Corn and soybeans also firm on dry South American weather
Grain prices ended the week on a high note, with corn up more than 1.25% and soybeans rising 0.75% after lingering drought concerns in South America triggered another round of technical buying on Friday. Wheat prices captured even bigger gains, with some contracts up more than 3.25% by the close. Geopolitical concerns over a potential Russian invasion of Ukraine have more than a few people worried about export disruptions in the Black Sea region.
Some additional rain and snow could hit parts of the eastern Corn Belt and Great Lakes region between Saturday and Tuesday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts seasonally warm weather for the entire United States between February 18 and February 24, with a dry pattern holding over much of the Plains during that time.
On Wall St., the Dow slumped 400 points lower in afternoon trading over escalating fears that Russia could soon invade Ukraine. Both the United States and the United Kingdom issued statements urging their citizens to exit Ukraine as soon as possible. Energy prices trended significantly higher on the news. Crude oil jumped 3.5% higher to move above $93 per barrel. Diesel rose 2.75%, with gasoline up more than 2.5%. The U.S. Dollar firmed moderately.
On Thursday, commodity funds were net buyers of soyoil (+1,000) contracts but were net sellers of corn (-5,500), soybeans (-9,000), soymeal (-3,000) and CBOT wheat (-8,000).
Corn
Corn prices rose 1.25% after fresh concerns about South American production potential triggered some technical buying. Spillover strength from wheat were even more influential, causing a late-session rally. March futures rose 8.25 cents to $6.50, with May futures up 9.25 cents to $6.4975.
Corn basis bids were steady to weak across the central U.S. on Friday after sliding 2 cents lower at a Nebraska elevator and 5 cents lower at an Illinois river terminal.
Private exporters announced the sale of 5.0 million bushels of corn for delivery to Japan during the 2021/22 marketing year, which began September 1.
In Argentina, the Buenos Aires grains exchange lowered its estimates for the country’s 2021/22 corn production by more than 236 million bushels, falling to a new projection of 2.008 billion bushels. “Rainfall in the remainder of February will be key to sustaining this volume,” according to the exchange.
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Preliminary volume estimates were for 471,582 contracts, fading well below Thursday’s final count of 702,438.
Soybeans
Soybean prices fought through a choppy session and ultimately closed around 0.75% higher on a round of technical buying partly spurred by sputtering South American production potential. Spillover strength from other commodities lent additional support. March futures rose 11.5 cents to $15.8575, with May futures up 12.25 cents to $15.8875.
Soybean basis bids tumbled 16 cents lower at an Illinois river terminal and dropped 5 cents at an Ohio elevator while holding steady across other Midwestern locations on Friday.
Private exporters announced the sale of 4.0 million bushels of soybeans for delivery to China during the 2022/23 marketing year, which begins September 1. Exporters also announced the sale of 30,000 metric tons of soyoil to unknown destinations during the current marketing year.
Ahead of the next National Oilseed Processors Association (NOPA) report, out next Tuesday, analysts expect to see a January soybean crush totaling 186.677 million bushels. If realized, that would be slightly higher than December’s tally of 186.438 million bushels and 1.1% higher than January 2021 totals.
Brazilian consultancy Safras & Mercado is the latest entity to slash its estimates for Brazil’s 2021/22 soybean production, cutting more than 183 million bushels from January estimates for a new total of 4.670 billion bushels. “The start of harvesting in Parana and Mato Grosso do Sul began to reveal the size of the problems,” according to a statement by consultant Luiz Fernando Gutierrez Roque. “Unfavorable weather conditions continue to punish crops in the southern states, as well as part of the fields in Mato Grosso do Sul.”
Nestled in between Argentina and Brazil is Paraguay, which produced around 367 million bushels of soybeans last year. But the country’s agriculture minister, Santiago Bertoni, told reporters at Reuters earlier today that this season’s harvest could drop by as much as 50%. “The reduction is going to be very big,” he says. “The entire sector is renegotiating contracts because there is no product … the drought has severely affected us.”
The Chinese government announced plans for the country to increase its meat output 89 million metric tons by 2025, representing an annual increase of 2.8% for the next three years.
“Thursday was a day some folks will long remember,” according to grain market analyst Roger Wright. “The trading range for March beans was 67 1/2 cents with a high of $16.33 and a settlement of $15.74 1/4 , a whopping 58 1/2 cents below the high for the day and down 20 1/2 cents on the day.” Wright offers some interesting additional thoughts in today’s Ag Marketing IQ blog – click here to learn more.
Preliminary volume estimates were for 344,661 contracts, falling well short of Thursday’s final count of 497,203.
Wheat
Wheat prices firmed substantially higher on worries than a potential escalation between Russia and Ukraine could disrupt the pace of grain exports overseas. Spillover strength from rising crude oil prices provided additional tailwinds today. March Chicago SRW futures climbed 26.75 cents to $7.9825, March Kansas City HRW futures rose 21.5 cents to $8.2250, and March MGEX spring wheat futures gained 14.75 cents to $9.57.
Russian consultancy IKAR estimates the country’s wheat production could reach 3.031 billion bushels for the 2022 harvest. Russia is the world’s No. 1 wheat exporter.
An agreement to avert a government shutdown on February 18 has now been extended until March 11, reports Farm Futures policy editor Jacqui Fatka. “One of Congress’s primary responsibilities is to fund the government, and yet again, they’ve kicked the can down the road,” she notes. What does that mean for ag spending? Fatka investigates in her latest DC Dialogue column – click here to learn more.
Preliminary volume estimates were for 181,949 CBOT contracts, inching slightly above Thursday’s final count of 179,755.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-Mar
657.75
637.75
651
8.25
22-May
656.5
636.5
650.5
9.25
Soybeans
22-Mar
1594.75
1563.5
1583
11.5
22-May
1597.25
1566.5
1586.25
12.25
Soymeal $/ton
22-May
459.9
448.2
454
1.7
Soyoil cents/lb
22-May
66.15
63.91
65.66
1.47
Wheat $/bushel
22-Mar
806.25
764.75
797.75
26.75
22-May
812.75
772
804
26
KC Wheat
22-Mar
831
791.5
824.25
21.5
22-May
833.25
794.5
827
20.75
MPLS Wheat
22-Mar
969.5
930.25
961.5
14.75
22-May
965.5
927.25
957.5
17
Live Cattle cents/lb
22-Feb
143.625
141.7
141.95
-0.4
Feeder Cattle cents/lb
22-Apr
173.075
170.575
170.825
-0.925
Lean Hogs cents/lb
22-Apr
103.85
102.025
102.125
-1.3
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Mar
94.66
89.19
93.43
3.55
Diesel
22-Mar
2.9462
2.803
2.9172
0.09
Unleaded Gasoline $/gallon
22-Mar
2.7638
2.6391
2.7385
0.0731
Natural Gas
22-Apr
4.045
3.872
3.97
0.027
U.S. Dollar Index
22-Mar
96.105
95.63
96.095
0.547
Gold $/ounce
22-Mar
1862.7
1821.5
1860.3
24.1
Copper
22-Feb
4.6045
4.491
4.4915
-0.166
Fertilizer Swaps
(as of 02/11)
DAP Tampa-index
810.0
0
DAP-New Orleans
804.7
32
Urea-New Orleans
606.3
-62
Urea-Middle East
665.0
-23
Urea-Black Sea
660.0
-50
UAN (32%) New Orleans
606.3
0
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Russian fears spook wheat prices higher.
