Morning report: A murky global economic outlook weighs on soybean, wheat prices. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 2-6 cents
Soybeans down 12-18 cents; Soymeal up $1.70/ton; Soyoil down $0.74/lb
Chicago wheat down 8-10 cents; Kansas City wheat down 9-11 cents; Minneapolis wheat down 8-10 cents
*Prices as of 6:50am CDT.
Good morning! I am headed out today to the Farm Progress Show in Boone, Iowa which will run from August 30 – September 1. I will be presenting on the markets and our 2023 acreage forecast from our August 2022 Farm Futures farmer survey each morning at 10am on the ADM Stage at the Wallace’s’ Farmer Hospitality Tent (Lot 625).
I’ll also be answering all of your burning market questions, as you have requested in the Feedback from the Field series over the past week. I am so excited to see all of you, so please stop by, say hi, and chat markets, crop conditions, and lawncare tips with me! See you in Boone!
Feedback from the Field updates! How does your farm’s crop conditions stack up against other farms around the country? Click this link to take the survey and share updates about your farm’s crop development. 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!
Corn
There are still some lingering concerns about corn yield prospects in 2022, especially in Nebraska and South Dakota, following last week’s crop tours. Those concerns powered corn to a two-month high this morning, as futures prices rose $0.02-$0.06/bushel higher at last glance on the worries about tight supplies.
“Corn is firm today with the market focusing on the estimate of a small. U.S. harvest from the Pro Farmer crop tour,” Matt Ammermann, StoneX commodity risk manager, told Reuters this morning. “Pro Farmer does generally tend to estimate below the USDA, now the focus will turn towards the next USDA forecast of U.S. crops in September.”
“Rises in corn are limited by cheap sales offers of Ukrainian corn as shipments through the safe shipping passage continue to develop. Cheap sales offers from both Ukraine and Russia are also depressing wheat futures today.”
Soybeans
Last week’s crop tours showed better than expected soybean crop conditions despite the summer’s heat. To that end, there are fewer supply concerns for soybeans than corn as harvest approaches, which sent soybean prices $0.12-$0.18/bushel lower this morning. Nearby September 2023 futures dipped below the $16/bushel benchmark on the sentiments.
Soybeans have also shown more price responsiveness to outside market conditions in the past couple trading sessions, namely the ongoing stock market selloff in response to Friday’s hawkish Federal Reserve outlook for more interest rate hikes and no signs of interest rate cuts any time soon while inflation still persists.
Wheat
Russian and Ukrainian grain sellers are offering discounts to large crops harvested earlier this summer amid slow exporting paces. U.S. prices followed $0.07-$0.10/bushel lower during the overnight trading session, with a stronger dollar adding to the downward price pressure on the wheat complex.
The wheat market was also susceptible to murky global economic outlooks, which could slow wheat usage rates as well as importing countries’ ability to finance wheat purchases.
U.S. Wheat Associates’ latest weekly Harvest Report was published on Friday. Hard red winter wheat harvest was estimated at 95% complete at that time with the remainder of the crop left to be harvested focused in the Pacific Northwest. Clear forecasts this week should help close the door on the 2022 HRW season, though that same dry weather could disrupt planting plans for the 2023 crop, expected to be planted in the coming weeks.
Last week’s dry and warm weather across the Pacific Northwest allowed harvest on soft winter wheat crops to advance to 69% complete. Soft spring wheat harvest is not trailing too far behind at 45% complete as of late last week. Similar to HRW, soft wheat harvest in the Pacific Northwest region will likely continue at a steady clip this week thanks to mostly clear weather forecasts.
The hard red spring wheat crop continues to lag behind historical crop development paces, especially in top producers North Dakota (18% harvested as of last week) and Minnesota (34%). But harvest is still moving along at a steady rate in South Dakota (85%) and Montana (52%).
Crops remain largely in good condition, though Montana’s Golden Triangle continues to struggle with drought. Mild temperatures and scattered showers are expected in the Northern Plains this week, which will slow maturation and harvesting rates. However, it could help revive soil moisture levels in areas that have been plagued by drought through the summer.
Inputs
Despite soaring energy costs that are causing many European fertilizer producers to scale back production, Polish fertilizer producer PKN Orlen announced overnight it would resume fertilizer production after halting operations last week due to infeasible production costs.
“Despite the difficult conditions on the gas market, Anwil resumes production of fertilisers and thus raw CO2. We are doing everything to make this product, used in the medical industry and for food production, available on the Polish market,” PKN’s Chief Executive Daniel Obajtek said on Twitter, as reported by Reuters.
Fertilizer production can also capture excess carbon dioxide supplies, which are critical for the beverage and bottling industries and also meat production and cold food storage and transportation.
Erste Group analyst Jakub Szkopek estimates that 70% of Europe’s ammonia production has been reduced due to high natural gas prices amid the E.U.’s ongoing dispute with Russia in regards to the Black Sea conflict. Prior to the war’s onset, Russia was E.U.’s primary provider of natural gas.
But sanctions and purchasing disputes are leading both parties to reduce transactions with the other, leaving Europe stretched thin for available energy supplies as prices soar. Szkopek expects that E.U. fertilizer prices will begin to rise in the coming weeks as production stalls and farmers begin to gear up for the 2023 growing season.
Weather
It will be a warm day across much of the Heartland, according to NOAA’s short-range forecasts. While the Upper Midwest and Northern Plains are not likely to see temperatures rise past the 80-degree benchmark, temperatures elsewhere across top crop-producing areas in the U.S. are likely to rise past the 90-degree mark and into the 100s in some regions of the Plains.
Rains are likely to move through the Eastern Corn Belt during the next 24 hours, dropping well over an inch of accumulation over a band reaching from West Texas, through Oklahoma and Missouri into Illinois, Indiana, Ohio, and Michigan. Any moisture is not likely to aid in yield development at this point, though it bodes well for soil moisture levels in areas that are struggling with excessive dryness this summer.
September is showing signs of another heatwave, despite my pleas to Mother Nature for cooler weather for my new lawn! The 6-10-day NOAA outlook is forecasting abnormally hot temperatures for the Heartland through the first week of September and increasingly slimming chances of precipitation during that time as well. Above average heat and dryness will continue to persist Corn Belt in the 8-14 day NOAA outlook, though the severity is likely to lessen as the calendar progress towards the middle of September.
Financials
Wall Street remained on edge through the night amid falling Asian and European stock indices. The S&P 500 tumbled 1% to $4,019 at last glance as the hangover following Federal Reserve chairman Jerome Powell’s comments to the media last Friday.
Inflationary pressures showed slight signs of easing in July, leading investors to hope the Fed would slow its interest rate hikes and announce future plans for cuts. But Powell’s media comments following last week’s annual Fed outlook meeting at Jackson Hole outlined a much more aggressive monetary policy approach than what Wall Street desired.
Powell expects rate increases to increase and plans on keeping them at high levels for the intermediate future to curb inflation. The personal consumption expenditure (PCE) index is currently at 6.3% and the Fed is aiming for that metric to drop to 2% before they can consider inflation squashed.
“The market kind of got ahead of itself over the last three, four weeks or so…in terms of pricing in a possible Fed pivot to a more dovish stance,” Clara Cheong, a global market strategist at J.P. Morgan Asset Management told the Wall Street Journal this morning.
What else I’m reading this morning on our website, FarmFutures.com:
Commstock’s Matthew Kruse evaluates how cotton has suffered in the drought this summer and if prices can compete with corn for 2023 acreage.
Naomi Blohm explains why milk prices are at a point of equilibrium and if strong demand can keep a floor under prices.
My latest E-Corn-Omics column dives into the dynamics currently at play in the fertilizer and energy markets. It also features farmer insights about 2023 fertilizer purchases and applications from our August 2022 Farm Futures survey.
Bryce Knorr announces the results from the annual Farm Futures study evaluating grain storage strategies.
Roger Wright has the latest update about how to use puts as a price enhancer in your grain marketing plan.
Morning Ag Commodity Prices – 8/29/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
6.775
6.685
6.7
0.0125
0.19%
DEC ’22 CORN
$ / BSH
6.7475
6.6625
6.695
0.0525
0.79%
MAR ’23 CORN
$ / BSH
6.795
6.7175
6.75
0.0525
0.78%
MAY ’23 CORN
$ / BSH
6.805
6.7275
6.7625
0.0575
0.86%
JUL ’23 CORN
$ / BSH
6.7625
6.6875
6.7175
0.0475
0.71%
SEP ’23 CORN
$ / BSH
6.31
6.2475
6.27
0.0175
0.28%
DEC ’23 CORN
$ / BSH
6.225
6.1525
6.175
0.0125
0.20%
AR2 ’24 CORN
$ / BSH
6.295
6.2375
6.25
0.0175
0.28%
MAY ’24 CORN
$ / BSH
6.32
6.32
6.32
0.0575
0.92%
SEP ’22 SOYBEANS
$ / BSH
16.1225
15.9025
15.945
-0.1075
-0.67%
NOV ’22 SOYBEANS
$ / BSH
14.6075
14.4025
14.4475
-0.165
-1.13%
JAN ’23 SOYBEANS
$ / BSH
14.6525
14.45
14.4925
-0.1625
-1.11%
MAR ’23 SOYBEANS
$ / BSH
14.65
14.455
14.49
-0.16
-1.09%
MAY ’23 SOYBEANS
$ / BSH
14.6525
14.45
14.4675
-0.18
-1.23%
JUL ’23 SOYBEANS
$ / BSH
14.64
14.425
14.465
-0.15
-1.03%
AUG ’23 SOYBEANS
$ / BSH
14.3375
14.2975
14.3025
-0.12
-0.83%
SEP ’23 SOYBEANS
$ / BSH
12
#N/A
13.9825
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
13.8
13.65
13.65
-0.1625
-1.18%
AN2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.8425
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
13.615
#N/A
13.7725
0
0.00%
SEP ’22 SOYBEAN OIL
$ / LB
70.82
70.02
70.08
-0.74
-1.04%
OCT ’22 SOYBEAN OIL
$ / LB
67.92
66.9
66.96
-0.96
-1.41%
SEP ’22 SOY MEAL
$ / TON
485.5
472.7
484.9
6.8
1.42%
OCT ’22 SOY MEAL
$ / TON
436.5
428.9
436
1.9
0.44%
DEC ’22 SOY MEAL
$ / TON
429.4
423.1
428.2
-0.3
-0.07%
JAN ’23 SOY MEAL
$ / TON
423.8
418.6
423.1
-0.3
-0.07%
MAR ’23 SOY MEAL
$ / TON
414.8
410.8
414.5
-0.7
-0.17%
SEP ’22 Chicago SRW
$ / BSH
7.94
7.7525
7.77
-0.0775
-0.99%
DEC ’22 Chicago SRW
$ / BSH
8.145
7.9525
7.965
-0.0875
-1.09%
MAR ’23 Chicago SRW
$ / BSH
8.3
8.1075
8.1275
-0.0875
-1.07%
MAY ’23 Chicago SRW
$ / BSH
8.3875
8.1975
8.215
-0.09
-1.08%
JUL ’23 Chicago SRW
$ / BSH
8.39
8.215
8.2325
-0.085
-1.02%
SEP ’23 Chicago SRW
$ / BSH
8.435
8.2875
8.3075
-0.0725
-0.87%
DEC ’23 Chicago SRW
$ / BSH
8.4875
8.3625
8.3625
-0.1075
-1.27%
SEP ’22 Kansas City HRW
$ / BSH
8.9
8.7325
8.745
-0.0875
-0.99%
DEC ’22 Kansas City HRW
$ / BSH
8.895
8.7025
8.7225
-0.1
-1.13%
MAR ’23 Kansas City HRW
$ / BSH
8.875
8.7025
8.7275
-0.085
-0.96%
MAY ’23 Kansas City HRW
$ / BSH
8.865
8.6975
8.7375
-0.075
-0.85%
JUL ’23 Kansas City HRW
$ / BSH
8.725
8.6175
8.625
-0.0975
-1.12%
SEP ’23 Kansas City HRW
$ / BSH
8.7325
#N/A
8.705
0
0.00%
DEC ’23 Kansas City HRW
$ / BSH
8.7925
#N/A
8.7575
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
8.9975
8.845
8.865
-0.08
-0.89%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.145
8.985
9.0125
-0.0825
-0.91%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.26
9.12
9.1525
-0.0725
-0.79%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.31
9.2175
9.2175
-0.085
-0.91%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.305
#N/A
9.2875
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.055
9.055
9.055
-0.0125
-0.14%
DEC ’23 MLPS Spring Wheat
$ / BSH
8.51
#N/A
9.14
0
0.00%
SEP ’21 ICE Dollar Index
$
109.445
108.74
108.91
0.159
0.15%
OC ’21 Light Crude
$ / BBL
94.4
92.29
93.28
0.22
0.24%
NO ’21 Light Crude
$ / BBL
93.75
91.66
92.65
0.26
0.28%
SEP ’22 ULS Diesel
$ /U GAL
4.0232
3.9103
3.925
-0.0826
-2.06%
OCT ’22 ULS Diesel
$ /U GAL
3.9476
3.8401
3.8482
-0.087
-2.21%
SEP ’22 Gasoline
$ /U GAL
2.8747
2.785
2.8012
-0.0501
-1.76%
OCT ’22 Gasoline
$ /U GAL
2.7036
2.6328
2.6403
-0.0371
-1.39%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
182.2
0
0.00%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
183.4
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
140.8
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
143.05
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
90.65
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
82.95
0
0.00%
AUG ’22 Class III Milk
$ / CWT
20.11
#N/A
20.13
0
0.00%
SEP ’22 Class III Milk
$ / CWT
20.18
20.08
20.18
-0.06
-0.30%
OCT ’22 Class III Milk
$ / CWT
20.76
20.76
20.76
0
0.00%
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