Morning report: Grains continue higher on Black Sea concerns. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 2-4 cents
Soybeans up 7-13 cents; Soymeal up $3.50/ton; Soyoil up $0.70/lb
Chicago wheat up 10-14 cents; Kansas City wheat up 12-13 cents; Minneapolis wheat up 14-16 cents
*Prices as of 6:50am CDT.
Ukraine
It’s spring in the Northern Hemisphere, which means that analysts, traders, and farmers are all eagerly penciling out 2022 crop allocations in hopes of predicting future prices moves in the grain and oilseed markets.
This year will prove to be especially challenging as Russia continues its unprovoked military invasion of neighboring Ukraine. Ukraine’s agriculture minister Roman Leshchenko announced yesterday that Ukraine’s spring sowing activities will likely be halved from a year ago to about 17.3 million acres. Prior to Russia’s occupation, Ukrainian farmers were predicted to sow 37.1 million acres of spring crops.
Ukraine is the world’s fourth largest corn exporter and has recently slipped down a spot to the world’s fifth largest wheat exporter following the Russian invasion. Its exports are a critical lifeline for affordable feed and foodstuffs to numerous Middle East and African countries.
“The adjusted plan currently stands at 7 million hectares. We have actually corrected (the initial plan) by half. There will be less corn,” Leshchenko told Reuters. “We have large stocks of corn, and how to export it later is a very difficult question.”
“Today, the issue of food security is at the forefront,” Leshchenko stated, emphasizing that the Ukrainian agriculture ministry is encouraging farmers to plant more spring wheat, buckwheat, oats, millet, and spring barley crops that are more accessible to Ukraine’s increasingly besieged population as Russian forces continue their brutal assault.
Input accessibility and affordability is of paramount concern for Ukrainian growers right now as fertilizer and fuel supplies are likely to be delayed to Ukrainian growers after Russia has destroyed much of Ukraine’s infrastructure, rattling supply chains in the region.
With its Black Sea terminals blockaded by Russian military forces, Ukraine is turning to what is left of its remaining infrastructure from Russian attacks and using trucks and railways to ship grain to neighboring countries where it can be loaded onto cargo vessels and shipped around the world.
“The territory of hostilities is constantly moving, and we hope that there will be some changes in the situation in terms of achieving peace, and we will be able to plant at least late crops those areas that are now in the war zone.”
Corn
Corn futures drifted $0.02-$0.04/bushel higher overnight on lingering concerns over a protracted Russian-Ukrainian war that would continue to hinder Ukrainian corn production and tighten global corn supplies.
“We are in for a long war between Russia and Ukraine, which we did not expect,” one Singapore-based trader told Reuters overnight. “The war will continue to impact supplies from the Black Sea region.”
Oil prices traded 2.5% higher overnight, with the nearby Brent crude oil contract nearing the $120/barrel benchmark as global entities continue to navigate a potential ban of Russian energy supplies following its unprovoked military invasion of Ukraine.
High fuel prices may have started eating into consumer fuel demand last week, tabling the previous week’s 10-week high in gasoline consumption. Weekly readings from last week’s Petroleum Inventory Status report from the U.S. Energy Information Administration (EIA) saw ethanol output level off at 43.1 million gallons/day of weekly production, easing 0.2% back from the previous week’s volumes.
What does today’s report have in store for weekly ethanol volumes? As fuel prices remain high, more ethanol production will likely be demanded by the market to ease the pain of high gas. Cash offerings at Midwestern ethanol plants remains largely negative outside of key Corn Belt areas but rose higher yesterday and is increasingly trending towards premiums above futures prices.
Even as corn futures prices steady above the $7/bushel benchmark, ethanol plants seem to be unwavering in production schedules. All signs suggest that the ethanol boom will likely continue, to the benefit of the U.S. corn grower.
Soybeans
Strengthening export prospects for the U.S. amid tightening South American supplies boosted soybean futures prices overnight, sending nearby Chicago contracts $0.07-$0.12/bushel higher at last glance.
Wheat
U.S. wheat futures largely steadied above the $11/bushel benchmark overnight, with gains ranging between $0.09-$0.17/bushel as slow trade flows out of the Black Sea continue to breed fear of potential supply shortfalls into global markets.
“Ukrainian ports remained closed and the country is likely to export just 200,000 tonnes (7.3M bu.) of wheat during March-June, analyst APK-Inform said on Monday, as it cut its 2021/22 forecast for Ukrainian wheat exports to 18.3 million tonnes (672.3M bu.) from 22.5 million tonnes (826.7M bu.),” a Reuters report explained this morning.
Russia’s winter wheat crop is in great shape, according to Russian state forecaster Hydrometcentre. Hydrometcentre’s head of science, Roman Vilfand, did not provide crop size estimates in an online webinar overnight, but assured viewer that only 10% of Russia’s winter grain crops outside of top-producing regions are in danger of being rated in poor condition.
“The forecast for the harvest of winter crops is good,” Vilfand said. Russia’s agriculture ministry expects favorable soil moisture levels, particularly in Russia’s southern regions, to fuel a 1% increase in Russia’s annual grains harvest, boosting the 2022 expected total for both spring and winter grains to 123 million tonnes.
Western economic sanctions levied against Russia could make it difficult for the market to price Russia’s grain this year, however. Russia has resumed some grain shipments in the wake of its unprovoked military invasion of Ukraine, but global buyers have shied away from booking new orders as Russian grains remain inaccessible to the U.S. dollar.
Weather
A wintery precipitation mix will continue to hover in the Upper Mississippi River Valley today, according to NOAA’s short-range forecasts. Rain showers and thunderstorms will batter the Eastern Corn Belt and Southeast again today, though 24-hour precipitation totals are forecast to be significantly lower than yesterday’s showers resulting in about a quarter inch of accumulation.
Financials
S&P 500 futures shed 23 points (0.51%) to $4,482 overnight as yesterday’s bond selloff continued. The bond selloff stems directly from the global push to curb inflation by raising interest rates. Commodities and equity stocks are widely viewed as a hedge against inflation, increasing the attractiveness of those assets to the broader markets.
“We are positive for equities for this year,” Seema Shah, Principal Global Investors chief strategist, told Bloomberg this morning. “We still think the U.S. economy is pretty good fundamentally,” Shah said, despite more challenging market conditions to come in 2023 and rising risks for recession as central banks try to slow inflationary pressures.
Also worth a read on our website, FarmFutures.com:
Markets are trading at an unprecedented level of volatility. Advance Trading’s Brady Huck shows farmers how to focus on what can be controlled in a recent Ag Marketing IQ column.
La Nina is back for a second straight spring and Bryce Knorr has key insights about tight supplies, fertilizer markets, and the ongoing Russian-Ukrainian war that could point to more high prices.
Commstock Investment’s Matthew Kruse outlines the importance of Brazil’s safrinha crop after the country finished up its soybean harvest last week.
Happy belated National Ag Day! Here’s how the Farm Progress team celebrated the holiday!
Morning Ag Commodity Prices – 3/23/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.5825
7.49
7.57
0.04
0.53%
JUL ’22 CORN
$ / BSH
7.35
7.26
7.34
0.0425
0.58%
SEP ’22 CORN
$ / BSH
6.89
6.805
6.885
0.0325
0.47%
DEC ’22 CORN
$ / BSH
6.7425
6.65
6.7375
0.0375
0.56%
MAR ’23 CORN
$ / BSH
6.75
6.66
6.745
0.0375
0.56%
MAY ’23 CORN
$ / BSH
6.755
6.6775
6.755
0.0425
0.63%
JUL ’23 CORN
$ / BSH
6.735
6.6525
6.73
0.04
0.60%
MAY ’22 SOYBEANS
$ / BSH
17.1175
16.91
17.095
0.13
0.77%
JUL ’22 SOYBEANS
$ / BSH
16.945
16.735
16.93
0.1425
0.85%
AUG ’22 SOYBEANS
$ / BSH
16.485
16.3025
16.465
0.1275
0.78%
SEP ’22 SOYBEANS
$ / BSH
15.63
15.46
15.615
0.12
0.77%
NOV ’22 SOYBEANS
$ / BSH
15.095
14.9375
15.0775
0.0975
0.65%
JAN ’23 SOYBEANS
$ / BSH
14.985
14.8575
14.96
0.0675
0.45%
MAR ’23 SOYBEANS
$ / BSH
14.5925
14.485
14.58
0.0625
0.43%
MAY ’23 SOYBEANS
$ / BSH
14.48
14.4
14.4675
0.0525
0.36%
JUL ’23 SOYBEANS
$ / BSH
14.4375
14.4225
14.4375
0.0575
0.40%
MAY ’22 SOYBEAN OIL
$ / LB
75.46
74.23
75.1
0.56
0.75%
JUL ’22 SOYBEAN OIL
$ / LB
72.85
71.81
72.61
0.44
0.61%
MAY ’22 SOY MEAL
$ / TON
482
476.1
480.5
3.7
0.78%
JUL ’22 SOY MEAL
$ / TON
475.4
469.7
473.5
3
0.64%
AUG ’22 SOY MEAL
$ / TON
462.6
457
461.6
3.5
0.76%
SEP ’22 SOY MEAL
$ / TON
448.8
443.2
447.5
3.9
0.88%
OCT ’22 SOY MEAL
$ / TON
434.5
428.5
434.5
4.4
1.02%
MAY ’22 Chicago SRW
$ / BSH
11.385
11.09
11.3625
0.18
1.61%
JUL ’22 Chicago SRW
$ / BSH
11.2125
10.915
11.175
0.165
1.50%
SEP ’22 Chicago SRW
$ / BSH
10.85
10.6075
10.81
0.125
1.17%
DEC ’22 Chicago SRW
$ / BSH
10.515
10.2925
10.5025
0.1275
1.23%
MAR ’23 Chicago SRW
$ / BSH
10.2175
10.0225
10.1975
0.0925
0.92%
MAY ’22 Kansas City HRW
$ / BSH
11.35
11.0825
11.325
0.16
1.43%
JUL ’22 Kansas City HRW
$ / BSH
11.2825
11.015
11.2675
0.17
1.53%
SEP ’22 Kansas City HRW
$ / BSH
11.1
10.875
11.1
0.1525
1.39%
DEC ’22 Kansas City HRW
$ / BSH
10.9675
10.7475
10.96
0.1525
1.41%
MAR ’23 Kansas City HRW
$ / BSH
10.605
10.605
10.605
0.0325
0.31%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.1425
10.9125
11.1425
0.185
1.69%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.09
10.86
11.09
0.185
1.70%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.85
10.6425
10.85
0.1675
1.57%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.81
10.63
10.81
0.1575
1.48%
MAR ’23 MLPS Spring Wheat
$ / BSH
0
#N/A
10.5825
0
0.00%
JUN ’21 ICE Dollar Index
$
98.825
98.425
98.805
0.282
0.29%
MA ’21 Light Crude
$ / BBL
112.31
108.38
112.2
2.93
2.68%
JU ’21 Light Crude
$ / BBL
109.41
105.69
109.35
2.8
2.63%
APR ’22 ULS Diesel
$ /U GAL
3.9033
3.7659
3.8765
0.0123
0.32%
MAY ’22 ULS Diesel
$ /U GAL
3.6482
3.546
3.6292
0.0334
0.93%
APR ’22 Gasoline
$ /U GAL
3.3874
3.2994
3.3772
0.0465
1.40%
MAY ’22 Gasoline
$ /U GAL
3.365
3.2722
3.3565
0.0519
1.57%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
156.325
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
160.575
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
139.425
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
135.7
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
100.25
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
111.225
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.39
22.37
22.39
-0.03
-0.13%
APR ’22 Class III Milk
$ / CWT
24.27
24.27
24.27
-0.04
-0.16%
MAY ’22 Class III Milk
$ / CWT
25.05
25.05
25.05
0.02
0.08%
Get our top content delivered right to your inbox. Subscribe to our morning and afternoon newsletters!
