22 Kansas City HRW
$ / BSH
8.1075
7.945
8.0975
0.06
0.75%
JUL ’22 Kansas City HRW
$ / BSH
8.1275
7.965
8.12
0.065
0.81%
SEP ’22 Kansas City HRW
$ / BSH
8.1625
8.005
8.155
0.065
0.80%
DEC ’22 Kansas City HRW
$ / BSH
8.2375
8.09
8.2375
0.07
0.86%
MAR ’22 MLPS Spring Wheat
$ / BSH
9.49
9.3025
9.4425
0.02
0.21%
MAY ’22 MLPS Spring Wheat
$ / BSH
9.455
9.2725
9.4125
0.03
0.32%
JUL ’22 MLPS Spring Wheat
$ / BSH
9.38
9.2175
9.38
0.0625
0.67%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.1375
8.9825
9.135
0.0775
0.86%
DEC ’22 MLPS Spring Wheat
$ / BSH
8.9775
8.9075
8.9775
-0.0225
-0.25%
MAR ’21 ICE Dollar Index
$
96.05
95.675
95.74
0.192
0.20%
MA ’21 Light Crude
$ / BBL
91.35
89.19
91.19
1.31
1.46%
AP ’21 Light Crude
$ / BBL
89.86
87.79
89.71
1.15
1.30%
MAR ’22 ULS Diesel
$ /U GAL
2.8611
2.803
2.8577
0.0305
1.08%
APR ’22 ULS Diesel
$ /U GAL
2.7563
2.7042
2.7547
0.0271
0.99%
MAR ’22 Gasoline
$ /U GAL
2.689
2.6391
2.686
0.0206
0.77%
APR ’22 Gasoline
$ /U GAL
2.8157
2.7685
2.813
0.0215
0.77%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
166.725
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
171.75
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
142.35
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
146.875
0
0.00%
FEB ’22 Live Hogs
$ / CWT
0
#N/A
90.175
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
103.425
0
0.00%
FEB ’22 Class III Milk
$ / CWT
20.7
#N/A
20.74
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.15
22.1
22.15
0.04
0.18%
APR ’22 Class III Milk
$ / CWT
22.6
22.6
22.6
0.05
0.22%
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