Morning report: Ukraine’s grain shipments, hopes for rain, stronger dollar, and Pelosi’s Taiwan visit all combine to weigh grain and oilseed prices lower. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 3-8 cents
Soybeans down 6-10 cents; Soymeal up $7.20/ton; Soyoil down $0.32/lb
Chicago wheat down 15-16 cents; Kansas City wheat down 15-17 cents; Minneapolis wheat down 16-21 cents
*Prices as of 6:50am CDT.
Feedback from the Field updates! How does your farm’s crop conditions stack up against other farms around the country? Click this link to take the survey and share updates about your farm’s crop development. I review and upload results daily to the FFTF Google(TM) MyMap, so farmers can see others’ responses from across the country – or even across the county!
Corn
Corn prices continued lower this morning in response to Ukraine resuming grain shipments for the first time since late February 2022. Nearby contracts are hovering close to the $6/bushel benchmark, so the corn complex will either need fresh demand news or additional crop development concerns to stay above that price.
Nearby futures prices traded $0.05-$0.08/bushel lower this morning on the prospects for greater Ukrainian grain flows on the global market. But expect those losses to remain capped by lower production values from the Black Sea country this year as it continues to battle invading Russian forces.
Scattered showers across the Corn Belt through the rest of the week also calmed fears about heat stress and drought, which also played a role in lower prices in the corn market this morning.
Yesterday’s Crop Progress report saw corn condition ratings stabilize at 61% good to excellent for the second consecutive week through the week ending July 31. It was a welcome sign for corn yield prospects that no further stress was introduced to the crop over the past week, but it certainly did not encourage any price growth in the futures market this morning.
Yesterday’s corn condition rating came as a bit of a surprise to market watchers, who had been expecting the rating to slide 1% prior to the report’s release.
Crop development remains behind historical paces due to a combination of heat stress and a delayed start to the season. Through the week ending July 31, 80% of the crop had reached the silking phase, just 5% behind the five-year average. Similarly, doughing rates lagged 5% behind the five-year benchmark as well, resting at 26% complete as of Sunday.
Soybeans
Improving crop conditions in the Upper Midwest over the past week paired with scattered showers across the Heartland this week kept worries about soybean health at bay for the time being. Falling palm oil prices also had a bearish impact on the soy complex overnight, as top exporter Indonesia raised its export volume prospects.
“The USDA reporting a one point improvement in U.S. soybean crop conditions is likely to keep the market on the back foot,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters overnight.
The soybean market is likely to be especially sensitive to any potential outcomes of Speaker Pelosi’s visit to Taiwan over the next couple days. China has threatened retaliatory countermeasures in response to Pelosi’s engagement with Taiwan. While Chinese officials have not specified with these measures will entail, based on the recent agreement China has made with Brazil to allow soymeal imports from the South American country, it seems likely that measures on soybean trade are likely on the table.
U.S. soybean exports to China have been a cornerstone for the U.S. trade deficit, which widened during the summer amid a stronger dollar and weakening global economic outlooks. In 2020 and 2021, U.S. soybean exports to China accounted for 8%-9% of all total U.S. ag export revenue volumes.
USDA’s biggest surprise in yesterday’s Crop Progress report came from the soybean sector. Pre-report trade estimates had pegged the weekly condition rating as falling 1% from last week’s reading of 59% good to excellent. But USDA reported 60% of the U.S. soybean crop to be in good to excellent condition as of July 31, a 1% increase from the previous week.
The move was a good sign for crop health in the Upper Midwest, especially as it reaches its peak reproductive stages over the next couple weeks. Extended forecasts through the middle of August are trending hot and dry, so USDA’s optimism in yesterday’s readings suggests that the crop may be slightly heartier headed into a period of such wide uncertainty than previously believed.
Similar to corn, soybean crop development continues to lag amid the slow start to the 2022 growing season and the ongoing heat stress currently being endured by much of the Plains and scattered regions of the Midwest. As of last Sunday, 79% of the anticipated 2022 soybean crop was blooming, just a percentage point behind the five-year average.
Another 44% of the crop was setting pods as of July 31. That value trended 7% lower than the five-year average for the same reporting period. Markets will be especially responsive to this reading over the next couple weeks as it will be a key indicator of yield health through the remainder of the season.
Weather forecasts will also factor into the market’s response to this metric. Scattered showers are forecast across the Heartland over the next few days. If the rains are timely and can hold off the impending heat wave, the odds on the country harvesting a more robust soybean crop in 2022 increase substantially.
Wheat
Wheat prices also tumbled on the prospect of Ukrainian exports returning to the global market. U.S. wheat export volumes have benefited from blocked Black Sea market access over the past month, as new wheat export orders increased by over a quarter during July 2022. That same time a year ago, orders had only risen by 3%.
A stronger dollar did not help matters any during the overnight trading session. Wheat futures fell $0.15-$0.20/bushel across the board, though traders remain cautious about the ability of Ukrainian grain shipments to return to full health.
“Funds sold off positions despite the fact that the pace of activity from Ukrainian ports will obviously not return to pre-conflict levels before a long time,” consultancy Agritel said.
Winter wheat harvest continues to lag slightly behind the five-year average. Yesterday’s Crop Progress report found that as of July 31, 82% of the crop had been harvested, down 3% from the five-year average benchmark. Soft red winter wheat harvest is largely complete for the 2022 season, while the dry weather is helping to accelerate hard red winter wheat harvest paces as combines move further north. About 65% of the 2022 hard red winter wheat harvest was complete as of last week.
Currently, the most significant delays are being observed in the Pacific Northwest region. U.S. Wheat Associate’s latest Harvest Report cites some crop development delays for spring white wheat crops in the region as the primary factor. Montana is also experiencing some durum crop development delays according to the report.
Spring wheat conditions improved 2% on the week, ending July 31 at 70% good to excellent. Even with the slow start to the year, the crop is already nearly completely headed (97% as of Sunday), which means peak harvest activity is likely only a couple weeks away.
Weather
Scattered showers are possible across patches of the Corn Belt today with the highest chance for accumulation in the Upper Midwest and West-Central Plains, according to NOAA’s short-range forecasts. Expected accumulation is likely to be light, though parts of South-Central Illinois and Indiana could see up to three quarters of an inch of precipitation over the next 24 hours.
Above average temperatures continue to plague NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday. The persistent dryness in the Heartland is expected to continue through the first half of August.
Financials: S&P 500 futures traded down 0.59% to $4,096.25 at last glance as markets remain wary of U.S. House of Representative Speaker Nancy Pelosi’s sudden visit to Taiwan expected later today. Markets are concerned that Pelosi’s visit will inflame tensions between the U.S. and China regarding China’s handling of Taiwan’s independence.
Tensions have been heightened between China and the U.S. since the trade war escalated in 2018. Chinese officials have been vocal about warning Pelosi not to meet with Taiwanese officials and have threatened to implement some sort of retaliatory measures if the Speaker follows through with these visits.
If Pelosi’s visit does not yield any diplomatic progress with both Chinese and Taiwanese officials, stock markets – as well as grain and oilseed markets – could suffer losses during the coming trading sessions.
What else I’m reading this morning on our website, FarmFutures.com:
Bryce Knorr explains how the weather, dollar, and technical signs could point to an early summer bottom for grain prices.
Darren Frye offers three tips to help farm owners lead others through change.
An ag appropriations bill was recently introduced in the Senate – here’s what it means for farmers.
KCoe Isom’s Davon Cook walks farmers though the lifecycle of a family business to help growers manage growth and make better decisions.
Naomi Blohm predicts dairy prices will continue trading sideways for the time being as supply builds and demand softens.
Morning Ag Commodity Prices – 8/2/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
6.0525
5.9625
6.0075
-0.0625
-1.03%
DEC ’22 CORN
$ / BSH
6.075
5.98
6.0225
-0.075
-1.23%
MAR ’23 CORN
$ / BSH
6.14
6.05
6.09
-0.0775
-1.26%
MAY ’23 CORN
$ / BSH
6.18
6.095
6.13
-0.0775
-1.25%
JUL ’23 CORN
$ / BSH
6.185
6.1
6.135
-0.0775
-1.25%
SEP ’23 CORN
$ / BSH
5.88
5.815
5.8475
-0.065
-1.10%
DEC ’23 CORN
$ / BSH
5.7775
5.6825
5.7275
-0.0525
-0.91%
AR2 ’24 CORN
$ / BSH
5.8475
#N/A
5.855
0
0.00%
MAY ’24 CORN
$ / BSH
0
#N/A
5.89
0
0.00%
AUG ’22 SOYBEANS
$ / BSH
15.96
15.875
15.9525
0.01
0.06%
SEP ’22 SOYBEANS
$ / BSH
14.35
14.0375
14.27
-0.05
-0.35%
NOV ’22 SOYBEANS
$ / BSH
14.08
13.7725
13.97
-0.09
-0.64%
JAN ’23 SOYBEANS
$ / BSH
14.1575
13.8425
14.0425
-0.09
-0.64%
MAR ’23 SOYBEANS
$ / BSH
14.145
13.84
14.035
-0.085
-0.60%
MAY ’23 SOYBEANS
$ / BSH
14.13
13.8275
14.0225
-0.08
-0.57%
JUL ’23 SOYBEANS
$ / BSH
14.0875
13.7975
13.9925
-0.0675
-0.48%
AUG ’23 SOYBEANS
$ / BSH
13.8125
#N/A
13.8025
0
0.00%
SEP ’23 SOYBEANS
$ / BSH
0
#N/A
13.315
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
13.1675
12.95
13.1
-0.04
-0.30%
AN2 ’24 SOYBEANS
$ / BSH
13.22
#N/A
13.1725
0
0.00%
AUG ’22 SOYBEAN OIL
$ / LB
66.84
65.91
65.91
-0.32
-0.48%
SEP ’22 SOYBEAN OIL
$ / LB
63.9
61.89
62.67
-1.42
-2.22%
AUG ’22 SOY MEAL
$ / TON
494.2
486.5
494.2
7.2
1.48%
SEP ’22 SOY MEAL
$ / TON
439.5
427.9
437.5
7.8
1.82%
OCT ’22 SOY MEAL
$ / TON
406.8
399.6
406
3.8
0.94%
DEC ’22 SOY MEAL
$ / TON
403.7
395.7
402.9
3.6
0.90%
JAN ’23 SOY MEAL
$ / TON
402.1
395
401.5
3.4
0.85%
SEP ’22 Chicago SRW
$ / BSH
7.9575
7.79
7.8325
-0.17
-2.12%
DEC ’22 Chicago SRW
$ / BSH
8.145
7.98
8.025
-0.165
-2.01%
MAR ’23 Chicago SRW
$ / BSH
8.2925
8.1625
8.205
-0.165
-1.97%
MAY ’23 Chicago SRW
$ / BSH
8.3675
8.26
8.3
-0.1625
-1.92%
JUL ’23 Chicago SRW
$ / BSH
8.3375
8.23
8.28
-0.145
-1.72%
SEP ’23 Chicago SRW
$ / BSH
8.36
8.2575
8.3
-0.1475
-1.75%
DEC ’23 Chicago SRW
$ / BSH
8.3625
8.3
8.35
-0.1375
-1.62%
SEP ’22 Kansas City HRW
$ / BSH
8.6
8.4575
8.5125
-0.1525
-1.76%
DEC ’22 Kansas City HRW
$ / BSH
8.655
8.53
8.5775
-0.1625
-1.86%
MAR ’23 Kansas City HRW
$ / BSH
8.7075
8.6075
8.6425
-0.1525
-1.73%
MAY ’23 Kansas City HRW
$ / BSH
8.7125
8.6125
8.6275
-0.1875
-2.13%
JUL ’23 Kansas City HRW
$ / BSH
8.58
8.53
8.58
-0.115
-1.32%
SEP ’23 Kansas City HRW
$ / BSH
8.15
#N/A
8.65
0
0.00%
DEC ’23 Kansas City HRW
$ / BSH
8.5575
#N/A
8.665
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
8.87
8.75
8.795
-0.18
-2.01%
DEC ’22 MLPS Spring Wheat
$ / BSH
8.9925
8.89
8.9325
-0.17
-1.87%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.085
9.01
9.01
-0.2075
-2.25%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.175
9.1
9.1
-0.2
-2.15%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.2075
#N/A
9.325
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
8.8775
#N/A
9.025
0
0.00%
DEC ’23 MLPS Spring Wheat
$ / BSH
0
#N/A
9.1025
0
0.00%
SEP ’21 ICE Dollar Index
$
105.58
104.92
105.405
0.069
0.07%
SE ’21 Light Crude
$ / BBL
94.72
92.59
94.57
0.68
0.72%
OC ’21 Light Crude
$ / BBL
93.24
91.11
93.11
0.72
0.78%
SEP ’22 ULS Diesel
$ /U GAL
3.4533
3.33
3.4001
-0.0399
-1.16%
OCT ’22 ULS Diesel
$ /U GAL
3.4031
3.2876
3.3531
-0.0378
-1.11%
SEP ’22 Gasoline
$ /U GAL
3.0129
2.9403
2.983
-0.0151
-0.50%
OCT ’22 Gasoline
$ /U GAL
2.7492
2.6998
2.7392
-0.0038
-0.14%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
179.65
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
183.1
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
136.775
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
142.625
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
120.45
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
96.825
0
0.00%
JUL ’22 Class III Milk
$ / CWT
22.52
#N/A
22.53
0
0.00%
AUG ’22 Class III Milk
$ / CWT
20.4
20.4
20.4
-0.06
-0.29%
SEP ’22 Class III Milk
$ / CWT
20.5
20.32
20.32
-0.18
-0.88%
