Corn up 1-3 cents
Soybeans down 1-2 cents; Soymeal down $0.10/ton; Soyoil down $0.84/lb
Chicago wheat up 5-6 cents; Kansas City wheat up 3-4 cents; Minneapolis wheat up 7-10 cents
*Prices as of 6:50am CDT.
Happy report day!
USDA releases its 2022 Prospective Plantings and Quarterly Grain Stocks reports today, providing updated supply information to the markets about U.S. crop stocks.
Our Farm Futures team will have live coverage and analysis of USDA’s reports following their release at 11am CDT on Thursday, March 31, 2022. Stay tuned to our website (FarmFutures.com) or our social feeds (@FarmFutures) for the latest updates.
Plus, I will be a guest on a Farm Progress 365 web event at 1pm CDT following USDA’s reports release on Thursday where I will provide analysis and insights from the acreage and grain stocks updates. Join us by registering at this link and feel free to ask me any questions you may have about the reports.
I wrote a preview of what to expect in today’s reports that can be found at this link. But here is a quick preview of what to expect in today’s reports. Good luck!
Tight global grain and oilseed supplies have created lucrative pricing opportunities for virtually every acreage allocation that farmers may be considering this year, triggering expansion signals. Combined corn, soybean, and wheat acreage in 2021 (227.3M ac.) was the ninth highest on record.
Current trade guesses estimate that 2022 acreages could land somewhere between the sixth and eighth place in history in Thursday’s Prospective Planting report from USDA’s National Agricultural Statistics Service (NASS). The report will verify this expansion – or the bulls will greet it if acreage allocations fall short of market expectations.
A lot of trade estimates have consolidated closely to USDA’s 2022 Agricultural Outlook Forum (AOF) preliminary forecast, issued late February 2022. USDA does not use its standard farmer-based surveys to calculate the figures used in those estimates, opting for modeled forecasts based on economic assumptions. Additionally, this year’s data does not account for altered trade flows amid the Black Sea conflict.
To my mind, the lack of diverse trade estimates suggests that the rampant market volatility has created an uncertain environment which has made 2022 acreage forecasts more challenging for the industry this spring. The global uncertainty plaguing commodity markets will not last forever but in the short-term, but it makes forecasting closer to USDA’s current estimates a safer bet.
I’ve written at length about Farm Futures’ January 2022 and March 2022 surveys, which have both indicated high farmer sensitivity to soaring input prices. But timing is what matters most, according to our surveys.
And that points to farmers being locked in on acreage closer to Christmas 2021 than in January or February 2022.
I suspect that this dynamic will lead corn and soybean acreages to closely mirror each other in Thursday’s report. Our farmer survey favors soybean acreage (92.2M ac.) over that of corn (90.4M ac.) in 2022, as profit expectations for crops beside corn have soared on the Corn Belt’s fringes. I expect to see soybean prices take a hit on Thursday if USDA finds that soy acreage will indeed outpace corn acres in 2022. If that’s not the case, I think corn prices will hit price resistance in the face of higher 2022 corn acreage.
A boom in winter wheat acreage in Missouri, North Carolina, and Ohio, plus acreage expansions in Texas, Kansas, and the Dakotas will open opportunities for double crop rotations with soybeans in the coming months. A shrinking cattle herd on the Plains could also divert 2021 corn acreage to alternative options this year, such as sorghum, which has lucrative feed export prospects and could withstand current drought conditions in the region better than other crops.
But as high fertilizer prices begin to rise into higher territory following Russia’s unprovoked military invasion of Ukraine, acreage expansions for other lucrative crops could be at risk. Farm Futures’ spring wheat and cotton forecasts showed an uptick in 2022 acreage intentions, but growers’ responses came in slightly below USDA’s February 2022 forecasts. Durum acreage shrunk from 2021 sowings amid stiff competition from alternative crops. That could point to bullish results on Thursday if realized.
Chemical availability – or lack thereof – will be a constraining factor for 2022 production with 76% of growers expecting 2022 herbicide deliveries to be delayed due to ongoing supply chain issues. Paired with its soaring costs, I anticipate that it will be a limiting factor for cotton and rice production this year, which could boost prices on Thursday.
While farmers were hesitant to forecast fertilizer prices in to 2023, 74% expect input prices will remain higher this spring than in Fall 2022. But one thing is clear – even if input prices are do not end up significantly impacting 2022 acreages, it will likely be a key factor in the coming year’s acreage plans.
Quarterly grain stocks
As Farm Futures contributing grain analyst Bryce Knorr points out, there is typically not as much market response to the Quarterly Grain Stocks portion of Thursday’s USDA reports. “Supply estimates won’t change much: 2021 crop production usually isn’t updated until the end of September, if then, and stocks at the beginning of the marketing year – 2020 crop ending stocks – are also fixed,” Knorr forecasts in a recent Ag Marketing IQ column.
Historically, corn usage rates for the December – February period jockey with third quarter consumption for the second largest quarterly consumption volumes of a marketing year. Analyst estimates are expecting lower usage rates for Thursday’s report, as peak export season typically will not accelerate corn disappearance until late February.
A smaller cattle herd could also keep corn supplies on the high side of analyst estimates. The wild card for corn in Thursday’s report? Corn consumption for ethanol.
Soybean usage rates are also likely to come in on the low end of analyst estimates in Thursday’s report. To be sure, soybean export paces in December and January were 25% lower relative to a year prior, which could result in a higher soybean stock reading on Thursday – a bearish factor.
The trade isn’t expecting much here, so any indication of increased soybean usage (lower stock readings) during the December – February period could be bullish for soybeans. It will indicate how strong domestic demand has risen and supply availability for a potential late season export push due to South American crop shortfalls.
Wheat supplies will land on the low side of historical estimates in Thursday’s report because of last summer’s spring wheat shortfall in the Northern Plains and Pacific Northwest. We are expecting another quarter of low domestic wheat usage as high prices limit feed demand and export interest.
USDA has already indicated in the March 2022 World Agricultural Supply and Demand Estimates report that wheat growers have already sold most of their 2021 wheat crops. This suggests that on-farm wheat stocks will likely be on the low end on Thursday’s report.
Corn
Corn prices were mixed to slightly higher this morning ahead of today’s USDA reports. Traders are juggling prospects for a Ukrainian peace deal, falling energy prices, and potentially lower U.S. corn acreage today.
Russia announced overnight it would raise export quotas for nitrogen and other fertilizer exports, after limiting said fertilizers from December 1, 2021 – May 31, 2022. But as global buyers largely ignore Russian supplies amid Western banking sanctions, the additional Russian output and price discount could potentially help ease some of the supply constraints on the fertilizer market.
The Biden Administration’s Environmental Protection Agency (EPA) said last night it is “considering a range of options across the administration to help mitigate impacts from Russia’s actions on American consumers.”
One such option is likely considering a temporary removal of restrictions for high-ethanol gasoline blends over the peak summer travel months. Corn is currently cheaper than gasoline, so the move would help stabilize gasoline prices as a busy summer travel season approaches.
That means that E15 fuel blends could increase by the time summer vacation arrives, which would benefit consumers, ethanol producers, and corn growers. E15 sales are currently banned during the summertime due to dated concerns that E15 increases smog. Research has since debunked that theory.
Ethanol producers are currently taking advantage of expansion signals as blending rates rise. Weekly output stabilized at 43.5 million gallons/day, according to updated Petroleum Inventory Status data released by the U.S. Energy Information Administration yesterday.
High gasoline prices did show signs of deterring consumer demand, as weekly gasoline consumption slumped for the third straight week. Ethanol stockpiles rose for a fourth straight week while blending volumes backed off.
Should the E15 ban be lifted, the ethanol industry will have more than enough capacity to meet production targets. Cash prices offered at ethanol plants edged lower this week amid high futures prices, so an E15 push could help revive expansion efforts to the benefit of the U.S. corn grower.
Soybeans
Prices in the soy complex edged lower overnight on falling energy prices and a likely acreage expansion for U.S. soybean crops this spring. Even with constricted Russian sunflower shipments, soyoil prices followed the rest of the complex lower on expanded soybean acreage in the U.S.
Russia announced plans to ban sunflower seed exports overnight and will slap export quotas on sunflower oil shipments in an effort to reduce soaring domestic food prices and tight availability. The sunflower oil quota begins April 15 and will continue through August 31 for shipments over 1.5 million metric tonnes (MMT). A quota will also be enforced on sunflower meal shipments over 700,000 MT. The sunflower seed export ban will be enforced beginning tomorrow through August 31.
With sharp growth in global prices for sunflower oil and oilseeds, there is currently increased demand for the Russian product,” Russia’s agriculture ministry said in an overnight statement. “This set of measures will eliminate the possibility of shortages, as well as sharp increases in the cost of raw materials and socially important products in Russia.”
India, the world’s largest edible oils importer, notably snapped up large volumes of Russian sunflower oil earlier this week. Russia’s move will likely add further price pressure to rising food inflation across the globe.
Wheat
Wheat prices inched up this morning, despite pressure from a higher dollar. Optimism for a potential ceasefire in the Black Sea waned. Even as Ukraine tries to export agricultural products through neighboring Romania’s Black Sea export terminals, global buyers are actively finding new sources for wheat supplies amidst the Black Sea conflict.
“Ceasefire seems unlikely for now,” an Asia-based source with an international trading house told Reuters last night, referencing the war Ukrainian-Russian war. “Market is relatively cautious at this moment, waiting for the USDA report.”
Despite lingering concerns amid the Russian military invasion, Ukrainian farmers continue to plow forward with planting progress. Ukrainian deputy agriculture minister Taras Vysotskiy announced late last night that farmers have already planted 988,000 acres of spring crops as of last Thursday – a tenth more than the same time last year.
Vysotskiy noted that fuel access has not slowed down planting progress so far and the government is doing everything in its power to keep farmers in the fields this spring. “We are negotiating with suppliers so that the sowing campaign does not stop,” Vysotskiy said in a televised statement.
This could provide much relief to turbulent grain markets, which have soared as Ukraine’s supply future remains murky. Earlier this month, Ukrainian agricultural officials estimated 2022 spring crop sowings could be cut in half to 17.3 million acres from last year’s 37.1 million acres.
Hopes for a ceasefire agreement between Russia and Ukraine ran high yesterday morning, before being dashed by news of continued Russian shelling of Ukrainian cities.
Financials
S&P 500 futures edged 3.25 points (0.07%) lower overnight to $4,592.75 amid inflationary pressures. The February 2022 Personal Consumption Expenditures (PCE) index will be released today, which provides the latest look at the Federal Reserve’s preferred metric of inflation.
Higher than expected inflationary readings in Europe are also weighing markets lower this morning. March inflation numbers for Germany and France rose to record highs while Spain’s reading notched a 40-year high.
Markets are trying to beat out global central banks by planning for higher interest rates in the short-term. Increasing interest rates is a tool central banks use to combat rising inflation.
Energy futures also tumbled this morning as China continues its omicron-driven lockdown and U.S. President Joe Biden mulls releasing a million barrels of strategic oil reserves a day for several months to combat high energy costs for consumers. OPEC+ meets today, though it will not likely approve more than a modest expansion of production in the coming months.
Also worth a read on our website, FarmFutures.com
Naomi Blohm dissects the meaning for farmers behind Wednesday’s soybean market rally.
Check out our 2022 acreage projections from our March 2022 Farm Futures survey!
Join us this afternoon at 1pm CDT to discuss the latest USDA reports! I’ll be featured in a Farm Progress 365 session to discuss the impacts of the updated data.
Will old crop supplies last before 2022 crops come online? Bryce Knorr points out that this factor will be on everyone’s minds ahead of Thursday’s USDA reports.
Morning Ag Commodity Prices – 3/31/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.41
7.325
7.3775
-0.0025
-0.03%
JUL ’22 CORN
$ / BSH
7.2325
7.1475
7.2075
0.0075
0.10%
SEP ’22 CORN
$ / BSH
6.77
6.6975
6.7525
0.0175
0.26%
DEC ’22 CORN
$ / BSH
6.6
6.5325
6.595
0.035
0.53%
MAR ’23 CORN
$ / BSH
6.635
6.57
6.625
0.0325
0.49%
MAY ’23 CORN
$ / BSH
6.6575
6.5975
6.655
0.035
0.53%
JUL ’23 CORN
$ / BSH
6.6525
6.5925
6.65
0.0325
0.49%
MAY ’22 SOYBEANS
$ / BSH
16.685
16.52
16.6425
0.0025
0.02%
JUL ’22 SOYBEANS
$ / BSH
16.47
16.3125
16.415
-0.01
-0.06%
AUG ’22 SOYBEANS
$ / BSH
16.0025
15.8725
15.9475
-0.02
-0.13%
SEP ’22 SOYBEANS
$ / BSH
15.1475
15.085
15.135
-0.045
-0.30%
NOV ’22 SOYBEANS
$ / BSH
14.7375
14.6125
14.7
-0.0025
-0.02%
JAN ’23 SOYBEANS
$ / BSH
14.65
14.55
14.6325
-0.005
-0.03%
MAR ’23 SOYBEANS
$ / BSH
14.3625
14.255
14.325
-0.0325
-0.23%
MAY ’23 SOYBEANS
$ / BSH
14.29
14.21
14.26
-0.0375
-0.26%
JUL ’23 SOYBEANS
$ / BSH
14.2175
14.215
14.215
-0.055
-0.39%
MAY ’22 SOYBEAN OIL
$ / LB
72.42
71.16
71.42
-0.8
-1.11%
JUL ’22 SOYBEAN OIL
$ / LB
70.77
69.63
69.99
-0.69
-0.98%
MAY ’22 SOY MEAL
$ / TON
475.1
472
473.3
0.2
0.04%
JUL ’22 SOY MEAL
$ / TON
469.1
466
467.6
0.7
0.15%
AUG ’22 SOY MEAL
$ / TON
457.6
455.1
456.5
1
0.22%
SEP ’22 SOY MEAL
$ / TON
442.3
440.4
442.3
1.6
0.36%
OCT ’22 SOY MEAL
$ / TON
428.3
425.9
427.8
1
0.23%
MAY ’22 Chicago SRW
$ / BSH
10.395
10.2075
10.3075
0.035
0.34%
JUL ’22 Chicago SRW
$ / BSH
10.3575
10.17
10.255
0.025
0.24%
SEP ’22 Chicago SRW
$ / BSH
10.21
10.0175
10.1225
0.04
0.40%
DEC ’22 Chicago SRW
$ / BSH
10.035
9.85
9.9625
0.0525
0.53%
MAR ’23 Chicago SRW
$ / BSH
9.76
9.65
9.7475
0.04
0.41%
MAY ’22 Kansas City HRW
$ / BSH
10.5775
10.36
10.4625
0.0175
0.17%
JUL ’22 Kansas City HRW
$ / BSH
10.5775
10.36
10.47
0.0225
0.22%
SEP ’22 Kansas City HRW
$ / BSH
10.505
10.315
10.415
0.02
0.19%
DEC ’22 Kansas City HRW
$ / BSH
10.45
10.3125
10.37
0.0225
0.22%
MAR ’23 Kansas City HRW
$ / BSH
10.2675
#N/A
10.2175
0
0.00%
MAY ’22 MLPS Spring Wheat
$ / BSH
10.705
10.5525
10.675
0.095
0.90%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.6975
10.54
10.6675
0.095
0.90%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.47
10.375
10.445
0.07
0.67%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.48
10.365
10.4275
0.065
0.63%
MAR ’23 MLPS Spring Wheat
$ / BSH
10.3725
10.35
10.35
0.04
0.39%
JUN ’21 ICE Dollar Index
$
98.325
97.76
98.255
0.38
0.39%
MA ’21 Light Crude
$ / BBL
107.8
100.16
102.42
-5.4
-5.01%
JU ’21 Light Crude
$ / BBL
105.64
98.4
100.48
-5.2
-4.92%
APR ’22 ULS Diesel
$ /U GAL
3.7925
3.667
3.667
-0.1415
-3.72%
MAY ’22 ULS Diesel
$ /U GAL
3.479
3.2865
3.3298
-0.1272
-3.68%
APR ’22 Gasoline
$ /U GAL
3.2159
3.2031
3.2031
-0.1219
-3.67%
MAY ’22 Gasoline
$ /U GAL
3.2793
3.1222
3.1633
-0.1231
-3.75%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
155.975
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
163.675
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
140.175
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
138
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
104.525
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
117
0
0.00%
APR ’22 Class III Milk
$ / CWT
23.55
23.55
23.55
0.09
0.38%
MAY ’22 Class III Milk
$ / CWT
23.93
23.91
23.93
0.03
0.13%
JUN ’22 Class III Milk
$ / CWT
23.7
#N/A
23.73
0
0.00%
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Morning report: Plus – a preview of the 2022 Prospective Plantings and Quarterly Grain Stocks reports. (Comments are updated by 7:30 a.m. Central Time.)
