Morning report: The Ukrainian war is raising more questions about global trade flows. How the world is adapting to these tectonic shifts.. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 1-3 cents
Soybeans up 6-10 cents; Soymeal down $1.40/ton; Soyoil up $0.71/lb
Chicago wheat down 3-4 cents; Kansas City wheat down 5-6 cents; Minneapolis wheat down 1-2 cents
*Prices as of 6:50am CDT.
Good morning! Keeping up with crop conditions and development across the country can be challenging as planting season nears, but Farm Futures is here to help. Our Feedback from the Field series is back for another year to help farmers across the country share their views on the 2022 growing season.
Just click this link to take the survey and share updates about your farm’s spring progress. I review and upload results daily to the FFTF Google MyMap, so farmers can see others’ responses from across the country – or even across the county!
We will feature weekly recaps of farmer responses in a column published on Tuesdays as well as relevant market, crop development, and weather information for farmers who want to stay in the know about U.S. crops.
You can respond as frequently as you like throughout the growing season. We update questions to reflect current crop conditions. Plus, I’ll be providing regular updates about my lawn so we can bond about herbicides and irrigation systems this year!
Thank you for your participation. I hope this tool helps you make informed marketing decisions this season. Have a safe #Plant22 season!
Corn
The rallying dollar kept corn gains at bay this morning as Chicago futures edged $0.01-$0.03/bushel lower. After early week rallies, market participants are awaiting fresh supply and demand forecasts from USDA expected out tomorrow.
Ukraine is attempting to ship its available grain supplies, but about 1,100 rail cars have been parked at the country’s western border with Poland, unable to advance any further due to the sheer volume of grain being shipped across the border, heightened security measures, infrastructure attacks by the Russians, and differences in rail-track gauges used between Ukraine and its neighboring countries.
Prior to the war, Ukraine shipped 98% of its grain via ocean freighters through Black Sea terminals. But with Russian military attacks closing loading operations in the Black Sea, Ukrainian growers are forced to use more expensive rail transport to move 2021 grain harvests to international markets.
Grain exports comprise a fifth of Ukraine’s exports. At $12.2 billion in 2021, those trade flows are a significant source of revenue for the Ukrainian economy. Ukrainian officials expect that March 2022 grain exports were only a tenth of March 2021 volumes.
“Hundreds of millions of people around the world will not receive food unless Russia’s blockade of Ukrainian ports is lifted in the near future,” the agriculture ministry said in an April 1 statement.
For more on the damage to Ukraine’s export markets, I highly recommend reading this Reuters report.
Soybeans
Soybean prices notched a $0.05-$0.10/bushel gain this morning due in large part to renewed Chinese interest in U.S. soybean exports. Further price activity is not expected until tomorrow’s USDA release of monthly supply and demand estimates.
In my latest E-corn-omics article, I explain that fertilizer buyers in South America are feeling more pressure to acquire supplies for the 2022/23 soybean crop than American farmers are currently enduring as planting for the 2022 crop ramps up in the Northern Hemisphere.
But Brazil has not shied away from negotiations with new suppliers, striking deals with Canadian fertilizer companies in recent weeks to procure the necessary supplies for its 2023 soybean crop. Braziilian fertilizer imports are expected to rise 27.4% above year-ago volumes to 10.43 million metric tonnes (MMT) for March 2022.
Brazil has about 16 ships containing fertilizer supplies from Russia currently en route to Brazilian ports, though it has scaled back its purchases of Russian fertilizer supplies in recent weeks. But the high price tag for fertilizer and the scramble to source enough supplies could slow Brazil’s expansion plans for 2022/23 crops.
Brazilian financial consultancy MacroSector projects an 8% annual drop in fertilizer application rates this year amid the ongoing supply challenges faced by Brazilian growers. MacroSector expects 2022 applications to fall to 42.18MMT this year as a result, down from 45.8MMT applied last year.
Brazil sources 85% of its needed fertilizer supplies from international sources, so the Western banking sanctions levied against Russia and Belarus sent the Brazilian agricultural industry scrambling to source available supplies from other origins.
A Brazilian lobbyist for Mosaic and Yara – two of the world’s top fertilizer producers – told Reuters that Brazilian fertilizer production is likely to increase by 35% through 2024. Domestic regulations and investment could slow that progress, so Brazil will remain vulnerable to global supply pressures on the fertilizer market in the meantime.
Wheat
Wheat futures were also little changed this morning as markets eagerly await tomorrow’s World Agricultural Supply and Demand Estimates (WASDE) report from USDA. Markets are already adjusting to the expectation of reduced Ukrainian export capacity, though tomorrow’s reports are expected to solidify those projections, for at least the short term.
The trade situation in Ukraine is now “difficult to be completely reversed in the short term”, analysts at Zhongzhou Futures in China told Reuters this morning. Traders are bracing for expanding European acreage in tomorrow’s forecasts, which could reduce some supply pressure.
Weather
Cool and wet weather will dominate today’s forecasts. Another day of rain-snow mix will batter the Northern Plains and Upper Midwest again today, according to NOAA’s short-range forecasts. Chances for mixed precipitation and rain in the Eastern Corn Belt will continue today. Thunderstorms are forecasted in the Southern Plains.
The system is expected to hover over the Great Lakes region and slowly shift across the Eastern Corn Belt over the next three days. Today’s accumulation is forecasted to be light – not topping more than a quarter inch.
Financials
Minutes released yesterday from the Federal Reserve’s latest Federal Open Market Committee (FOMC) meeting in mid-March suggested that Fed governors are taking a more hawkish tone on raising interest rates than ever before as inflation remains high.
Market uncertainty following Russia’s invasion of Ukraine kept Fed governors from raising the Federal Funds interest rate further than the 0.25% increase following the March 2022 FOMC meeting. Fed Chairman Jerome Powell had previously assured markets that interest rate hikes would be gradual, but in light of market volatility caused by the Russian war, it appears more drastic rate hikes could be on the way.
U.S. stocks slumped yesterday on the rapid tone shift from the Fed. Stocks recovered overnight. The dollar is on track to post another day of gains today, marking its sixth day of the current market rally. Oil prices edged 2-2.5% higher on ongoing Russian-Ukrainian war activities.
“…Despite a surge in oil and gas prices, Russia’s invasion of Ukraine has upended the supermajors’ plans and left them scrambling to adapt to historic shifts in energy markets,” A Bloomberg report noted this morning.
Also worth a read on our website, FarmFutures.com
The March 2022 Farm Futures survey found that fertilizer availability will not be as big of an issue for growers this spring. The bigger issues on farmers’ minds? Chemical and parts availability and, as always, weather.
Executive editor Mike Wilson has helpful tips on finding spare parts when most needed this spring.
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.
Davon Cook has fresh insights on how to manage earnings flows and avoid tensions between the farm partnership after profitable years like 2021.
Morning Ag Commodity Prices – 4/7/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.59
7.5325
7.55
-0.015
-0.20%
JUL ’22 CORN
$ / BSH
7.495
7.435
7.4625
-0.0075
-0.10%
SEP ’22 CORN
$ / BSH
7.155
7.1175
7.15
-0.0075
-0.10%
DEC ’22 CORN
$ / BSH
7.05
7.005
7.045
-0.0025
-0.04%
MAR ’23 CORN
$ / BSH
7.07
7.0325
7.07
-0.0025
-0.04%
MAY ’23 CORN
$ / BSH
7.0675
7.0325
7.0675
-0.005
-0.07%
JUL ’23 CORN
$ / BSH
7.03
6.9975
7.0275
-0.005
-0.07%
MAY ’22 SOYBEANS
$ / BSH
16.285
16.1475
16.2625
0.0675
0.42%
JUL ’22 SOYBEANS
$ / BSH
16.1225
15.99
16.105
0.07
0.44%
AUG ’22 SOYBEANS
$ / BSH
15.71
15.5775
15.6825
0.0525
0.34%
SEP ’22 SOYBEANS
$ / BSH
14.96
14.8075
14.92
0.0575
0.39%
NOV ’22 SOYBEANS
$ / BSH
14.5475
14.3825
14.51
0.07
0.48%
JAN ’23 SOYBEANS
$ / BSH
14.5425
14.375
14.5125
0.085
0.59%
MAR ’23 SOYBEANS
$ / BSH
14.3575
14.245
14.32
0.0675
0.47%
MAY ’23 SOYBEANS
$ / BSH
14.31
14.255
14.3025
0.0625
0.44%
JUL ’23 SOYBEANS
$ / BSH
14.345
14.3
14.3425
0.095
0.67%
MAY ’22 SOYBEAN OIL
$ / LB
72.55
71.5
72.46
0.63
0.88%
JUL ’22 SOYBEAN OIL
$ / LB
70.91
69.94
70.84
0.57
0.81%
MAY ’22 SOY MEAL
$ / TON
465.3
459.6
461
-0.8
-0.17%
JUL ’22 SOY MEAL
$ / TON
457.8
452.5
454.9
0.4
0.09%
AUG ’22 SOY MEAL
$ / TON
446.6
441.7
444
0
0.00%
SEP ’22 SOY MEAL
$ / TON
432.6
428.7
431.8
1.1
0.26%
OCT ’22 SOY MEAL
$ / TON
419.7
416
416.5
-0.8
-0.19%
MAY ’22 Chicago SRW
$ / BSH
10.445
10.28
10.36
-0.0225
-0.22%
JUL ’22 Chicago SRW
$ / BSH
10.475
10.315
10.395
-0.0125
-0.12%
SEP ’22 Chicago SRW
$ / BSH
10.425
10.275
10.37
0.0025
0.02%
DEC ’22 Chicago SRW
$ / BSH
10.35
10.225
10.3125
-0.0075
-0.07%
MAR ’23 Chicago SRW
$ / BSH
10.21
10.1175
10.1825
-0.0175
-0.17%
MAY ’22 Kansas City HRW
$ / BSH
10.9025
10.745
10.855
0.005
0.05%
JUL ’22 Kansas City HRW
$ / BSH
10.92
10.765
10.82
-0.04
-0.37%
SEP ’22 Kansas City HRW
$ / BSH
10.9075
10.755
10.845
-0.0025
-0.02%
DEC ’22 Kansas City HRW
$ / BSH
10.89
10.755
10.85
0
0.00%
MAR ’23 Kansas City HRW
$ / BSH
10.745
10.6925
10.6925
-0.1
-0.93%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.19
11.05
11.13
0.0425
0.38%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.1775
11.035
11.1225
0.0375
0.34%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.935
10.815
10.89
0.0325
0.30%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.9125
10.7975
10.8725
0.045
0.42%
MAR ’23 MLPS Spring Wheat
$ / BSH
10.855
#N/A
10.7775
0
0.00%
JUN ’21 ICE Dollar Index
$
99.85
99.435
99.545
-0.07
-0.07%
MA ’21 Light Crude
$ / BBL
98.75
95.43
98.59
2.36
2.45%
JU ’21 Light Crude
$ / BBL
97.88
94.67
97.75
2.34
2.45%
MAY ’22 ULS Diesel
$ /U GAL
3.4129
3.2969
3.3723
0.0271
0.81%
JUN ’22 ULS Diesel
$ /U GAL
3.2366
3.13
3.2007
0.0342
1.08%
MAY ’22 Gasoline
$ /U GAL
3.1385
3.0249
3.1023
0.0561
1.84%
JUN ’22 Gasoline
$ /U GAL
3.1044
3
3.0709
0.0523
1.73%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
157.1
0
0.00%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
159.95
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
137.7
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
134.225
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
98.75
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
108.525
0
0.00%
APR ’22 Class III Milk
$ / CWT
24.05
24.05
24.05
0.11
0.46%
MAY ’22 Class III Milk
$ / CWT
24.85
24.83
24.83
-0.02
-0.08%
JUN ’22 Class III Milk
$ / CWT
24.82
24.82
24.82
0
0.00%
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