Morning report: Soy falls on U.S. harvest progress, Brazil’s bumper crop. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 3-5 cents
Soybeans down 8-11 cents; Soymeal down $2.80/ton; Soyoil down $0.78/lb
Chicago wheat down 14-15 cents; Kansas City wheat down 16-18 cents; Minneapolis wheat down 9-11 cents
*Prices as of 6:50am CDT.
Feedback from the Field updates! How is harvest progressing on your farm this fall?! Click this link to take the survey and share updates about your farm’s harvest 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!
My latest FFTF column is live on our site! Growers are progressing with soybean harvest much more quickly than their corn counterparts and many respondents are already feeling the pressure of dry soil on winter wheat sowing and crop development. Check out the article for all the latest farmer insights!
Inputs: The Illinois USDA released its bi-weekly Production Costs report yesterday, which featured higher anhydrous ammonia prices for a fourth straight week amid high energy prices and an uptick in seasonal demand.
Diesel prices also edged up higher over the past two weeks as global energy production forecasts have been slashed in recent weeks in preparation for a global economic slowdown expected in 2023.
Urea prices were largely unchanged over the past two weeks, while UAN prices edged a hair (0.1%) lower. Phosphate prices were mixed but largely neutral, with DAP posting a 0.1% price gain from the previous report two weeks ago and MAP prices falling 0.6% during that time.
In the broad context of looking at 2023 production forecasts, growers looking to produce 200 bushel-per-acre corn yields next year are now expected to pay anywhere from $205.85-$246.28/acre for nitrogen (N), phosphorous (P), and potassium (K) costs if these inputs are booked at today’s prices. That is a 12%-19% increase from year ago costs ($185-$208/acre), which were over double the previous year’s NPK expenses at that time.
While urea prices have eased substantially over the past year, anhydrous ammonia and UAN costs remain high, especially as energy costs have continued to rise. Phosphate prices have also drifted 8%-17% higher over the past year, eating into the profit margins for soybean production as well as corn.
Teams at Purdue University (represent!) and the University of Illinois have assembled preliminary crop budgets for the 2023 growing season. For corn, at yesterday’s closing price for Dec23 futures of $6.2475/bushel, both budgets still show comfortable returns to land even amid high price forecasts for fertilizer products.
These high corn prices are doing a good job of keeping inflationary pressures in the fertilizer market at bay for now. Both universities’ budgets (with some slight redneck math modifications on my end) show that producers should be able to retain net profits as long as corn prices stay above $6/bushel.
That doesn’t erase the sticker shock of higher prices. And it doesn’t eliminate farmers’ risk if corn prices take a nosedive. But it should provide growers enough incentive to start planning for 2023 profits and use this opportunity to invest in more efficient ways to cut costs in preparation for a tighter margin environment.
Also in other fertilizer (and grains) news
Yesterday, Russia’s foreign ministry sought to trade barbs with the U.S. over its slow fertilizer shipping situation. Russian Foreign Ministry spokeswoman Maria Zakharova proclaimed that the U.S. is preventing Russia from shipping grain and fertilizer exports through means of “blackmailing” and “persecuting” any of Russia’s potential trade partners.
Economic sanctions in place by Western countries, including the U.S., have increased the business risk associated with Russian entities since the Black Sea conflict began. Banking risks to finance Russian export vessels remain high and the connected insurance and credit costs reflect these risks. And while it may be slowing Russia’s trade paces, it hasn’t stopped them completely – especially if the customers are willing to pay the extra risk premium.
Shipments of Russian fertilizers have been imported into Brazil – a country which is now exporting some of its fertilizer supplies due to excess quantities. Russian fuel cargoes have easily found their way to China – and even the U.S. – since the early days of the conflict. Russia is blending stolen Ukrainian grain with its own exportable supplies and selling it to Libya and Iran.
In response to the latest Russian disinformation campaign, the U.S., Australia, Canada, Japan, South Korea, and New Zealand (APEC) reaffirmed its support for the Ukrainian resistance and urged Russia to withdraw its military forces and end the conflict peacefully.
A joint statement follows: “We will further step-up efforts to overcome the food crisis in coordination with international organizations and development partners and, in this context, will focus on supporting affected economies in protecting vulnerable populations from the impact of food price shocks and on lifting of export restrictions on food and fertilizers. We also express our concern regarding volatility in energy markets and underscore the need to promote energy resilience, access, and security in the region.”
Overnight, Turkey’s president, Tayyip Erdogan, told reporters of expectations that the Black Sea Grain Initiative, which has freed up millions of tonnes (about 8MMT to be exact) of Ukrainian grain and oilseed supplies to global buyers, is likely to continue. Erdogan has been a key facilitator of negotiations between Russia and Ukraine in recent months.
“There is no obstacle to extending the export deal. I saw this in the talks I held with (Ukrainian President Volodymyr) Zelenskiy last night and also in the talks I held with (Russian President Vladimir) Putin,” Erdogan told reporters overnight.
The sentiment invoked bearish price pressure on the ag market this morning as markets prepare for Ukrainian grain supplies to remain available to the international market through at least November.
Corn
The dollar strengthened overnight as more uncertainty rippled through the global economy about rising interest rates and high inflation, which created more headwinds for export prospects for U.S. grains.
Corn prices are on track to open today’s trading session $0.03-$0.05/bushel lower this morning. The bearish sentiments were also compounded by advancing harvest progress in the U.S. and easing worries about a potential break in the Ukraine-Russia Black Sea Grain Initiative.
“Economic concerns … still linger and overshadow the demand outlook for commodities,” consultancy CRM Agri said in a note, as reported by Reuters.
Soybeans
Soybean prices fell $0.08-$0.11/bushel this morning on lingering export shipping pace concerns in the U.S. Gulf, where a majority of U.S. soybeans are historically shipped into international channels. As discussed previously, those speeds have dwindled as drought has lowered water levels on the Mississippi River, prohibiting grain and oilseed barges from reaching export terminals.
Soybean markets also struggled with bearish market forces due to advancing harvest paces across the Midwest and favorable weather forecasts in Brazil that are likely to be a precursor to a bumper crop harvested in the world’s largest soybean exporting country.
My forecasts yesterday of lackluster soybean export paces were somewhat true, but they missed one important detail.
Through the week ending October 13, the U.S. shipped 69.7 million bushels of soybeans to international buyers. As I mentioned yesterday, Monday’s Export Inspections report from USDA recorded 69.2 million bushels, which was nearly double the size of the previous week’s inspections.
And USDA’s weekly export shipping volumes held true to that estimate in yesterday’s report. But while it marked a 2.1x increase weekly soybean shipping volume, it still fell short of last year’s shipping paces during the same reporting week by nearly 9%.
Year-to-date soybean shipping volumes are 18% lower than last year due to low water levels on the Mississippi that have subsequently slowed export shipping paces at the U.S. Gulf. This time last year, Hurricane Ida damaged port facilities in New Orleans, which also slowed export paces last year during the peak season for soybean shipments.
All told, marketing-year-to-date soybean export volumes are nearly 60% slower than the same time in 2020/21 – the last time U.S. Gulf facilities did not face operational headwinds during peak soybean harvest activity.
What was surprising in yesterday’s report was the amount of new soybean export sales generated during the October 7-13 reporting period. USDA reported that 94.0 million bushels of new 2022/23 soybean export orders were booked during the reporting week, surpassing even the high pre-report trade estimates of 91.9 million bushels.
China booked 72.6 million bushels of U.S. soybean export orders during that week, which compounded with smaller U.S. soybean yields to help to revive soybean prices that had been drifting lower during late September 2022.
Wheat: Wheat prices tumbled $0.08-$0.16/bushel lower this morning as worries about Black Sea grain access eased overnight thanks to Turkish President Erdogan’s comments, which restored faith in the Grain Initiative and the Ukrainian shipping corridor. The dollar also charged up overnight, threatening to challenge a late September 2022 20-year high amid global economic uncertainty.
Some of wheat’s losses were limited by worrisome weather concerns in Argentina, where drought and cooler than normal temperatures for this time of year are threatening the country’s winter wheat crop.
Weather
Temperatures will remain warm today as skies clear across the Heartland, according to NOAA’s short-term forecasts. The clear skies will continue across the Midwest and Plains until Sunday, when a storm system building in the Northern Rockies will sneak into the Northern Plains. But until that point, harvest progress will be able to continue uninterrupted across the country.
Any showers next week will likely dissipate by second half of the week, which should limit any potential harvest delays. NOAA’s 6-10-day forecasts are now trending cooler for the Upper Midwest, while forecasts for the Eastern Corn Belt continue to show warmer than average temperatures. Chances for rain are shifting away from the Heartland and into the Pacific Northwest and Southeast. Dry weather is likely to continue plaguing winter wheat conditions in the Southern Plains during the end of next week.
The 8-10-day outlook is trending much warmer for the Midwest and Plains, but the Plains will continue to see slim chances for precipitation while the Midwest is expected to see near normal chances for rain during Halloween and the first couple days of November.
U.S. Drought Monitor ratings released yesterday bested last week’s figures to notch a new record high drought reading for the U.S. Through the week ending October 18, 82.23% of U.S. land was classified in some sort of abnormally dry to exceptional drought condition.
This should leave many growers ending harvest in the U.S. with an important question in mind – will the drought damage of this fall receive enough moisture this winter to prevent more yield losses in 2023?
Financials
U.K. Prime Minister Liz Truss was yesterday’s casualty in the ongoing saga of high inflation and rising interest rates. S&P 500 futures traded 0.33% lower to $3,663.00 at last glance as the markets continued to digest the U.K.’s struggles with the current economic environment while also bracing for the latest round of earnings reports today that is likely to be met with mixed sentiments.
“The reality is that we see weak growth, higher inflation, and earnings surprising to the downside. It’s a pretty difficult combination,” Luca Paolini, chief strategist at Pictet Asset Management, told the Wall Street Journal. “This earnings season is going to still be OK. The worry is for the next two in a way.”
What else I’m reading this morning on our website, FarmFutures.com:
Naomi Blohm explains why corn is still king.
Bipartisan senators banded together to urge the EPA to expand RFS blending volumes.
AgMarket.Net’s Jim McCormick urges farmers to consider how global factors could influence markets into 2023 as harvest winds down.
For fun – here are some amazing harvest images our editorial staff has captured over the past couple months!
Virginia Tech ag economist David Kohl explains why working capital can help farmers manage volatility during the remainder of the year.
Morning Ag Commodity Prices – 10/21/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.8375
6.8
6.8025
-0.0375
-0.55%
MAR ’23 CORN
$ / BSH
6.895
6.8575
6.8625
-0.0375
-0.54%
MAY ’23 CORN
$ / BSH
6.895
6.8575
6.8625
-0.0375
-0.54%
JUL ’23 CORN
$ / BSH
6.8375
6.7975
6.8025
-0.0425
-0.62%
SEP ’23 CORN
$ / BSH
6.3675
6.3425
6.345
-0.035
-0.55%
DEC ’23 CORN
$ / BSH
6.2375
6.21
6.2125
-0.0375
-0.60%
AR2 ’24 CORN
$ / BSH
6.2925
6.2875
6.2875
-0.03
-0.47%
AY2 ’24 CORN
$ / BSH
6.3225
#N/A
6.335
0
0.00%
JUL ’24 CORN
$ / BSH
6.285
#N/A
6.2975
0
0.00%
NOV ’22 SOYBEANS
$ / BSH
13.91
13.8
13.8175
-0.0975
-0.70%
JAN ’23 SOYBEANS
$ / BSH
13.995
13.88
13.9
-0.1
-0.71%
MAR ’23 SOYBEANS
$ / BSH
14.075
13.9625
13.9775
-0.1
-0.71%
MAY ’23 SOYBEANS
$ / BSH
14.1425
14.03
14.0475
-0.0975
-0.69%
JUL ’23 SOYBEANS
$ / BSH
14.1675
14.06
14.0775
-0.095
-0.67%
AUG ’23 SOYBEANS
$ / BSH
14.0025
13.9175
13.9275
-0.0925
-0.66%
SEP ’23 SOYBEANS
$ / BSH
13.675
13.615
13.6175
-0.0825
-0.60%
NOV ’23 SOYBEANS
$ / BSH
13.58
13.4875
13.4875
-0.0925
-0.68%
AN2 ’24 SOYBEANS
$ / BSH
13.5925
#N/A
13.62
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.5775
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.52
#N/A
13.565
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
70.59
69.65
70.12
-0.3
-0.43%
JAN ’23 SOYBEAN OIL
$ / LB
68.07
67.21
67.64
-0.3
-0.44%
DEC ’22 SOY MEAL
$ / TON
412.7
409.6
410.9
-2.4
-0.58%
JAN ’23 SOY MEAL
$ / TON
406
402.9
404
-2.8
-0.69%
MAR ’23 SOY MEAL
$ / TON
398.8
396
396.9
-3.1
-0.78%
MAY ’23 SOY MEAL
$ / TON
395.4
392.7
393.7
-3.2
-0.81%
JUL ’23 SOY MEAL
$ / TON
395.4
393
394.4
-2.5
-0.63%
DEC ’22 Chicago SRW
$ / BSH
8.515
8.375
8.3875
-0.105
-1.24%
MAR ’23 Chicago SRW
$ / BSH
8.7025
8.5675
8.585
-0.095
-1.09%
MAY ’23 Chicago SRW
$ / BSH
8.7975
8.6725
8.685
-0.095
-1.08%
JUL ’23 Chicago SRW
$ / BSH
8.78
8.6625
8.665
-0.105
-1.20%
SEP ’23 Chicago SRW
$ / BSH
8.78
8.7125
8.7325
-0.07
-0.80%
DEC ’23 Chicago SRW
$ / BSH
8.84
8.765
8.795
-0.0775
-0.87%
AR2 ’24 Chicago SRW
$ / BSH
8.8475
8.765
8.765
-0.105
-1.18%
DEC ’22 Kansas City HRW
$ / BSH
9.5025
9.3775
9.3875
-0.11
-1.16%
MAR ’23 Kansas City HRW
$ / BSH
9.4825
9.36
9.37
-0.11
-1.16%
MAY ’23 Kansas City HRW
$ / BSH
9.46
9.3475
9.3675
-0.0975
-1.03%
JUL ’23 Kansas City HRW
$ / BSH
9.4225
9.295
9.3075
-0.105
-1.12%
SEP ’23 Kansas City HRW
$ / BSH
9.325
9.285
9.285
-0.1125
-1.20%
DEC ’23 Kansas City HRW
$ / BSH
9.395
9.3275
9.345
-0.0875
-0.93%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.3725
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.64
9.5625
9.5775
-0.0475
-0.49%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.7
9.6325
9.6475
-0.0475
-0.49%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.705
9.6925
9.6925
-0.055
-0.56%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.765
#N/A
9.76
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.43
#N/A
9.4575
0
0.00%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.42
#N/A
9.4525
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.195
0
0.00%
DEC ’21 ICE Dollar Index
$
113.475
112.7
113.37
0.552
0.49%
DE ’21 Light Crude
$ / BBL
85.19
83.15
85.03
0.52
0.62%
JA ’21 Light Crude
$ / BBL
83.97
82.05
83.84
0.54
0.65%
NOV ’22 ULS Diesel
$ /U GAL
3.7728
3.6886
3.7652
0.0084
0.22%
DEC ’22 ULS Diesel
$ /U GAL
3.5216
3.4435
3.5216
0.0378
1.09%
NOV ’22 Gasoline
$ /U GAL
2.6735
2.6218
2.6735
0.0257
0.97%
DEC ’22 Gasoline
$ /U GAL
2.4885
2.4379
2.4885
0.0224
0.91%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
175.575
0
0.00%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
177.55
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
149.775
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
151.675
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
87.025
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
89.1
0
0.00%
OCT ’22 Class III Milk
$ / CWT
21.83
21.8
21.8
-0.03
-0.14%
NOV ’22 Class III Milk
$ / CWT
21.26
21.21
21.22
-0.07
-0.33%
DEC ’22 Class III Milk
$ / CWT
19.8
19.8
19.8
-0.05
-0.25%
What else I’m reading this morning on our website, FarmFutures.com:Get our top content delivered right to your inbox. Subscribe to our morning and afternoon newsletters!
