Morning report: Rains boost yield outlooks, but global economic worries keep grain and oilseed markets trading in the red this morning. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 2-3 cents
Soybeans down 2-8 cents; Soymeal up $3.90/ton; Soyoil down $0.65/lb
Chicago wheat down 15-17 cents; Kansas City wheat down 19-21 cents; Minneapolis wheat down 12-14 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 MyMap, so farmers can see others’ responses from across the country – or even across the county!
My new FFTF column was published on Tuesday! Here are a few of my favorite insights, which highlight the extreme variability in crop conditions across the country.
A soybean grower in Minnesota on the Canadian border who had to wait out a cold spring is anxiously hoping for a late fall. “Late planted some to wet spring. Poor stands late flowering. [We are] gonna need to make it to mid-October without a frost to make a crop.”
“Instead of 3 and some 4 bean pods as normal, this year is predominately 2 bean pods due to drought,” one Eastern Michigan soybean grower observed.
Excessive heat is causing other crop management issues. “Weed pressure from short crop is extremely challenging,” a Central Nebraska soybean producer shared. “Heat just won’t let up. [Our crops are] all irrigated. Any dryland [crop] is long gone. I would guess my beans will fall an average of 17%-30% [of APH yields].”
Corn growers aren’t out of the woods yet, either. “Ears are small, lower than normal row numbers due to high temps and severe drought,” observed a Michigan corn grower. Other Feedback from the Field responses from corn growers reporting fair to very poor corn conditions over the past week reflected struggles throughout the Heartland.
Further west in Nebraska, one corn producer noted that the “June heat caused a very short, stressed crop,” and made comparisons to the last major drought to plague U.S. farmers. “[It’s] worse than 2012 here. We are all irrigated [but] just couldn’t keep up. Feed is scarce for cattle. I’m not sure anyone realizes how bad it is in Nebraska.”
Even in areas where drought was not a primary concern at the start of the year, there is cause for concern. “Tip back is the worst we’ve seen in a long time,” lamented a corn grower in East-Central Illinois. “Ears are averaging 30 long, 16 around at 32,000.”
But in areas where rains have been timely, farmer sentiment sounds much different. A Minnesota producer reporting excellent corn conditions observed, “We have been lucky to receive rain regularly.” Another Northwest Iowa producer also commented on “timely rain!” upon reporting good corn conditions.
Corn
Corn prices fell $0.02-$0.03/bushel overnight as rain and moderate temperatures blanket most of the Corn Belt today. Some of the losses were also due to growing global economic concerns. Even with the morning’s losses, prices are still hovering above one-week lows recorded earlier this week.
Yesterday’s weekly Petroleum Inventory Status report from the U.S. Energy Information Administration (EIA) saw weekly ethanol output volumes drop to the lowest level since late April 2022. Weekly production volumes through August 12 dropped nearly 4% to 983,000 barrels/day, marking the first time since mid-May 2022 that the metric dipped below the 1 million barrel per day benchmark.
Ethanol stocks have held relatively steady over the past two months, hovering between 23.3 million – 23.6 million barrels at each weekly reading. Yesterday’s report was no exception, as stocks came in at 23.4 million barrels as of last Friday.
Blending demand from refineries notched a one-year high of 929,000 barrels/day through the week ending August 12. That reading is due in large part to high consumer fuel demand, which rebounded to a six-week high of 9.3 million barrels/day in yesterday’s report thanks to falling fuel prices.
Yesterday’s findings are likely reflective of seasonal traveling shifts as school activities resume over the next couple weeks and summer vacation travel activities wind down. The lower ethanol output volume would be more concerning in a long-term perspective if similar trends were exhibited in consumer gasoline demand and ethanol blending demand from refiners.
But the numbers show that those metrics showed high performance through the week ending August 12. And the stable ethanol stocks volume indicates that production volumes are largely aligning with demand needs. A seasonal slump may be on the way, but there is still room for opportunity for fall ethanol production.
The Inflation Reduction Act (IRA) signed into law yesterday could offer the exact opportunity the ethanol industry may be looking for. A Reuters report by Leah Douglas published overnight finds that “The IRA allows companies that own and operate carbon capture and storage (CCS) technology equipment to collect as much as $85 per ton, up from $50, of captured carbon that is stored underground, and $60 per ton, up from $35, of captured carbon that is used in other manufacturing processes or for oil recovery.”
The ethanol industry is widely lauded for its ability to capture carbon dioxide streams through its production. New CO2 pipelines proposed as part of the act could add new revenue streams for Midwestern ethanol producers in the form of tax credits.
The IRA is “the most significant federal commitment to low-carbon biofuels since the Renewable Fuel Standard was expanded 15 years ago,” said Geoff Cooper, president and CEO of the Renewable Fuels Association.
Soybeans
More rains in the Upper Midwest today and moderate temperatures in other key soybean-growing regions eased worries about yield losses but did result in $0.02-$0.07/bushel losses for soybean prices during the overnight trading session. Soyoil prices fell in tandem, though soymeal prices rose on steady demand prospects.
“The more benign weather in the western U.S. Midwest has tempered the market’s rally reflex for now,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters. “Weather forecasters have another useful rain event penned in those same regions about a week out. The evolution of forecast for that event will likely remain an influence.”
A Brazilian agricultural consultancy issued forecasts yesterday that call for lower fertilizer applications on Brazilian cropland during the 2022/23 growing season. MB Agro expects Brazil’s fertilizer consumption this year will fall to 43 million metric tonnes (MMT), down from 45.85MMT a year ago.
High prices, supply chain logjams, and realigned trade flows in the wake of the Black Sea conflict have created concerns about fertilizer availability for Brazilian growers. And while previous news reports of plentiful Brazilian fertilizer imports from Canada and Russia have brushed headlines in recent months, high costs could still represent a restricting constraint for Brazilian producers this fall when peak planting activity will begin.
MB Agro is calling for lower applications but is not yet expecting that yields will similarly drop – at least in 2022/23. “There is not much room, you are using what the soil retained and there is a limit for that,” MB Agro director Alexandre Mendon?a de Barros told Reuters.
Norwegian fertilizer producer, Yara, forecasts local operations in Brazil to stabilize production in 2022, which the company expects to result in stable to lower prices for Brazilian fertilizer products in the coming months as local supply chain issues are resolved.
Brazil imports 85% of its fertilizer supplies. Russia continues to be a primary supplier, with additional support from Canada, Morocco, Jordan, and China. USDA is currently forecasting a bin-busting 5.47-billion-bushel soybean crop for Brazil in the 2022/23 marketing year, breaking 2020’s record haul of 5.13 billion bushels.
Wheat
Taiwan snapped up 1.25 million bushels of milling wheat tendered from the U.S. overnight as prices dipped $0.13-$0.18/bushel. A stronger dollar triggered another day of losses for the wheat market, which is likely to open today at a loss for the fifth consecutive trading session.
The stronger dollar reflects growing concerns about global economic growth prospects, which dipped earlier this week after weak Chinese GDP readings and central bank rate increases in China. Yesterday’s Federal Reserve meeting minutes from the July FOMC meeting also kept recession worries alive.
“The macro environment is on the negative side of the ledger and fundamentals are skewed bearish: Ukraine exports, China recession/demand concerns, Iowa rains, cooler European temps and better Midwest forecasts,” Peak Trading Research said in a note, as reported by Reuters.
Ahead of today’s weekly Export Sales report from USDA, my latest E-corn-omics column takes a look at brisk export sales paces recorded in July 2022 for U.S. wheat. A combination of factors has spurred interest in U.S. wheat, including Chicago futures prices reaching a six-month low, robust global demand, and lagging shipping paces from Black Sea exporters.
Plus, demand from buyers in Southeast Asia and Central America is trending higher than a year ago. There are still many global factors at play influencing wheat markets. But as farmers move forward with the bulk of their wheat sales in the coming weeks, it is a favorable prospect for farmgate profits that export demand indicators are looking this optimistic, especially relative to last year.
Ukraine
Another load of corn was shipped from the Ukrainian Black Sea port of Chornomorsk overnight. The cargo vessel is destined for Belize. So far since the “Grain Initiative” began on August 1, Ukrainian Black Sea terminals have shipped 25 grain and/or oilseed cargoes. Another four ships arrived at Black Sea ports overnight and are likely to be loaded and shipped back out tomorrow.
Weather
While blisteringly hot temperatures are notched in southern regions of the U.S. over the next week, temperatures across the Midwest are not likely to reach the severe highs of those regions. Key Corn Belt region weather will hover between the 80s-90s today with highs in the Plains topping 90 over the next couple days, according to NOAA’s short-range forecasts.
A band of showers is expected to hover over the Southern U.S. over the next couple days, which could add more moisture to areas of the Southern Plains. That region is expected to see between 0.10 – 2.00 inches of rainfall over the next 24 hours.
The Upper Midwest is also forecast to see a strong chance of showers through the weekend. The system will linger over Eastern North Dakota, Minnesota, Wisconsin, Iowa, and Eastern Iowa and is expected to drop 0.10 – 1.00 inches of precipitation over the next 24 hours.
More moderate temperatures are forecast in the 6-10-day NOAA outlook. Areas of the Upper Midwest could still face above average temperatures and below average chances for moisture during that time, while the Central Plains and Eastern Corn Belt are trending cooler and wetter through late next week.
While the wetter and cooler forecasts bode well for some corn and soybean crops, expect market focus to shift towards crop conditions in the Upper Midwest over the next two weeks. Soybeans are still filling pods, so any exceptionally hot and dry weather could raise market concerns about 2022 yield prospects.
Financials
Oil prices moved higher this morning on a round of bargain buying after shedding nearly 9% of its value over the past month on worries about a global economic slowdown and growing stockpiles. S&P 500 futures edged 0.2% higher to $4,285.50 at last glance on jobs data expected today that could lead the Federal Reserve to slow raising interest rates.
What else I’m reading this morning on our website, FarmFutures.com:
My latest E-corn-omics column highlights wheat export optimism.
Jacqui Fatka summarizes the benefits to conservation programs from the Inflation Reduction Act.
The farm economy is strong – for now. But Federal Reserve data shows shrinking expectations for farmland values and profitability.
Advance Trading’s Tom Berry advises producers to put their risk into perspective and act in their farm’s best interests.
Does it pay to second guess USDA? Bryce Knorr looks at five ways to estimate 2022 corn and soybean yields.
Our team’s coverage of Friday’s August 2022 WASDE reports.
Morning Ag Commodity Prices – 8/18/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
6.175
6.0825
6.1225
-0.0275
-0.45%
DEC ’22 CORN
$ / BSH
6.1475
6.04
6.0875
-0.0325
-0.53%
MAR ’23 CORN
$ / BSH
6.22
6.115
6.16
-0.0325
-0.52%
MAY ’23 CORN
$ / BSH
6.25
6.155
6.19
-0.0325
-0.52%
JUL ’23 CORN
$ / BSH
6.23
6.1325
6.1775
-0.03
-0.48%
SEP ’23 CORN
$ / BSH
5.88
5.835
5.8625
-0.0225
-0.38%
DEC ’23 CORN
$ / BSH
5.825
5.7575
5.8075
0.0025
0.04%
AR2 ’24 CORN
$ / BSH
5.885
5.85
5.8825
0.0025
0.04%
MAY ’24 CORN
$ / BSH
5.895
5.895
5.895
-0.02
-0.34%
SEP ’22 SOYBEANS
$ / BSH
14.8775
14.6725
14.75
-0.0025
-0.02%
NOV ’22 SOYBEANS
$ / BSH
13.97
13.765
13.8225
-0.0775
-0.56%
JAN ’23 SOYBEANS
$ / BSH
14.0375
13.8375
13.895
-0.07
-0.50%
MAR ’23 SOYBEANS
$ / BSH
14.0675
13.8675
13.9325
-0.065
-0.46%
MAY ’23 SOYBEANS
$ / BSH
14.085
13.9025
13.96
-0.0625
-0.45%
JUL ’23 SOYBEANS
$ / BSH
14.075
13.905
13.965
-0.0475
-0.34%
AUG ’23 SOYBEANS
$ / BSH
13.7675
13.74
13.755
-0.075
-0.54%
SEP ’23 SOYBEANS
$ / BSH
13.405
13.37
13.405
-0.0225
-0.17%
NOV ’23 SOYBEANS
$ / BSH
13.31
13.1375
13.25
-0.01
-0.08%
AN2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.29
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.215
0
0.00%
SEP ’22 SOYBEAN OIL
$ / LB
67.88
66.49
66.82
-0.59
-0.88%
OCT ’22 SOYBEAN OIL
$ / LB
66.44
65.16
65.48
-0.59
-0.89%
SEP ’22 SOY MEAL
$ / TON
445
440.6
444.7
4.1
0.93%
OCT ’22 SOY MEAL
$ / TON
408.3
404.5
407.7
1.9
0.47%
DEC ’22 SOY MEAL
$ / TON
403.3
399
402.2
1.6
0.40%
JAN ’23 SOY MEAL
$ / TON
399.2
395.6
398.8
1.4
0.35%
MAR ’23 SOY MEAL
$ / TON
392.9
388.8
391.8
0.8
0.20%
SEP ’22 Chicago SRW
$ / BSH
7.665
7.4025
7.48
-0.1525
-2.00%
DEC ’22 Chicago SRW
$ / BSH
7.835
7.575
7.6625
-0.1425
-1.83%
MAR ’23 Chicago SRW
$ / BSH
7.99
7.7475
7.8275
-0.1325
-1.66%
MAY ’23 Chicago SRW
$ / BSH
8.085
7.8575
7.93
-0.1275
-1.58%
JUL ’23 Chicago SRW
$ / BSH
8.0775
7.875
7.94
-0.115
-1.43%
SEP ’23 Chicago SRW
$ / BSH
8.085
7.9425
7.985
-0.105
-1.30%
DEC ’23 Chicago SRW
$ / BSH
8.1375
8
8
-0.1425
-1.75%
SEP ’22 Kansas City HRW
$ / BSH
8.535
8.265
8.3275
-0.1825
-2.14%
DEC ’22 Kansas City HRW
$ / BSH
8.555
8.285
8.35
-0.18
-2.11%
MAR ’23 Kansas City HRW
$ / BSH
8.5725
8.315
8.37
-0.185
-2.16%
MAY ’23 Kansas City HRW
$ / BSH
8.575
8.345
8.3875
-0.175
-2.04%
JUL ’23 Kansas City HRW
$ / BSH
8.4425
8.2775
8.315
-0.1775
-2.09%
SEP ’23 Kansas City HRW
$ / BSH
8.3
8.3
8.3
-0.1775
-2.09%
DEC ’23 Kansas City HRW
$ / BSH
8.3275
8.3275
8.3275
-0.165
-1.94%
SEP ’22 MLPS Spring Wheat
$ / BSH
8.845
8.6525
8.695
-0.14
-1.58%
DEC ’22 MLPS Spring Wheat
$ / BSH
8.95
8.7725
8.825
-0.1175
-1.31%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.07
8.9
8.9225
-0.14
-1.54%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.15
8.995
9.02
-0.1225
-1.34%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.05
9.05
9.05
-0.115
-1.25%
SEP ’23 MLPS Spring Wheat
$ / BSH
9
9
9
0.04
0.45%
DEC ’23 MLPS Spring Wheat
$ / BSH
8.51
#N/A
9.0275
0
0.00%
SEP ’21 ICE Dollar Index
$
106.875
106.43
106.46
-0.026
-0.02%
SE ’21 Light Crude
$ / BBL
89.56
87.32
89.23
1.12
1.27%
OC ’21 Light Crude
$ / BBL
89.14
86.92
88.84
1.15
1.31%
SEP ’22 ULS Diesel
$ /U GAL
3.6499
3.5834
3.6264
0.009
0.25%
OCT ’22 ULS Diesel
$ /U GAL
3.5984
3.5375
3.5799
0.0117
0.33%
SEP ’22 Gasoline
$ /U GAL
2.971
2.9314
2.9655
0.031
1.06%
OCT ’22 Gasoline
$ /U GAL
2.7439
2.7
2.7403
0.0286
1.05%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
183.25
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
187.125
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
141.75
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
145.85
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
98.05
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
88.425
0
0.00%
AUG ’22 Class III Milk
$ / CWT
20.07
20.05
20.05
-0.12
-0.59%
SEP ’22 Class III Milk
$ / CWT
20.61
20.56
20.56
-0.11
-0.53%
OCT ’22 Class III Milk
$ / CWT
20.64
20.64
20.64
-0.16
-0.77%
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