Morning report: A looming recession is likely to keep export volumes low across the globe in 2023. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 1-4 cents
Soybeans down 8-11 cents; Soymeal down $0.30/ton; Soyoil down $0.64/lb
Chicago wheat down 3-5 cents; Kansas City wheat down 4-5 cents; Minneapolis wheat down 6-7 cents
*Prices as of 6:50am CDT.
Feedback from the Field updates! How is harvest progress going 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(TM) MyMap, so farmers can see others’ responses from across the country – or even across the county!
Breaking overnight
The World Trade Organization (WTO), the international body which regulates global trading rules, released updated global trade forecasts for the next year that suggest slower trading paces in 2023 as the WTO expects recessionary forces to materialize.
Global trade volumes in 2023 are now only expected to increase 1% on the year, down significantly from WTO’s previous forecast of 3.4%. “The global economy faces a multi-pronged crisis,” Ngozi Okonjo-Iweala, secretary-general of the WTO, told the Wall Street Journal. “The picture for 2023 has darkened considerably.”
For U.S. farmers, exports account for 48% of 2022 soybean production, 46% of 2022 wheat production (this is likely to be forecast lower in the upcoming WASDE report due to smaller than expected U.S. production in 2022), and 16% of 2022 corn production.
Exports are a vital part of the demand pipeline when markets determine pricing for U.S. ag commodities. While USDA’s World Ag Outlook Board has been erring on the conservative side for commodity exports during the 2022/23 marketing year, this WTO announcement suggests that additional cuts may be coming to U.S. ag export volumes, which are on track this year to break last year’s record highs thanks to high commodity prices.
Translation: tougher times may be ahead for commodity markets if this source of demand slows. If you can find favorable harvest pricing in the coming weeks, this might be your sign to pull the trigger on those deals.
Corn
The dollar resumed its upward climb on global recession worries, sending energy prices and subsequently corn prices lower during the overnight trading session. Corn futures traded $0.01-$0.04/bushel lower as forecasts for global trade darkened and harvest progress in the U.S. piled on supply volumes.
Markets are becoming more optimistic about corn yields as harvest continues. StoneX commodity brokerage re-forecast its 2022 corn yields at 173.9 bushels per acre, which is up from USDA’s current forecast of 172.5 bpa.
“Overall this shows that the U.S. harvest is not getting significantly worse and that yields are looking positive,” Matt Ammermann, StoneX commodity risk manager, told Reuters.
Demand will be in sharp focus for corn markets today, especially since the U.S. Energy Information Administration will update their weekly Petroleum Inventory Status report, which features weekly insights about ethanol production.
Markets are hoping for a turnaround in weekly ethanol output in today’s report after production has trended lower over the past month as consumer fuel demand slides on higher prices. As corn is the primary feedstock for ethanol production, this represents a bearish threat to a sector that was widely slated to account for the majority of corn demand for the 2022/23 just weeks ago.
Last week’s Petroleum Inventory Status report from the EIA saw ethanol production fell to a 19-month low of 855,000 barrels/day through the week ending September 23 as consumers continue to scale back gasoline purchases amid high prices.
Soybeans
Bearish global trade forecasts issued by the WTO overnight paired with a stronger dollar and ongoing shipping logjams on the Mississippi River sent soybean futures $0.08-$0.11/bushel lower this morning. Harvest pressure in the U.S. also weighed futures prices lower this morning.
Barges are backing up on the Mississippi River as low river levels due to drought in the river’s southern regions continue to limit traffic flows on the country’s arterial grain riverway. Shipping sources told Reuters yesterday that an estimated 100 tow boats carrying around 1,600 barges are jammed up near Lake Providence, Louisiana, awaiting passage to export terminals at the Gulf of Mexico.
The Army Corps of Engineers has been dredging the section of the river that has been closed since last week, but the lack of rainfall in the nearby forecast is more concerning.
Around 60% of U.S. corn, soybean, and wheat exports are shipped through the Gulf. The low river volumes come at a time of year when soybean exports are traditionally at their peak volume. And as exports historically make up the bulk of soybean usage, the low river volumes represent a very real threat to profit margins for U.S. farmers.
“Mother Nature hasn’t been very helpful, and there’s not a lot of relief in sight in the weather forecast,” Merritt Lane, president and chief executive of barge operator Canal Barge Company, told Reuters.
Cash prices at river terminals across the Midwest traded as high as a dollar over futures prices at the end of August. Now, cash offerings are being bid out at a $0.25-$0.70/bushel discount below futures prices as movement on the Mississippi River slows to a halt. And with little rain in sight in the two-week forecast, farmers may not be able to capitalize on strong harvest prices this year, unlike previous harvests.
South America
Also – remember how we were all worried that Brazil was not going to have the fertilizer supplies needed for planting its 2022/23 crops when the Black Sea conflict began? How about this for a headline I saw yesterday?
Brazil has so much fertilizer that cargo is being rerouted. The invisible hand of the market smacks us all upside the head again…
Wheat
The dollar continued climbing, which took even more wind out of wheat’s rally during the overnight trading session. Prices fell $0.03-$0.07/bushel overnight on the renewed recessionary sentiments at play in the wider financial markets. Demand destruction is increasingly becoming a concern in this high-priced commodity environment.
“Wheat, corn and soybeans are being weakened today by renewed fears of world recession and demand destruction,” Ammermann told Reuters. “Following the risk-on mood on Tuesday, the mood has switched more risk-off today with equities falling and a firm dollar unfavourable for U.S. export prospects.”
“The concern is that the high food prices consumers around the world are seeing will reduce demand. The U.S. soybean export programme is already looking poor now.”
Weather
It’s likely to be another warm day across the Heartland, with highs reaching the 80s and 90s in the Central and Southern Plains and topping out in the 70s elsewhere in the Midwest, according to NOAA’s short-term forecasts. That forecast should help to accelerate maturation speeds and keep combines running at a steady clip over the next week.
Growers in the Northern and Central Plains will battle more showers by this evening, with some of that precipitation expected to creep into the Upper Midwest by Wednesday and Thursday. The showers are likely to be light.
The favorable weather conditions will likely continue into the middle of October. NOAA’s 6-10-day outlook is showing cooler temperature probabilities for continental region to the east of the Mississippi River, though chances for perception continue to hover below average for much of the country during that time. The 8-14-day outlook is still trending slightly warmer and continues to show below average chances for precipitation for the entire Heartland through the end of next week.
That’s good news for corn, soybean, and spring wheat growers eager to make significant strides on harvest progress over the next two weeks. But for growers in the Plains who are eager to receive moisture for newly planted winter wheat crops, the next couple weeks could be a little more anxiety-producing if no rains move into the Plains.
Financials
Profit-takers swooped into the financial markets overnight, capitalizing on the strongest two-day trading session in over two years and likely ending the rally before it can advance much farther. S&P 500 futures fell 0.89% overnight to $3,769.25 as recession worries continued to drive market headlines after the two-day breather. The dollar resumed its upward climb overnight on the sentiments.
Nerd alert
It’s Nobel Prize week, which is one of my favorite times of the year! Today’s award for chemistry was awarded to Carolyn Bertozzi, Morten Meldal and K. Barry Sharpless from the U.S. The American trio was recognized for their work in developing “click chemistry and biorthogonal chemistry.” Just when you thought organic chemistry was the hardest of all the chemistries, of course they go and create a new one. Good luck, pre-vet majors!
What else I’m reading this morning on our website, FarmFutures.com:
Advance Trading’s Brian Basting encourages farmers to focus on protecting gross revenue as harvest ramps up.
My latest E-corn-omics column digs into the great wheat disappearance of 2022.
Water Street Solution’s Darren Frye explains how can continue to move forward when uncertainty runs high.
Bryce Knorr evaluates whether harvest prices will make cash sales a better choice than storage for 2022 corn and soybeans.
Our team’s coverage of Friday’s USDA reports!
Naomi Blohm reminds market watchers that China still needs soybeans.
Morning Ag Commodity Prices – 10/5/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.855
6.785
6.7925
-0.0375
-0.55%
MAR ’23 CORN
$ / BSH
6.9225
6.855
6.8625
-0.0375
-0.54%
MAY ’23 CORN
$ / BSH
6.9325
6.865
6.8725
-0.0375
-0.54%
JUL ’23 CORN
$ / BSH
6.87
6.8075
6.8125
-0.035
-0.51%
SEP ’23 CORN
$ / BSH
6.34
6.3025
6.3075
-0.015
-0.24%
DEC ’23 CORN
$ / BSH
6.2125
6.1725
6.1725
-0.02
-0.32%
AR2 ’24 CORN
$ / BSH
6.2775
#N/A
6.26
0
0.00%
AY2 ’24 CORN
$ / BSH
6.2975
#N/A
6.28
0
0.00%
JUL ’24 CORN
$ / BSH
6.22
6.2125
6.2125
-0.0275
-0.44%
NOV ’22 SOYBEANS
$ / BSH
13.8525
13.715
13.73
-0.105
-0.76%
JAN ’23 SOYBEANS
$ / BSH
13.9525
13.815
13.8325
-0.1025
-0.74%
MAR ’23 SOYBEANS
$ / BSH
14.0325
13.9
13.92
-0.095
-0.68%
MAY ’23 SOYBEANS
$ / BSH
14.12
13.9875
14.0025
-0.1025
-0.73%
JUL ’23 SOYBEANS
$ / BSH
14.16
14.0325
14.05
-0.0975
-0.69%
AUG ’23 SOYBEANS
$ / BSH
14.02
13.905
13.9275
-0.085
-0.61%
SEP ’23 SOYBEANS
$ / BSH
13.72
13.64
13.64
-0.095
-0.69%
NOV ’23 SOYBEANS
$ / BSH
13.6175
13.5175
13.535
-0.0825
-0.61%
AN2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.6475
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
13.5775
#N/A
13.6
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.58
0
0.00%
OCT ’22 SOYBEAN OIL
$ / LB
68.68
68.67
68.68
0.05
0.07%
DEC ’22 SOYBEAN OIL
$ / LB
65.27
64.35
64.4
-0.62
-0.95%
OCT ’22 SOY MEAL
$ / TON
408.8
408.8
408.8
5.8
1.44%
DEC ’22 SOY MEAL
$ / TON
402.3
400
401.1
-0.4
-0.10%
JAN ’23 SOY MEAL
$ / TON
400
398
398.8
-0.3
-0.08%
MAR ’23 SOY MEAL
$ / TON
396.8
394.9
395.6
-0.2
-0.05%
MAY ’23 SOY MEAL
$ / TON
395.9
394.4
395
-0.2
-0.05%
DEC ’22 Chicago SRW
$ / BSH
9.16
8.95
8.97
-0.06
-0.66%
MAR ’23 Chicago SRW
$ / BSH
9.2775
9.0775
9.1
-0.055
-0.60%
MAY ’23 Chicago SRW
$ / BSH
9.325
9.145
9.1625
-0.055
-0.60%
JUL ’23 Chicago SRW
$ / BSH
9.15
8.9875
8.995
-0.05
-0.55%
SEP ’23 Chicago SRW
$ / BSH
9.09
8.9425
8.96
-0.0375
-0.42%
DEC ’23 Chicago SRW
$ / BSH
9.1
8.9725
8.985
-0.0225
-0.25%
AR2 ’24 Chicago SRW
$ / BSH
9.0525
#N/A
8.9625
0
0.00%
DEC ’22 Kansas City HRW
$ / BSH
10.005
9.825
9.8425
-0.045
-0.46%
MAR ’23 Kansas City HRW
$ / BSH
9.96
9.785
9.8
-0.0475
-0.48%
MAY ’23 Kansas City HRW
$ / BSH
9.91
9.7475
9.75
-0.0575
-0.59%
JUL ’23 Kansas City HRW
$ / BSH
9.68
9.5375
9.5575
-0.04
-0.42%
SEP ’23 Kansas City HRW
$ / BSH
9.5325
9.47
9.47
-0.0275
-0.29%
DEC ’23 Kansas City HRW
$ / BSH
9.4425
9.425
9.4425
-0.0525
-0.55%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.4075
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.8525
9.695
9.7175
-0.045
-0.46%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.9
9.765
9.7775
-0.06
-0.61%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.83
9.8125
9.8125
-0.055
-0.56%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.8225
9.8025
9.8225
-0.02
-0.20%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.6225
9.5175
9.575
0.0175
0.18%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.5
9.5
9.5
0.015
0.16%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
0
0
0.00%
DEC ’21 ICE Dollar Index
$
110.945
109.985
110.89
0.909
0.83%
NO ’21 Light Crude
$ / BBL
87.39
85.75
86.17
-0.35
-0.40%
DE ’21 Light Crude
$ / BBL
86.39
84.76
85.2
-0.3
-0.35%
NOV ’22 ULS Diesel
$ /U GAL
3.5827
3.486
3.5232
-0.0126
-0.36%
DEC ’22 ULS Diesel
$ /U GAL
3.4372
3.3459
3.3854
-0.0041
-0.12%
NOV ’22 Gasoline
$ /U GAL
2.6774
2.6291
2.6357
-0.0473
-1.76%
DEC ’22 Gasoline
$ /U GAL
2.5143
2.4716
2.48
-0.0353
-1.40%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
174.65
0
0.00%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
175.2
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
144.2
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
147.5
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
87
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
74.425
0
0.00%
OCT ’22 Class III Milk
$ / CWT
22.26
22.09
22.1
-0.16
-0.72%
NOV ’22 Class III Milk
$ / CWT
21.9
21.74
21.78
-0.02
-0.09%
DEC ’22 Class III Milk
$ / CWT
21.17
21.17
21.17
-0.06
-0.28%
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