Morning report: Corn, soybean and wheat prices test moderate gains in overnight trading. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Up 12 to 13 cents
Soybeans: Up 17 to 19 cents
Wheat: Up 10 to 16 cents
Corn and soybean prices heated up yesterday after favorable data from USDA’s September World Agricultural Supply and Demand Estimates report, which showed yield and production cuts for both crops. Overnight trading suggests additional gains could be captured on Tuesday, with corn, soybean and wheat prices all moving higher ahead of today’s session.
Overseas stock markets were lightly mixed but mostly higher. Asian markets closed with gains of around 0.25%, while European markets trended around 0.5% in midday trading. On Wall St., the Dow rose 185 points overnight to 32,683 as investors await the next consumer price index report (a key look at inflation trends), which will be released later Tuesday morning.
Energy futures shifted higher, with crude oil up 1.25% overnight to move just under $89 per barrel. Diesel firmed 0.5% higher, while gasoline climbed 2.25% higher. The U.S. Dollar softened moderately.
The latest 72-hour precipitation map from NOAA shows ample rains for northern Minnesota and moderate rainfall likely for the Northern and Central Plains, while the rest of the Corn Belt could be hard-pressed to find wet weather between today and Friday. Official 6-to-10-day forecasts show seasonally wet weather could be in store for the Northern Plains and upper Midwest between September 18 and September 22, with warmer-than-normal conditions likely for the central U.S. during that time.
On Monday, commodity funds were net buyers of corn (+9,000), soybeans (+21,000), soymeal (+10,500) and soyoil (+5,000) contracts but were net sellers of CBOT wheat (-7,000).
Corn
Corn prices tested moderate gains ahead of Tuesday’s session, suggesting another round of technical buying may be in store today. A bullish sentiment developed yesterday after USDA trimmed yield forecasts by nearly three bushels per acre.
Corn basis bids were steady to weak on Monday, dropping as much as 40 cents at an Iowa processor and eroding 2 to 20 cents lower at five other Midwestern locations.
USDA’s latest corn production estimates tumbled 415 million bushels below August totals to 13.9 billion bushels in yesterday’s WASDE report. That assumes a new national yield forecast of 172.5 million bushels per acre (down 2.9 bpa from last month) across 80.8 million harvested acres (down 1.0 million from last month).
On the demand side, USDA slashed total corn use by 250 million bushels, which included 100 million fewer bushels for feed and residual use, 100 million fewer ex-ported bushels and 50 million fewer bushels for ethanol production. All told, supply dropped more rapidly than use, with USDA lowering ending stocks by 169 million bushels to 1.2 billion.
Corn export inspections drifted moderately lower in the week ending September 8, sliding to 17.6 million bushels. That was on the lower end of trade guesses, which ranged between 12.8 million and 32.5 million bushels. Mexico topped all destinations, with 7.3 million bushels. Cumulative totals for the 2022/23 marketing year are better than last year’s pace so far, with 22.0 million bushels since the beginning of September.
Analysts expected corn ratings to hold steady from a week ago, but USDA lowered them by a point in yesterday’s crop progress report, leaving 53% of the crop in good-to-excellent condition through Sunday. Another 27% is rated fair (unchanged from last week), with the remaining 20% rated poor or very poor (up a point from last week).
Nearly all (95%) of this season’s corn crop has reached the dough stage, versus a prior five-year average of 96%. Seventy-seven percent is dented (prior five-year average is 79%), and 25% is fully mature (prior five-year average is 30%). Harvest progress reached 5%, which is one point faster than the prior five-year average of 4% so far.
France’s corn production could fall to the lowest level in more than three decades, with the country’s farm ministry anticipating it will fall to 446 million bushels amid a drought and heat-stressed season. “A decline in planting, linked to the surge in fertilizer and gas prices, has been coupled with a sharp drop in yields caused by drought,” according to the ministry. Harvest is just getting underway.
South Korea issued an international tender to purchase 2.6 million bushels of animal feed corn, which will be sourced from either the United States, South America or South Africa, that closes on Wednesday. The grain is for shipment in November.
The preliminary report from the CBOT showed daily futures volume moved to 338,311, with open interest firming by 9,303. Options volume was robust, at 213,451 and favored calls (119,531) over puts (93,920). Implied volatility for near-the-money December contracts moved to 28.2% and don’t expire for another 73 days.
Soybeans
Soybean prices were firm overnight and will likely stay in the green today after USDA showed lower-than-expected yield estimates in Monday’s WASDE report. The agency also docked quality ratings a point lower in its latest crop progress report yesterday afternoon. Prices tested gains of more than 1% overnight.
Soybean basis bids were steady to weak across the central U.S. on Monday after spilling 10 to 68 cents lower across five Midwestern locations.
USDA raised its beginning stocks for 2022/23 due to a lower-than-expected amount of exports in 2021/22 in the agency’s September WASDE report. Production estimates fell 152 million bushels to 4.4 billion based on lower harvested area and yields. Harvested aces is expected to decline by 600,000 acres to 86.688 million, while average yields took an unexpected 1.4-bpa dip to 50.5 bpa. Ending stocks remain historically tight, declining another 45 million bushels to just 200 million.
Soybean export inspections reached 12.1 million bushels last week, which fell below the entire range of trade guesses, which came in between 14.7 million and 23.9 million bushels. China led all destinations, with 5.4 million bushels. Cumulative totals for the 2022/23 marketing year are trending higher so far from year-ago totals, with 14.0 million bushels.
USDA hasn’t offered any soybean harvest updates yet, but that is surely right around the corner. Nearly all (97%) of the crop is now setting pods through September 11, versus the prior five-year average of 98%. And 22% is dropping leaves, which is six points behind the prior five-year average of 28%.
As with corn, USDA docked soybean quality ratings a point, with 56% of the crop now in good-to-excellent condition. Another 29% is rated fair (unchanged from last week), with the remaining 15% rated poor or very poor (up a point from last week).
How do your farm’s crop conditions stack up against other operations in the U.S.? Click this link to take the survey and share updates about your farm’s crop development. Farm Futures grain market analyst Jacqueline Holland regularly reviews and uploads results to the FFTF Google MyMap, so farmers can peer anecdotes from around the country.
The preliminary report from CBOT showed daily futures volume at 309,892, with open interest trending 18,365 higher. Options volume moved to 109,674 and slightly favors puts (58,011) over calls (51,663). Implied volatility for near-the-money November contracts moved to 24.3% and expire in another 37 days.
Wheat
Wheat prices reversed higher overnight after suffering a moderate setback in Monday’s session. Spillover strength from other commodities, along with a sagging U.S. Dollar, were partly the reason, along with a robust round of export inspection data from USDA yesterday morning. Traders remain focused on the latest news from Ukraine and Russia as well.
USDA made no changes to its 2022/23 U.S. wheat outlook for supply and use. The agency did lower its season-average farm price by 25 cents to $9.00 per bushel due to recent trends but does note that this is still a record SAFP if it holds.
Globally, USDA expects a higher production in Russia, with a new estimate of 3.344 billion bushels. Ukraine’s production potential, on the other hand, also trended higher from a month ago but will end up being significantly lower year-over-year, at around 753.2 million bushels. Both countries are typically among the top wheat ex-porters in the world.
Wheat export inspections were robust last week, climbing to 27.1 million bushels and beating the entire range of trade estimates, which came in between 9.2 million and 23.0 million bushels. Mexico was the No. 1 destination, with 7.6 million bushels. Cumulative totals for the 2022/23 marketing year remain moderately below last year’s pace so far, with 235.2 million bushels.
The spring wheat harvest moved from 71% complete a week ago up to 85% through September 11. This year’s effort is still slower than 2021’s pace of 95% and the prior five-year average of 89%, however. Winter wheat plantings made some progress as well, moving from 3% a week ago up to 10% through Sunday. That puts the 2022/23 crop slightly behind 2021’s pace of 11% but remains ahead of the prior five-year average of 7%.
Japan issued a regular tender to purchase 3.6 million bushels of food-quality wheat from the United States and Canada in a regular tender that closes on Thursday. Of the total, 32% is expected to be sourced from the U.S. The grain is for arrival by the end of December.
Jordan issued an international tender to purchase 4.4 million bushels of wheat from optional origins that closes on September 20 after passing on all offers in a similar tender that closed earlier today.
The preliminary report from CBOT showed daily SRW volume at 78,224, with open interest trending 2,219 higher. Options volume moved to 24,700 and favors calls (17,657) over puts (7,043). Implied volatility for December near-the-money options moved to 40.2% and expires in 73 days.
Volume in HRW wheat moved to 29,784, with open interest trending 1,479 lower. Options volume is at 1,878 and heavily favors calls (1,427) over puts (451).
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