Morning report: Spring wheat rallies on surprise ratings cut, weaker dollar. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 8-16 cents
Soybeans up 21-37 cents; Soymeal up $10.90/ton; Soyoil up $0.65/lb
Chicago wheat up 15-16 cents; Kansas City wheat up 17-18 cents; Minneapolis wheat up 16-18 cents
*Prices as of 6:55am 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 MyMap, so farmers can see others’ responses from across the country – or even across the county!
Corn
Corn prices rose $0.08-$0.16/bushel overnight after a somewhat surprising decline in crop condition ratings in yesterday’s USDA report. The dollar also weakened and slow Black Sea exporting paces renewed global supply concerns.
“U.S. grain futures led by corn trade higher today in response to worsening crop conditions,” Ole Hansen, head of commodity strategy at SaxoBank, told Reuters. “Just like central Europe, searing heat and drought have raised concerns about lower production and yields.”
Two more ships departed from Ukraine’s Chornomorsk terminal in the Black Sea overnight. SO far, 12 ships carrying grain have set sail from the Black Sea in the past nine days. One vessel is transporting 2.5 million bushels (64,720 metric tonnes) of corn to South Korea while the other is carrying 5,300MT of sunflower meal to Turkey.
Ukraine still has 20 million MT of grain and oilseed products to ship from its 2021/22 reserves and is expected to harvest 40 million MT of ag products from the 2022/23 harvest. Shipping paces will need to accelerate so the country does not face significant storage issues in the coming months, especially as peak harvest activity begins to ramp up across the Northern Hemisphere.
A week after surprising markets by leaving corn conditions unchanged at 61% good to excellent, USDA cleaved 3% off corn ratings in yesterday’s Crop Progress report, once again startling market watchers. Through the week ending August 7, 58% of the crop was in good to excellent condition.
Analysts had been expecting a smaller cut – only a 1% downgrade – so USDA’s update ushered in some bullish sentiment into the corn market in this morning’s trading session.
Weekend rains were not enough to offset some of last week’s heat in the Upper Midwest. Crop development remains a handful of points behind five-year averages thanks to a slow start to the season and a somewhat turbulent growing season. These factors will all be considered in Friday’s USDA report, which will feature the first look at farmer-surveyed corn and soybean yields for the first time in the 2022 growing season.
Through Sunday, corn silking progress was 90% complete (5YA – 93%). Doughing was reported at 45% complete through August 7, up 19% on the week but 4% below the five-year average benchmark. USDA reported denting progress for the first time in the 2022 growing cycle with only 6% of the nation’s crop experiencing kernel denting, down 3% from the five-year average.
Soybeans
Soybean prices rose $0.22-$0.37/bushel overnight as the September 2022 contract clawed within striking distance of the $15/bushel benchmark. Lower condition rating scores for the U.S. crop paired with a weaker dollar improved export prospects for soybeans ahead of peak shipping season expected to begin later this month.
Strength was also derived from the edible oils complex and weather forecasts. Impending hot and dry weather across the Heartland also helped lift prices higher this morning, as yield worries continue to rate top of mind for markets and producers alike.
Palm oil prices hit an 11-day high overnight as top exporter Indonesia reconfigured export tax policies to be more competitively priced against rival Malaysian palm oil exports. Export volumes from Indonesia are expected to surge through the end of the month after the export policy discussions delayed optimal shipping volumes.
Markets also eagerly anticipated yesterday’s USDA updates on soybean conditions and this time, the analysts did not miss the mark on their pre-report USDA predictions. Market watchers forecasted a 1% weekly drop in soybean condition ratings and USDA delivered on that forecast, cutting soybean conditions through August 7 to 59% good to excellent.
The crop will be closely monitored over the next couple weeks as peak pod fill is currently underway. Extended forecasts are predicting hot and dry weather across the Heartland as the middle of August approaches, which could threaten pod fill rates and ultimately, yields.
About 89% of the nation’s soybean crop had bloomed as of August 7, up 1% from the five-year average. Plants with pods setting were reported at 61% complete as of last Sunday, 5% below the five-year average for the same reporting period.
Wheat
A surprising ratings downgrade for the spring wheat crop led Minneapolis futures to notch some of the morning’s steepest gains in the wheat complex today. Slow shipping speeds out of the Black Sea and a weaker dollar also propped up gains in the U.S. wheat market this morning, where prices rose between $0.16-$0.19/bushel.
Winter wheat harvesting rates moved to 86% complete as of August 7, according to yesterday’s Crop Progress report. Market analysts had been predicting that value would result closer to 89% complete ahead of the report’s release thanks to hot and dry weather in the Pacific Northwest over the past week that encouraged crop maturation and harvest progress.
Heat in the Northern Plains led USDA to cut 6% from spring wheat crop conditions. The move surprised market watchers, who had been predicting USDA would report spring wheat to be in 70% good to excellent condition through Sunday. However, USDA dropped the spring wheat ratings to 64% good to excellent for the week, leaving room for bullish spring wheat price action at the Minneapolis Grains Exchange this morning.
USDA also reported the first week of spring wheat harvest in the Northern Plains through August 7. Markets had been predicting 9% of the crop has been harvested so far and USDA confirmed that value in yesterday’s Crop Progress report. Much of the progress has advanced in South Dakota, though harvesting paces in Montana will likely pick up this week as well.
Weather
It will be another day of moderate temperatures in the Great Lakes region following more showers in the region yesterday and through the night, according to NOAA’s short-range forecasts. The rain system will continue to linger over the southern edge of the Eastern Corn Belt today, dropping between a quarter inch to three quarters of an inch of precipitation between Oklahoma to Ohio over the next 24 hours before dissipating by tomorrow afternoon.
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. These extended forecasts are increasingly hot and dry, which is putting a floor under the price losses in the corn and soybean markets this morning.
Financials
The S&P 500 fell 0.2% to $4,133.50 this morning as markets fretted about labor productivity data expected today, which could indicate signs of economic weakness. Some early anticipation was also afoot as markets brace for tomorrow’s latest Consumer Price Index (CPI) update, which will show where inflation is heading.
A robust earnings season is wrapping up, which could take some of the upward momentum out of markets that investors have enjoyed over the past month.
“Corporate earnings are holding up OK and consumers are still spending, that is the bottom line,” Brian O’Reilly, head of market strategy at Mediolanum International Funds, told the Wall Street Journal this morning. Recent economic data “takes any talk of an immediate recession off the table for now,” he added.
Farm Futures releases 2022 yield estimates!
On Friday, our team released the yield findings from our latest farmer survey. In an online survey conducted from July 13 – Aug. 1, 692 farmer respondents provided insights about their 2022 yields. And despite current market worries about soybean health, growers suggested more optimism is afoot for soybean yields than corn.
High soybean yields projected
The survey found that growers expect 2022 soybean yields to notch a new record high of 52.5 bushels per acre. The estimate is surprisingly optimistic considering current crop conditions and the impending hot and dry weather expected during the middle of the month as the crop approaches peak pod fill stages.
If realized – and if USDA keeps its current 2022 soybean harvested acreage unchanged at 87.5 million acres – 2022 soybean production will rise to 4.59 billion bushels, up nearly 90 million bushels from USDA’s current estimate.
It will set a new record high for U.S. soybean production and will loosen 2022/23 ending supplies to 320 million bushels if USDA leaves its current usage estimates unchanged. That translates to an ending stocks-to-use ratio of 7.1%, which is a 2% increase from current supply estimates.
While that may not seem like a significant supply increase at first glance, a 52.5 bpa soybean yield would ease 2022/23 U.S. soybean ending stocks from the current ranking of 11th tightest on record to the 20th tightest of all time. It would be the largest domestic soybean stockpile since the 2019/20 marketing year, if realized.
If USDA does indeed trend high on its 2022 soybean yield estimate, farmers should brace for bearish price reactions. U.S. soybean supplies have hovered at historically tight volumes for the past two years. During that same time, global stocks have also been unusually tight yet global demand has soared to new heights, which has contributed to high soybean prices since August 2020.
But a large 2022/23 U.S. soybean crop could upend that price run. Top global producer and export Brazil suffered severe crop losses due to drought following its harvest earlier this spring. But 2022/23 production prospects are once again high and if weather permits improving yields this year, U.S. farmers should begin to prepare now for potentially lower soybean price dynamics.
Bearish corn yields could feed the price bulls
Farmer responses from the Farm Futures survey indicated that growers are currently forecasting national corn yields at 174.8 bpa for the 2022 season. If realized, that will represent a 2.2-bpa drop from 2021’s record-setting yield of 177.0 bpa. It would be the fourth-largest yield on record.
If USDA keeps 2022 harvested corn acreage steady at 81.9 million acres in the August WASDE report, 2022 corn production will likely fall 183 million bushels to 14.32 billion bushels. That equates to the fifth largest corn crop on record.
If USDA does not change its current usage estimates, that means that the stocks-to-use ratio for the 2022/23 will fall to 8.8% from its current level of 10.1%. The smaller corn crop will result in the 7th tightest corn supply on record. That could have bullish implications for corn prices following USDA’s report release next Friday.
For further analysis, check out my article outlining our survey findings on our website.
Markets will gain a better understanding of the 2022/23 yield forecasts after USDA releases its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) report next Friday, August 12 at 11am CDT. Stay tuned to the Farm Futures website and social platforms as our team covers the report’s release and provides real-time market analysis.
What else I’m reading this morning on our website, FarmFutures.com
Farm Futures yield results from our latest farmer survey!
Darren Frye asks – Where will your time be best spent today?
Roger Wright explains how to maximize income potential from selling put options.
A special Farm Futures white paper by University of Minnesota agricultural economist Ed Usset examines different grain marketing strategies farmers may look to use.
Morning Ag Commodity Prices – 8/9/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
6.26
6.135
6.23
0.145
2.38%
DEC ’22 CORN
$ / BSH
6.245
6.1225
6.2125
0.14
2.31%
MAR ’23 CORN
$ / BSH
6.32
6.2
6.285
0.1325
2.15%
MAY ’23 CORN
$ / BSH
6.36
6.22
6.3225
0.125
2.02%
JUL ’23 CORN
$ / BSH
6.365
6.2575
6.335
0.1275
2.05%
SEP ’23 CORN
$ / BSH
6.035
5.9475
6.005
0.0975
1.65%
DEC ’23 CORN
$ / BSH
5.91
5.825
5.88
0.0775
1.34%
AR2 ’24 CORN
$ / BSH
5.9775
5.8975
5.9725
0.0925
1.57%
MAY ’24 CORN
$ / BSH
0
#N/A
5.92
0
0.00%
AUG ’22 SOYBEANS
$ / BSH
16.56
16.32
16.56
0.365
2.25%
SEP ’22 SOYBEANS
$ / BSH
15.02
14.7725
14.965
0.325
2.22%
NOV ’22 SOYBEANS
$ / BSH
14.35
14.0875
14.295
0.295
2.11%
JAN ’23 SOYBEANS
$ / BSH
14.415
14.1675
14.3675
0.29
2.06%
MAR ’23 SOYBEANS
$ / BSH
14.405
14.17
14.3575
0.2725
1.93%
MAY ’23 SOYBEANS
$ / BSH
14.4025
14.1825
14.3675
0.2675
1.90%
JUL ’23 SOYBEANS
$ / BSH
14.3675
14.1575
14.335
0.2575
1.83%
AUG ’23 SOYBEANS
$ / BSH
14.11
13.965
14.06
0.215
1.55%
SEP ’23 SOYBEANS
$ / BSH
0
#N/A
13.3925
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
13.4675
13.25
13.39
0.18
1.36%
AN2 ’24 SOYBEANS
$ / BSH
13.4
13.4
13.4
0.1575
1.19%
AUG ’22 SOYBEAN OIL
$ / LB
67.1
#N/A
69.2
0
0.00%
SEP ’22 SOYBEAN OIL
$ / LB
66.24
65.35
65.97
0.62
0.95%
AUG ’22 SOY MEAL
$ / TON
498
#N/A
498.7
0
0.00%
SEP ’22 SOY MEAL
$ / TON
447.5
439
447.4
11
2.52%
OCT ’22 SOY MEAL
$ / TON
412.3
405.2
410.9
8.4
2.09%
DEC ’22 SOY MEAL
$ / TON
408.5
401.8
407.6
8.5
2.13%
JAN ’23 SOY MEAL
$ / TON
405.5
398.7
405
8.2
2.07%
SEP ’22 Chicago SRW
$ / BSH
8.0125
7.8325
7.955
0.1575
2.02%
DEC ’22 Chicago SRW
$ / BSH
8.2125
8.03
8.155
0.1625
2.03%
MAR ’23 Chicago SRW
$ / BSH
8.38
8.21
8.325
0.1525
1.87%
MAY ’23 Chicago SRW
$ / BSH
8.4925
8.315
8.4375
0.1475
1.78%
JUL ’23 Chicago SRW
$ / BSH
8.495
8.3375
8.4375
0.1375
1.66%
SEP ’23 Chicago SRW
$ / BSH
8.53
8.45
8.4775
0.1325
1.59%
DEC ’23 Chicago SRW
$ / BSH
8.5775
8.49
8.5375
0.14
1.67%
SEP ’22 Kansas City HRW
$ / BSH
8.685
8.5275
8.645
0.1675
1.98%
DEC ’22 Kansas City HRW
$ / BSH
8.7575
8.61
8.7175
0.1675
1.96%
MAR ’23 Kansas City HRW
$ / BSH
8.81
8.68
8.78
0.17
1.97%
MAY ’23 Kansas City HRW
$ / BSH
8.8375
8.7075
8.8125
0.1725
2.00%
JUL ’23 Kansas City HRW
$ / BSH
8.7575
8.65
8.735
0.1575
1.84%
SEP ’23 Kansas City HRW
$ / BSH
8.7075
#N/A
8.5675
0
0.00%
DEC ’23 Kansas City HRW
$ / BSH
8.725
#N/A
8.5975
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.03
8.89
8.9725
0.165
1.87%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.1675
9.0075
9.125
0.1775
1.98%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.2725
9.175
9.235
0.1625
1.79%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.2525
9.2525
9.2525
0.0875
0.95%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.3
9.3
9.3
0.0875
0.95%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.1
9.1
9.1
0.0825
0.91%
DEC ’23 MLPS Spring Wheat
$ / BSH
0
#N/A
9.06
0
0.00%
SEP ’21 ICE Dollar Index
$
106.31
105.855
106.04
-0.283
-0.27%
SE ’21 Light Crude
$ / BBL
92.16
89.05
91.74
0.98
1.08%
OC ’21 Light Crude
$ / BBL
91.34
88.29
90.96
1.03
1.15%
SEP ’22 ULS Diesel
$ /U GAL
3.3081
3.1812
3.3018
0.1227
3.86%
OCT ’22 ULS Diesel
$ /U GAL
3.2825
3.1624
3.278
0.1175
3.72%
SEP ’22 Gasoline
$ /U GAL
2.9427
2.8562
2.931
0.0448
1.55%
OCT ’22 Gasoline
$ /U GAL
2.7008
2.6241
2.6949
0.0452
1.71%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
181.275
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
185.65
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
138.35
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
144.225
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
121.8
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
100.3
0
0.00%
AUG ’22 Class III Milk
$ / CWT
19.99
19.99
19.99
0.04
0.20%
SEP ’22 Class III Milk
$ / CWT
19.45
#N/A
19.4
0
0.00%
OCT ’22 Class III Milk
$ / CWT
19.8
#N/A
20.05
0
0.00%
