Morning report: Traders juggle weather forecasts, Ukrainian war fallout, and rising interest rates in grain markets this morning. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 5-9 cents
Soybeans down 6-9 cents; Soymeal down $1.60/ton; Soyoil up $0.12/lb
Chicago wheat down 13-15 cents; Kansas City wheat down 14-16 cents; Minneapolis wheat down 14-18 cents
*Prices as of 6:55am CDT.
Inputs
Manure is having a moment in the sun amid tight fertilizer supplies and high prices during the spring planting season. “Manure is absolutely a hot commodity,” agriculture consultant Allen Kampschnieder told Reuters. “We’ve got waiting lists.”
Producers who once paid for manure removal are now seeing unprecedented demand for nutrient-rich waste products. Equipment companies are selling out of manure spreaders at breakneck speeds as crop producers scramble to find affordable fertilizer options.
But fertilizer concerns pale in comparison to other input concerns farmers are facing this spring, according to the Farm Futures March 2022 farmer survey. Grower responses suggest that chemicals (herbicides, insecticides, etc.) and equipment/parts procurement are more urgent concerns for growers as the spring planting season ramps up.
To be sure, farmers are still concerned with high fertilizer costs, as evidenced by falling producer sentiment in the latest Purdue Ag Economy Barometer reading released yesterday. But 84% of survey respondents reported being able to obtain the fertilizer supplies in the form (liquid, dry, anhydrous) desired for the 2022 growing season, suggesting that other issues are more pressing for growers this year.
A multitude of compounding factors driving fertilizer prices higher last year helped to spur a production increase at the wholesale level coming into the 2022 planting season. Retailers maneuvered past supply chain headaches by adjusting inventory management strategies to account for longer lead times and larger volumes.
Plus, the expected acreage expansion for 2022 doesn’t seem likely to happen because of high input prices. Last week’s Prospective Plantings report from USDA found 2022 principal crop acreage at 317.4 million acres, a fractional 0.07% increase from last year. But it will keep a cap on U.S. fertilizer demand – thus prices – through the spring 2022 planting season.
Those are key factors that have kept retail fertilizer prices from surging higher through the first few months of 2022, even in the wake of Russia’s military invasion of Ukraine. An index of bi-weekly fertilizer (NPK) and fuel prices in Illinois found only a 0.9% increase in retail NPK and diesel prices since the war’s onset in February 2022.
While farmers expressed the most concern about chemicals, the scramble to source adequate equipment and parts ahead of the season is a timelier issue in farm country right now. When asked which item was more likely to be delayed to the farm this spring, growers narrowly favored equipment and parts (50.4%) over chemicals (49.6%).
While some chemical applications are not necessary for a few more weeks (depending on an individual farm’s growing plans), parts are essential to get planters rolling. Farmers overwhelmingly expect supplies of these two inputs to cause more significant problems than other items in the survey.
For more survey results and to see how growers are adapting their marketing plans in the wake of the Black Sea conflict, check out my latest E-corn-omics article!
Corn
Corn prices in Chicago dipped $0.05-$0.09/bushel overnight as profit-takers swooped in overnight to take the tops off yesterday’s highs, which featured new crop corn futures (the Dec22 contract) trading at a contract high just above the $7/bushel benchmark.
Soybeans
Soybean prices also edged $0.06-$0.09/bushel lower this morning, following corn’s losses amid a round of profit-taking. Rainfall in the parched Upper Plains will improve the soil moisture conditions in the region as the peak planting period approaches, further contributing to soy’s early morning losses.
Wheat
After a two-day rally, wheat futures fell $0.15-$0.18/bushel this morning on a round of technical selling. Poor crop conditions for winter wheat acreage in the U.S. Plains played a big role in the gains. But the wheat market continues to hang in the balance of the Russian-Ukrainian war, with the possibility of a prolonged conflict providing bullish undertones for the global wheat market.
Wheat prices are likely to remain responsive to any further economic sanctions levied against Russia by the west in the coming days. Any new weather developments in the U.S. Plains will also provide future opportunities for price action in the wheat complex.
“A lower U.S. wheat crop would further exacerbate the supply situation on the global market, as Ukraine is also likely to produce considerably less wheat because of the war,” Commerzbank analysts told Reuters this morning.
North African country Tunisia is hoping to become a self-sufficient durum wheat producer this year. Tunisia, which is the world’s 34th largest wheat importer, will increase its state purchasing price of wheat and barley from its farmers to incentivize higher domestic production.
Tunisia had previously been reliant on the Black Sea market for wheat purchases. The country typically consumes double the volume of durum wheat it harvests. It will add nearly 2 million durum acres into production this year.
After days of market speculation, Kazakhstan announced overnight it will officially place export restrictions on wheat and flour shipments for the next two months to help curb soaring domestic food inflationary pressures.
The measures’ enforcement will begin in two weeks and last through June 15. The central Asian country will limit its wheat exports to 36.7 million bushels during that time. Wheat shipments will be capped at 300,000 metric tonnes.
Kazakhstan is the world’s ninth-largest wheat exporter and a critical supplier to other Central Asian countries.
Weather
Another day of rain-snow mix will batter the Northern Plains and Upper Midwest today, according to NOAA’s short-range forecasts. Chances for thunderstorms in the Eastern Corn Belt will ease today, paving the way for softer rain showers ahead of spring planting. Meanwhile, the Southeast will continue to stave off thunderstorm activity today.
The Upper Midwest and Michigan will see the highest chances for accumulation today, with between a quarter to three-quarters of an inch expected. Showers are expected to be lighter elsewhere in the affected area.
The system will continue to hover over the Upper Midwest and Great Lakes region for the rest of the week, thwarting any chances for early planting progress in the region.
Financials
Livestock and dairy prices took a hit yesterday. Dairy was plagued by easing Chinese demand amidst COVID lockdowns across the world’s second-largest economy. Cattle prices were buffeted by seasonality, coming off five weeks of strong prices in the cash cattle market.
Hog prices faced pressure from potential bans of U.S. poultry export amid surging rates of highly pathogenic avian influenza (HPAI) across the country. Any potential losses in the chicken market are likely to be offset by lower production rates.
S&P 500 futures dipped 41.75 points (0.92%) this morning to $4,478.50 amidst a global bond selloff as markets prepare for central banks across the world to raise interest rates to curb inflationary pressures.
“Money-market traders are betting on the steepest Fed tightening in almost three decades following hawkish comments from Governor Lael Brainard on Tuesday,” Robert Brand wrote in a Bloomberg report this morning.
“Market participants finally acknowledged that central banks are serious and will raise interest rates significantly to bring inflation rates down,” Florian Spate, a senior bond strategist at Generali Investments, told Bloomberg. “We expect the selloff to lose momentum but the general trend for yields is likely to point still upwards.”
Also worth a read on our website, FarmFutures.com
Buying corn acres ain’t cheap! Bryce Knorr explains how fast planting paces could help corn buy back acreage from soybeans as new crop corn prices soar to $7/bushel.
Executive editor Mike Wilson has helpful tips on finding spare parts when most needed this spring.
Advance Trading’s Brian Basting echoes Knorr’s sentiments about 2022 acreage, noting that weather could change 2022 acreage shakeups.
My most recent E-corn-omics column has five graphs explaining the March 31 USDA reports. I see you, visual learners!!
Morning Ag Commodity Prices – 4/6/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.61
7.5075
7.51
-0.0875
-1.15%
JUL ’22 CORN
$ / BSH
7.495
7.4025
7.405
-0.0775
-1.04%
SEP ’22 CORN
$ / BSH
7.1975
7.1175
7.1225
-0.0525
-0.73%
DEC ’22 CORN
$ / BSH
7.0875
7.005
7.0075
-0.0575
-0.81%
MAR ’23 CORN
$ / BSH
7.105
7.0275
7.0275
-0.0525
-0.74%
MAY ’23 CORN
$ / BSH
7.095
7.0375
7.0375
-0.04
-0.57%
JUL ’23 CORN
$ / BSH
7.045
6.9975
7.005
-0.0275
-0.39%
MAY ’22 SOYBEANS
$ / BSH
16.43
16.215
16.245
-0.065
-0.40%
JUL ’22 SOYBEANS
$ / BSH
16.25
16.04
16.0725
-0.0675
-0.42%
AUG ’22 SOYBEANS
$ / BSH
15.8525
15.6775
15.6775
-0.0725
-0.46%
SEP ’22 SOYBEANS
$ / BSH
15.0975
14.92
14.9225
-0.085
-0.57%
NOV ’22 SOYBEANS
$ / BSH
14.63
14.4625
14.47
-0.0875
-0.60%
JAN ’23 SOYBEANS
$ / BSH
14.6
14.445
14.445
-0.09
-0.62%
MAR ’23 SOYBEANS
$ / BSH
14.35
14.235
14.2375
-0.0825
-0.58%
MAY ’23 SOYBEANS
$ / BSH
14.33
14.275
14.33
0.0325
0.23%
JUL ’23 SOYBEANS
$ / BSH
14.33
14.2625
14.33
0.03
0.21%
MAY ’22 SOYBEAN OIL
$ / LB
73.04
71.68
72.43
0.02
0.03%
JUL ’22 SOYBEAN OIL
$ / LB
71.47
70.17
70.77
-0.12
-0.17%
MAY ’22 SOY MEAL
$ / TON
470
463.2
463.4
-2.5
-0.54%
JUL ’22 SOY MEAL
$ / TON
462.5
456.1
456.1
-2.1
-0.46%
AUG ’22 SOY MEAL
$ / TON
450.9
445.9
445.9
-1.7
-0.38%
SEP ’22 SOY MEAL
$ / TON
436.4
432.3
432.3
-1
-0.23%
OCT ’22 SOY MEAL
$ / TON
421.3
416
416
-2.3
-0.55%
MAY ’22 Chicago SRW
$ / BSH
10.5625
10.235
10.2625
-0.19
-1.82%
JUL ’22 Chicago SRW
$ / BSH
10.5625
10.2475
10.2725
-0.1825
-1.75%
SEP ’22 Chicago SRW
$ / BSH
10.4825
10.1775
10.2075
-0.1675
-1.61%
DEC ’22 Chicago SRW
$ / BSH
10.3675
10.1
10.1275
-0.145
-1.41%
MAR ’23 Chicago SRW
$ / BSH
10.2
9.9475
10.07
-0.0425
-0.42%
MAY ’22 Kansas City HRW
$ / BSH
10.9325
10.6375
10.6375
-0.19
-1.75%
JUL ’22 Kansas City HRW
$ / BSH
10.95
10.64
10.6525
-0.19
-1.75%
SEP ’22 Kansas City HRW
$ / BSH
10.9175
10.63
10.6325
-0.1875
-1.73%
DEC ’22 Kansas City HRW
$ / BSH
10.885
10.61
10.705
-0.0825
-0.76%
MAR ’23 Kansas City HRW
$ / BSH
10.75
10.6125
10.6425
-0.0575
-0.54%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.155
10.985
11.03
-0.0875
-0.79%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.14
10.935
10.99
-0.1275
-1.15%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.8775
10.69
10.73
-0.1375
-1.27%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.85
10.675
10.6925
-0.1475
-1.36%
MAR ’23 MLPS Spring Wheat
$ / BSH
10.76
#N/A
10.7925
0
0.00%
JUN ’21 ICE Dollar Index
$
99.74
99.365
99.5
0.072
0.07%
MA ’21 Light Crude
$ / BBL
104.02
100.37
103.28
1.32
1.29%
JU ’21 Light Crude
$ / BBL
102.63
99.15
101.95
1.27
1.26%
MAY ’22 ULS Diesel
$ /U GAL
3.5631
3.4411
3.544
0.0758
2.19%
JUN ’22 ULS Diesel
$ /U GAL
3.3578
3.2523
3.341
0.0626
1.91%
MAY ’22 Gasoline
$ /U GAL
3.21
3.1329
3.1907
0.0258
0.82%
JUN ’22 Gasoline
$ /U GAL
3.1713
3.0954
3.1551
0.024
0.77%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
156.125
0
0.00%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
159
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
136.8
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
133.325
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
97.675
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
107.75
0
0.00%
APR ’22 Class III Milk
$ / CWT
23.77
23.7
23.77
0.05
0.21%
MAY ’22 Class III Milk
$ / CWT
24.43
24.43
24.43
0.03
0.12%
JUN ’22 Class III Milk
$ / CWT
24.45
24.45
24.45
0.05
0.20%
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