Morning report: Corn, soy struggle for upward momentum amid energy market slump. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 1-2 cents
Soybeans down 1-5 cents, Soymeal down $0.40/ton, Soyoil up $0.29/lb
Chicago wheat down 6-7 cents, Kansas City wheat down 2-3 cents, Minneapolis wheat down 3-4 cents
*Prices as of 6:55am CDT.
Feedback from the Field updates – last weeks of the season! 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! Soybean harvest is rapidly coming to a close across the country and more and more FFTF respondents are reporting corn harvest as complete.
Responses are starting to slow as many growers are wrapping up for the year, so our time together in FFTF this growing season will also come to an end in the upcoming weeks. So be sure to drop any insights you’d like to share with us from the 2022 season at this link and I will share them on our map as well as in my columns as harvest season winds down. Thanks! -JH
USDA Baseline Projections
Every year, USDA’s World Ag Outlook Board (WAOB), the organization that publishes monthly WASDE reports, is required by law to submit for Federal review baseline supply and demand estimate projections out 10 years into the future. To be clear – these projections are truly estimates in the truest sense of that word.
WAOB released the latest Baseline Projections report yesterday. And before I dive into the results, I need to really stress a few things about this data set first.
As we have seen over the past few years, there is no way to accurately predict how grain markets will react in 10 days, let alone 10 years. So we should take these estimates with a grain of salt. It is important to consider that these estimates are not calculated via NASS’s usual methods of farmer surveys and objective yield and/or acreage inspections.
Rather, these estimates are derived from economic models created by WAOB, the Economic Research Service, Farm Production and Conservation Business Center, the Foreign Agricultural Service, the Office of the Chief Economist, the Office of Budget and Program Analysis, and the Risk Management Agency. The estimates leave out input from NASS and FSA – two agencies whose data regularly factor into monthly Crop Production and WASDE data updates.
The published report uses October 2022 WASDE data as the premise for most of the baseline assumptions in the report. These estimates aren’t set in stone, and they aren’t perfect. But at the very least, they provide a vague idea of what farmers may decide to plant and where markets could head next spring under the current market conditions.
With that aside, here are the results!
USDA expects farmers will plant 92.0 million acres of corn in Spring 2023, which is up from 88.6 million acres planted this past spring. Tight supplies and high prices are the key driver behind the uptick in corn acreage next spring even as fertilizer costs soar. Our August 2022 Farm Futures farmer survey indicated similar sentiments.
If trendline corn yields are realized next year (181.5 bpa), stocks-to-use ratios will swell from the current level of 8.3% to a much more comfortable 11.6% and export and feed usage rates will similarly grow.
While the projections much beyond the 2023/24 growing season are more difficult to rely on, it is worth noting that WAOB is predicting that future corn acreage past 2023 is not expected to top more than 91 million acres and supplies are likely to continue hovering at tight levels for several years to come over the next decade – suggesting corn acres may face stiff competition in the near future.
And that competitor? Soybeans. Strong domestic growth expectations will keep soybean acreage competitive with corn in the coming years, though not likely next year. In 2023, WAOB expects farmers will plant 87.0 million acres of soybeans, which is half a million fewer acres planted than this year.
WAOB is again bracing for continued tightness in the U.S. soybean market over the next 10 years, though returns are expected to dip beginning in the 2024/25 growing season.
Wheat acres will also compete strongly for acreage next spring. WAOB expects that 47.5 million acres of wheat will be planted for harvest in 2023, up nearly 1.8 million acres from this year’s sowings. Competitive wheat prices and tight global supplies have provided a strong incentive for wheat growers, and I have already heard anecdotal evidence that more wheat acres were already planted this fall, despite some troublesome growing conditions in the Plains.
Wheat supplies are likely to rebound more quickly than corn and soybean stocks, though prices are forecast to remain strong for another couple growing seasons.
In summary, next spring farmers are looking to increase corn and wheat acres, likely at the expense of soybean acreage. That shouldn’t come as a surprise to the markets – the returns for corn and wheat far outweigh earnings from soybeans at the current market levels.
Plus, we are still another year or two out from the addition of the new biodiesel plants that are expected to increase soy crush demand in the U.S. When that is realized, it will likely throw a wrench in these projections.
Corn
Energy prices dipped this morning as markets evaluated reduced demand prospects following China’s latest COVID lockdowns. That sentiment, paired with rapid harvest progress over the past week in the U.S., sent corn futures $0.01-$0.02/bushel lower overnight.
Yesterday’s Crop Progress report found 87% of U.S. corn acres had been harvested as of November 7. That marked an 11% increase from the previous week and is also 11% ahead of the five-year average. Markets were expecting an average completion rate of 86%, which marks one of the only times this growing season that the analysts have underestimated the weekly harvest figure from USDA.
Soybeans
Soybean prices fell $0.01-$0.05/bushel this morning, continuing yesterday’s technical selloff and losing support amid the final days of harvest and lingering concerns about Chinese import demand as another round of COVID lockdowns ensues.
USDA’s Crop Progress report issued yesterday found 94% of U.S. soybeans harvested as of last Sunday, which was perfectly aligned with pre-report trade estimates. Soybean harvest progress increased 6% from the previous week and held an 8-point advantage over the five-year benchmark for the same reporting period.
Wheat
Wheat prices rallied slightly higher during the overnight trading session on U.S. crop quality concerns but were poised to open this morning’s trading session $0.03-$.07/bushel lower as the dollar strengthened overnight.
“Traders remain hesitant to sell wheat until they know whether Russia will agree to a continuation of the grain export corridor deal that is set to expire Nov. 19,” research firm Hightower said in a report, as reported by Reuters. “Bad weather is also adding uncertainty to the global supply outlook, with poor crop conditions for the U.S. Plains, lower Argentina crop production and quality concerns in Australia.”
Market analysts had been hoping for improving winter wheat crop conditions ahead of yesterday’s Crop Progress report after last week’s showers and USDA did not disappoint. The pre-report trade guess averaged 31% good to excellent. While USDA’s figure found a 2-point condition improvement on the week, the 30% good to excellent rating for winter wheat conditions fell just shy of the pre-report average trade guess.
But the rains did help improve growing conditions for the young crop. Emergence rates rose 11% on the week to 73% complete. That figure has consistently trailed the five-year average all fall, but yesterday the mark moved within 1% of the benchmark – the closest it has been all season. To be sure, drought still remains a very prominent concern for this winter wheat crop in the Southern Plains, but last week’s showers brought some long-awaited relief to dire conditions.
Weather
Some scattered showers will be expected in the Central and Northern Plains today, according to NOAA’s short-term forecasts. More widespread showers will develop over the Upper Midwest later this evening. Minnesota, Wisconsin, and Oklahoma could see up to three quarters of an inch of accumulation over the next 24 hours as a result.
NOAA’s 6-10-day forecasts are now trending cool for the middle of the month across most of the country. Chances for rain will be below normal in the Midwest and Northern Plains, though the Central and Southern Plains are likely to see a near normal to above average change of precipitation during that tie.
Those trends will begin to shift slightly in the 8-10-day outlook. Forecasts during that time are still cool but not quite as chilly as in the 6-10-day forecast. The chances for rain will remain consistent with the 6-10-day forecast on the Central and Southern Plains, but chances for excessive dryness in the Upper Midwest and Plains will recede slightly.
At any rate, that should help close the door on Fall 2022 harvest activity in the Upper Midwest. Some of the showers could benefit Mississippi River levels also, which is good news for grain and fertilizer flows.
Financials
It’s Midterm Elections Day – so get out and vote if you haven’t already! The S&P 500 edged up 0.19% to $3,822.50 as Wall Street braces for today’s election results as markets are hopeful that more Republican shifts in the legislature will reduce political uncertainty – and any sort of major legislative agendas for either party – over the next two years.
What else I’m reading this morning on our website, FarmFutures.com:
Corn, wheat, and money are still playing ball. Bryce Knorr lists three fundamentals to watch to make sure you aren’t missing out on the game.
Water Street Solutions’ Darren Frye offers three approaches to solve your farm’s toughest problems.
Naomi Blohm knows that the best marketing plans have started scenario planning not just for 2022 grain, but also the 2023 and 2024 crops.
Mexico is moving closer to a GMO corn ban – here’s how it could impact U.S. corn farmers.
For those of you who may have missed my Wednesday morning newsletter, my latest E-corn-omics column is about the implications of the recent Brazilian election to U.S. farmers.
Our latest special edition Farm Futures print issue features a series on farmer mental health. It is one of the pieces I am most proud of during my time here, so I cannot recommend checking it out enough!
Morning Ag Commodity Prices – 11/8/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.77
6.725
6.7375
-0.02
-0.30%
MAR ’23 CORN
$ / BSH
6.8275
6.785
6.795
-0.02
-0.29%
MAY ’23 CORN
$ / BSH
6.83
6.79
6.7975
-0.0225
-0.33%
JUL ’23 CORN
$ / BSH
6.78
6.74
6.7525
-0.02
-0.30%
SEP ’23 CORN
$ / BSH
6.38
6.3475
6.355
-0.0125
-0.20%
DEC ’23 CORN
$ / BSH
6.2475
6.22
6.2275
-0.0075
-0.12%
AR2 ’24 CORN
$ / BSH
6.305
6.3
6.305
0.0025
0.04%
AY2 ’24 CORN
$ / BSH
6.33
#N/A
6.325
0
0.00%
JUL ’24 CORN
$ / BSH
6.3
6.29
6.29
-0.0075
-0.12%
NOV ’22 SOYBEANS
$ / BSH
14.4275
14.3925
14.405
0.005
0.03%
JAN ’23 SOYBEANS
$ / BSH
14.5275
14.405
14.445
-0.0575
-0.40%
MAR ’23 SOYBEANS
$ / BSH
14.605
14.485
14.5275
-0.0525
-0.36%
MAY ’23 SOYBEANS
$ / BSH
14.6775
14.5575
14.6
-0.055
-0.38%
JUL ’23 SOYBEANS
$ / BSH
14.7
14.585
14.6275
-0.055
-0.37%
AUG ’23 SOYBEANS
$ / BSH
14.5225
14.4525
14.4525
-0.05
-0.34%
SEP ’23 SOYBEANS
$ / BSH
14.14
14.045
14.08
-0.0325
-0.23%
NOV ’23 SOYBEANS
$ / BSH
13.96
13.87
13.9
-0.0175
-0.13%
AN2 ’24 SOYBEANS
$ / BSH
13.965
13.9175
13.9175
-0.02
-0.14%
AR2 ’24 SOYBEANS
$ / BSH
13.8825
#N/A
13.8525
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.8275
#N/A
13.805
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
76.73
75.8
76.41
0.08
0.10%
JAN ’23 SOYBEAN OIL
$ / LB
74.25
73.37
73.87
-0.03
-0.04%
DEC ’22 SOY MEAL
$ / TON
420.7
417.2
418.3
-0.7
-0.17%
JAN ’23 SOY MEAL
$ / TON
414.3
411.2
412.1
-0.8
-0.19%
MAR ’23 SOY MEAL
$ / TON
405.6
402.9
403.8
-0.5
-0.12%
MAY ’23 SOY MEAL
$ / TON
401.5
398.9
399.7
-0.4
-0.10%
JUL ’23 SOY MEAL
$ / TON
400.4
397.9
397.9
-1.2
-0.30%
DEC ’22 Chicago SRW
$ / BSH
8.505
8.365
8.3975
-0.06
-0.71%
MAR ’23 Chicago SRW
$ / BSH
8.6825
8.55
8.58
-0.06
-0.69%
MAY ’23 Chicago SRW
$ / BSH
8.7825
8.6525
8.685
-0.0575
-0.66%
JUL ’23 Chicago SRW
$ / BSH
8.82
8.705
8.73
-0.06
-0.68%
SEP ’23 Chicago SRW
$ / BSH
8.8825
8.775
8.7925
-0.0625
-0.71%
DEC ’23 Chicago SRW
$ / BSH
8.9625
8.8625
8.875
-0.0575
-0.64%
AR2 ’24 Chicago SRW
$ / BSH
8.8825
8.8825
8.8825
-0.065
-0.73%
DEC ’22 Kansas City HRW
$ / BSH
9.6325
9.52
9.55
-0.0225
-0.24%
MAR ’23 Kansas City HRW
$ / BSH
9.5875
9.49
9.51
-0.0275
-0.29%
MAY ’23 Kansas City HRW
$ / BSH
9.5375
9.4575
9.47
-0.0325
-0.34%
JUL ’23 Kansas City HRW
$ / BSH
9.4675
9.41
9.4125
-0.0225
-0.24%
SEP ’23 Kansas City HRW
$ / BSH
9.45
9.42
9.42
0.0025
0.03%
DEC ’23 Kansas City HRW
$ / BSH
9.41
9.41
9.41
-0.04
-0.42%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.3975
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.66
9.555
9.57
-0.0325
-0.34%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.78
9.685
9.6875
-0.035
-0.36%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.78
9.75
9.75
-0.035
-0.36%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.805
#N/A
9.7725
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.5475
#N/A
9.5425
0
0.00%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.5325
#N/A
9.5475
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.5725
0
0.00%
DEC ’21 ICE Dollar Index
$
110.5
109.97
110.255
0.262
0.24%
DE ’21 Light Crude
$ / BBL
92.17
90.37
91.11
-0.68
-0.74%
JA ’21 Light Crude
$ / BBL
91.1
89.39
90.04
-0.69
-0.76%
DEC ’22 ULS Diesel
$ /U GAL
3.8188
3.7395
3.8056
0.0245
0.65%
JAN ’23 ULS Diesel
$ /U GAL
3.6433
3.5808
3.6338
0.0193
0.53%
DEC ’22 Gasoline
$ /U GAL
2.6844
2.6226
2.6367
-0.0164
-0.62%
JAN ’23 Gasoline
$ /U GAL
2.6203
2.559
2.5779
-0.0144
-0.56%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
178.225
0
0.00%
JAN ’23 Feeder Cattle
$ / CWT
0
#N/A
179.925
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
153.05
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
155.025
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
87.05
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
89.05
0
0.00%
NOV ’22 Class III Milk
$ / CWT
20.87
20.83
20.83
-0.07
-0.33%
DEC ’22 Class III Milk
$ / CWT
20.36
20.36
20.36
-0.11
-0.54%
JAN ’23 Class III Milk
$ / CWT
19.73
19.72
19.73
0
0.00%
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