Afternoon report: Grains face broad selloff to start the week.
Grain prices suffered significant cuts on Monday as part of a broad commodity selloff largely triggered by new coronavirus concerns amid fresh lockdowns in Shanghai (a key Chinese financial hub) – the biggest such move since the early days of the pandemic. Ongoing negotiations between Russia and Ukraine created additional bearish pressure for wheat prices today. Corn prices dropped nearly 1%, soybean prices slumped nearly 3% lower, and most wheat contracts were slashed more than 4%.
Between today and Thursday, nearly all of the Midwest and Plains will receive at least some measurable moisture, per the latest 72-hour cumulative precipitation map from NOAA. Some parts of the Mid-South and eastern Corn Belt could gather 1.5″ or more during this time. NOAA’s new 8-to-14-day outlook predicts near-normal precipitation amounts for the central U.S. between April 4 and April 10, with seasonally cool weather likely for most areas east of the Mississippi River next week.
On Wall St., the Dow eased 130 points lower in afternoon trading to 34,730 but has been on a general upward trajectory for the past two weeks as investors continue to bake in expectations about the Russian invasion of Ukraine and expectations for multiple interest rate hikes later this year. Energy futures plummeted on news of Chinese covid-related lockdowns, which raises questions about global demand. Crude oil spilled 7% lower to $106 per barrel, with gasoline also down 7% and diesel dropping 8%. The U.S. Dollar firmed moderately.
Last Friday, commodity funds were net buyers of all major grain contracts, including corn (+4,500), soybeans (+4,500), soymeal (+4,000), soyoil (+1,000) and CBOT wheat (+6,500).
Corn
Corn prices trended nearly 1% lower, following a broad range of other commodity losses today. Losses were relatively minor compared to other grains after a solid round of export inspection data from USDA this morning, however. May futures dropped 7.25 cents to $7.4675, with July futures down 6.25 cents to $7.2850.
Corn basis bids were lightly mixed at two interior river terminals on Monday but held steady elsewhere across the central U.S. today.
Private exporters announced to USDA the sale of 5.0 million bushels of corn to unknown destinations. Of the total, 60% is for delivery during the current marketing year, with the remaining 40% for delivery in 2022/23.
For the week ending March 24, corn export inspections improved 7% from the prior week to reach 63.2 million bushels. That was also on the upper end of trade estimates, which came in between 39.4 million and 65.5 million bushels. China was the No. 1 destination, with 18.0 million bushels. Cumulative totals for the 2021/22 marketing year are still running moderately behind last year’s pace, with 1.143 billion bushels.
Analysts expect USDA to show 2022 corn acreage estimates at 92.001 million acres when the agency releases its Prospective Plantings report on Thursday morning. If realized, that would be more than a million acres below last year’s 93.357 million acres. Individual trade guesses ranged between 89.700 million and 93.500 million acres.
Turkey’s grain board TMO announced it had made provisional purchases of 11.8 million bushels of corn from optional origins in an international tender that recently closed. The purchases are still subject for final confirmation, and the grain is for shipment between April 8 and May 5. A severe drought last season has caused Turkey to ramp up its grain purchases in recent months.
In South Africa, the country’s Crop Estimates Committee anticipates the 2022 corn harvest will drop 10% from a year ago, to 578.1 million bushels. It would have been hard to duplicate last year’s bin-busting crop, which enjoyed ideal weather conditions for much of the season. South Africa is the continent’s top corn producer.
Preliminary volume estimates were for 182,540 contracts, trending moderately higher than Friday’s final count of 147,204.
Soybeans
Soybean prices eroded steadily throughout Monday’s session on concerns that Chinese demand could wane if a surge of new coronavirus cases majorly affects that country’s economy. Spillover weakness from other commodities created additional downward pressure today. May futures crumbled 49.25 cents to $16.61, with July futures down 44.75 cents to $16.4375.
Soybean basis bids trended 5 cents higher at a Nebraska processor and 2 cents lower at an Iowa river terminal while holding steady elsewhere across the central U.S. on Monday.
Private exporters to USDA the sale of 4.9 million bushels of soybeans for delivery to China during the 2021/22 marketing year, which began September 1.
Soybean export inspections firmed 14% higher from a week ago, reaching 23.1 million bushels. That was a bit toward the lower end of analyst estimates, which ranged between 18.4 million and 29.4 million bushels. Cumulative totals for the 2021/22 marketing year are still well behind last year’s pace, with 1.596 billion bushels.
Ahead of Thursday’s Prospective Plantings report, analysts think USDA will show soybean planting estimates at 88.727 million acres – a significant jump above 2021’s tally of 87.195 million acres, if realized. Individual trade estimates had a broad range of between 86.000 million and 92.208 million acres.
Preliminary volume estimates were for 140,664 contracts, moving 28% above Friday’s final count of 109,639.
Wheat
Wheat prices incurred heavy losses as traders assessed the current situations unfolding in China and the Black Sea region. Losses from a broad range of other commodities – particularly in the energy sector – along with a strengthening U.S. Dollar, drummed up more bearish conditions today. May Chicago SRW futures lost 52 cents to $10.5025, May Kansas City HRW futures tumbled 45.75 cents to $10.65, and May MGEX spring wheat futures dropped 24.75 cents to $10.7950.
Wheat export inspections trended slightly higher week-over-week, making it to 12.5 million bushels. That was toward the lower end of trade guesses, which ranged between 11.0 million and 18.4 million bushels. Mexico and Japan led all destinations, with each country taking 3.1 million bushels. Cumulative totals for the 2021/22 marketing year remain moderately below last year’s pace, with 620.8 million bushels.
Prior to Thursday’s Prospective Plantings report from USDA, analysts think the agency will show 2021/22 all-wheat plantings at 47.771 million acres. If realized, that would be a solid bump above last season’s total of 46.703 million acres. Of the total, winter wheat acres are expected to account for 34.382 million acres, with spring wheat plantings totaling 11.801 million acres.
China sold 20.1 million bushels of its state wheat reserves on auction late last week, which was 98.4% of the total available for sale. China has offered a flurry of similarly sized grain sales earlier this year as it seeks to quell high prices and support its local livestock industry.
Russian consultancy Sovecon estimates that the country will still export 80.8 million bushels of wheat in March, despite the ongoing geopolitical turmoil in the Black Sea region. Russia is the world’s top wheat exporter.
Egypt joins the growing list of countries seeking “Plan B” grain purchases as they avoid the high risks of buying Russian or Ukrainian grain. The country has been in talks with Argentina, France, India and the United States as it lays out a plan for future purchases later this year.
Preliminary volume estimates were for 182,540 CBOT contracts, shifting 24% above Friday’s final count of 147,204.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-May
750.25
740.5
748.5
-7.25
22-Jul
731
721.25
730.5
-6.25
Soybeans
22-May
1710
1661
1664.25
-49.25
22-Jul
1687.25
1643.5
1646.75
-44.75
Soymeal $/ton
22-Jul
479.4
471.1
472.8
-8.9
Soyoil cents/lb
22-Jul
72.42
70.42
70.58
-1.97
Wheat $/bushel
22-May
1096
1047
1057
-52
22-Jul
1082.25
1038.75
1051.5
-48
KC Wheat
22-May
1103.25
1058.75
1070.5
-45.75
22-Jul
1099
1057.5
1069.5
-43.25
MPLS Wheat
22-May
1102
1065.25
1079.5
-24.75
22-Jul
1093.25
1064
1078.25
-24
Live Cattle cents/lb
22-Apr
140.575
139.7
140.15
-0.325
Feeder Cattle cents/lb
22-Apr
161.75
160.525
160.675
-0.9
Lean Hogs cents/lb
22-May
120.125
117.4
119.15
1.25
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Apr
112.93
104.5
105.42
-8.48
Diesel
22-Apr
4.073
3.7156
3.742
-0.3726
Unleaded Gasoline $/gallon
22-Apr
3.474
3.1995
3.2
-0.27
Natural Gas
22-May
5.707
5.452
5.545
-0.066
U.S. Dollar Index
22-Jun
99.365
98.82
99.075
0.253
Gold $/ounce
22-Apr
1959.8
1924.5
1933.4
-20.4
Copper
22-Mar
4.704
4.633
4.704
0.018
Fertilizer Swaps
(as of 03/25)
DAP Tampa-index
1,017.5
0
DAP-New Orleans
1,102.3
19.29
Urea-New Orleans
992.1
8.82
Urea-Middle East
1,130.0
10
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
686.2
24.8
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