Morning report: Plus – insights from yesterday’s WASDE reports. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 2-4 cents
Soybeans down 4-7 cents; Soymeal up $0.60/ton; Soyoil down $0.45/lb
Chicago wheat up 3-4 cents; Kansas City wheat up 3-4 cents; Minneapolis wheat up 3-4 cents
*Prices as of 6:55am 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(TM) MyMap, so farmers can see others’ responses from across the country – or even across the county!
Good morning! If you missed the highlights from yesterday’s WASDE report, which was bullish for soybeans, bearish for wheat, and neutral to slightly bearish for corn, I’ve sprinkled most of the key highlights in this morning’s report. Enjoy!
Corn
Corn prices fell $0.02-$0.04/bushel overnight. Prices continued to respond slightly bearishly to yesterday’s WASDE reports, which found USDA’s yield cuts to be in line with market expectations. USDA also scaled back corn consumption for ethanol and exports by a considerable volume, which created some demand jitters though stocks are expected to remain tight enough to hold current price levels.
Favorable weather for harvesting across much of the Midwest over the next couple days also left a bearish mark on prices this morning. There is frost on the ground here in Northern Colorado as the temperatures have dropped over the past couple days. If that trend holds true across the Plains and Midwest, corn crops could dry down quicker during that time which could help farmers save on dryer expenses in the coming weeks.
WASDE Results – U.S. corn production
USDA kept 2022 corn yields in line with analyst estimates, dropping the national yield down 0.6 bpa from last month’s estimate to 171.9 bpa. As a result, corn price action following the report’s release was derived more prominently from cuts to 2022/23 U.S. corn exports and ethanol production volumes.
Where were the biggest cuts that drove USDA’s corn yields lower? Perhaps unsurprisingly, the biggest cuts were in regions of the Plains that were already forecast to have lower yields than last year due to drought stress (South Dakota, Nebraska, Kansas, Texas). Yield improvements in the Eastern Corn Belt (Missouri, Illinois, Indiana, Ohio) were not strong enough to offset poor-performing fields in the Plains.
The lower yields cut 2022 corn production to 18.895 billion bushels – an 8% decline from last year’s harvest. Acreage was left unchanged in this month’s report following last month’s adjustments from updated Farm Service Agency (FSA) and Risk Management Agency (RMA) to account for prevent plant and failed acreage. It will be the seventh largest corn crop harvested in U.S. history.
As expected, both new and old crop corn ending stocks tightened in yesterday’s reports, thanks to higher-than-expected Q4 2021/22 corn usage rates. USDA’s corn supply revisions will put 2022/23 ending stocks at the fifth-tightest level on record, in the company of 2020 and 2011 supply levels.
While there weren’t any surprises from USDA’s yield findings, there are more concerning usage prospects ahead for the corn market. USDA cut ethanol usage and corn export volumes by a total of 125 million bushels for the 2022/23 marketing year.
High prices and global economic turmoil do not bode favorably for corn usage in the coming months. USDA revived feed and residual usage forecasts slightly this month, leaving corn growers dependent upon cattle markets for better usage prospects in the 2022/23 marketing year.
WASDE results – Chinese corn production
Despite differing forecasts from a USDA attach? post in Beijing, USDA kept China’s corn production and import volumes unchanged in yesterday’s report. This was only somewhat surprising – China has already brokered a deal with Brazil for corn import volumes in the coming months, so U.S. growers may have little negotiating power in this scenario.
Soybeans
Profit takers swooped into the soybean complex overnight to take advantage of yesterday’s rally on larger than expected soybean yield cuts from the October 2022 WASDE report. Some harvest pressure and prospects for a larger Brazilian crop to be harvested next spring also kept prices tampered this morning.
“The report news came as a bullish surprise,” according to a Hightower report referring to the USDA’s forecast on soybeans, as reported by Reuters. “Traders expected a drop in demand for U.S. soybeans, but this was totally offset by a surprise drop in production.”
“The only real surprise in the USDA report was the soybean yield estimate posted at 49.8 bushel/acre versus the more than 50.5 expected. However, this is partly offset by a potentially record Brazilian production next spring at 152 Mt,” French consultancy Agritel said in a note, as reported by Reuters.
WASDE results – U.S. soybean production
USDA cut 2022 soybean yield forecasts by 0.7 bushels per acre (bpa) to 49.8 bpa in the October 2022 World Agricultural Supply and Demand Estimates (WASDE) report, which was a direct reversal from pre-report expectations of higher soybean yields. The move triggered a bullish price run for soybean futures in the moments following the report’s release, sending nearby soybean futures contracts knocking on the $14/bushel benchmark’s door.
The biggest yield losses from last month’s report were found across much of the Heartland, though the biggest losses were in Missouri, Nebraska, and Kansas. Compared to last year, yields are down significantly in most states except in the Northern Plains and Mississippi Delta region. Pod counts were down significantly from last year, reducing the total volume of soybeans harvested.
Revised 2022 soybean production on the yield adjustments stood at 4.313 billion bushels, which marked a 3.4% decrease from last year’s crop. It is now only the fourth largest soybean crop harvested by the U.S. after forecasts earlier this season projected a record-breaking harvest.
The smaller crop and demand cuts mean that U.S. soybean ending stocks for the 2022/23 marketing year will now drop to the seventh tightest volume on record, drawing similar comparisons to 2012 and 2013 supply levels.
Yesterday’s findings also means that 2023 soybeans may have just bought back a few more acres of corn. To be sure, corn acres remain a clear market favorite for the 2023 growing season. Pricing opportunities expanded for 2022 soybeans yesterday, but markets are not yet convinced that even with a smaller 2022 soybean crop that more acres will need to come into production in 2023.
WASDE results – South American soybean production
USDA’s reports yesterday may not have focused on South American crop production as prominently as in prior months, but with planting season already underway, it was no surprise that any revisions could create market waves.
Even with erratic weather so far, USDA felt confident in increasing Brazil’s 2022/23 soybean crop by 110 million bushels to a new record high of 5.58 billion bushels. Higher Brazilian and Argentine soybean exports could offset slower U.S. loading paces as low water levels on the Mississippi River have slowed U.S. soybean shipments in recent weeks.
And there is a market for more liquid South American soybeans. USDA increased China’s soybean import forecast by 37 million bushels to 3.6 billion bushels for the 2022/23 marketing year. That means if U.S. growers can’t get their soybeans to West Coast shipping terminals in the coming weeks, they could lose out on some valuable pricing opportunities.
Wheat
As profit-takers took the tops off soybean prices, bargain buyers lifted the wheat complex this morning after yesterday’s bearish USDA reports. U.S. wheat prices edged $0.02-$0.03/bushel higher this morning as concerns about Argentina’s shrinking wheat crop and tightening domestic supplies in the U.S. kept global supply pressures alive in the wheat market.
WASDE results – U.S. wheat stocks
Wheat prices stumbled lower following Monday’s three-month price high as global forecasts were adjusted higher to account for larger Russian and Brazilian crops. But usage cuts to U.S. feed and export forecasts also took some of the bullish winds out of wheat’s sails this morning.
Domestic wheat stocks were trimmed, with the smaller crop outweighing usage adjustments by absolute volume. But in relative terms, USDA’s cut to wheat usage rates in the form of smaller exports and feed usage actually overpowered the smaller crop projection. This played a pivotal role in sending wheat prices lower.
To be sure, U.S. wheat stocks are still going to shrink to their smallest volume since the 2013/14 marketing year. But as Russia ramps up its exports on a seemingly growing spring wheat harvest – as well as captured Ukrainian supplies – and the dollar remains at elevated levels, U.S. wheat is likely to face stiff competition on the global markets in the coming months.
Weather
Temperatures are expected to cool even further today than yesterday in the Upper Midwest, according to NOAA’s short-term forecasts. The Southern Plains will even see slightly cooler temperatures today.
The rain system that settled over the Eastern Corn Belt this week will finally shift out of the region today, paving the way for clear skies across much of the Heartland over the next few days. A chance of showers – and maybe even the season’s first snowfall – will hover over the Great Lakes region during that time, though precipitation is likely to be light.
Cooler temperatures are finally expected to settle into the Midwest through the end of the month. 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 Upper Midwest during that time.
However, the 8-14-day outlook is trending warmer for the Heartland through the end of October. The extended forecast also indicates drier than average precipitation patterns, which will benefit harvest progress for late-planted crops.
Financials
The U.S. Bureau of Labor Statistics releases updates to its Consumer Price Index (CPI) database this morning that will provide the latest insights on where inflationary pressures are headed following rapid interest rate increases from the Federal Reserve.
Economists are expecting the new data set, which encompasses September 2022 price baskets, is likely to show inflation trending higher, which means the Fed is likely to continue raising interest rates at its next Federal Open Market Committee (FOMC) meeting next month.
What else I’m reading this morning on our website, FarmFutures.com:
Our team’s coverage of the October 2022 WASDE reports!
AgMarket.Net’s Bill Biedermann explains why bullish sentiments were afoot for corn and wheat in yesterday’s WASDE, even though prices traded lower following the report’s release.
Water Street Solution’s Darren Frye asks farmers – what is your definition of a successful farm?
Executive editor Mike Wilson explains how to manage costly nitrogen for high-yielding corn.
Bryce Knorr explains why harvest lows could already be at play in the markets.
Morning Ag Commodity Prices – 10/13/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.9625
6.89
6.8975
-0.0325
-0.47%
MAR ’23 CORN
$ / BSH
7.0325
6.965
6.9725
-0.0275
-0.39%
MAY ’23 CORN
$ / BSH
7.04
6.9775
6.985
-0.025
-0.36%
JUL ’23 CORN
$ / BSH
6.985
6.915
6.92
-0.0225
-0.32%
SEP ’23 CORN
$ / BSH
6.4825
6.44
6.44
-0.02
-0.31%
DEC ’23 CORN
$ / BSH
6.3425
6.3075
6.315
-0.01
-0.16%
AR2 ’24 CORN
$ / BSH
6.4
6.3825
6.3825
-0.0075
-0.12%
AY2 ’24 CORN
$ / BSH
6.425
#N/A
6.4075
0
0.00%
JUL ’24 CORN
$ / BSH
6.375
#N/A
6.3625
0
0.00%
NOV ’22 SOYBEANS
$ / BSH
14.05
13.8625
13.93
-0.03
-0.21%
JAN ’23 SOYBEANS
$ / BSH
14.1425
13.9525
14.0175
-0.0325
-0.23%
MAR ’23 SOYBEANS
$ / BSH
14.21
14.02
14.09
-0.0325
-0.23%
MAY ’23 SOYBEANS
$ / BSH
14.2775
14.09
14.1625
-0.0275
-0.19%
JUL ’23 SOYBEANS
$ / BSH
14.3
14.1175
14.19
-0.0225
-0.16%
AUG ’23 SOYBEANS
$ / BSH
14.13
13.9575
14.0275
-0.03
-0.21%
SEP ’23 SOYBEANS
$ / BSH
13.7925
13.6375
13.6925
-0.0425
-0.31%
NOV ’23 SOYBEANS
$ / BSH
13.65
13.485
13.55
-0.0475
-0.35%
AN2 ’24 SOYBEANS
$ / BSH
13.6225
13.6225
13.6225
-0.0075
-0.06%
AR2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.575
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.56
0
0.00%
OCT ’22 SOYBEAN OIL
$ / LB
0
#N/A
69.17
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
65.86
65
65.16
-0.43
-0.66%
OCT ’22 SOY MEAL
$ / TON
0
#N/A
421.8
0
0.00%
DEC ’22 SOY MEAL
$ / TON
417.6
412.9
416.3
2
0.48%
JAN ’23 SOY MEAL
$ / TON
412.6
408.4
411.5
1.4
0.34%
MAR ’23 SOY MEAL
$ / TON
406.9
402.7
406
1.2
0.30%
MAY ’23 SOY MEAL
$ / TON
404.1
399.9
402.8
0.7
0.17%
DEC ’22 Chicago SRW
$ / BSH
8.9425
8.8125
8.8325
0.01
0.11%
MAR ’23 Chicago SRW
$ / BSH
9.1075
8.9825
9.0025
0.0125
0.14%
MAY ’23 Chicago SRW
$ / BSH
9.185
9.07
9.0775
0.005
0.06%
JUL ’23 Chicago SRW
$ / BSH
9.1
8.9875
9.0025
0.0075
0.08%
SEP ’23 Chicago SRW
$ / BSH
9.0525
9.01
9.0475
0.0725
0.81%
DEC ’23 Chicago SRW
$ / BSH
9.1
9.0225
9.0225
0.0225
0.25%
AR2 ’24 Chicago SRW
$ / BSH
9.0025
9
9
0.04
0.45%
DEC ’22 Kansas City HRW
$ / BSH
9.8225
9.7
9.72
0.02
0.21%
MAR ’23 Kansas City HRW
$ / BSH
9.7975
9.685
9.6975
0.0175
0.18%
MAY ’23 Kansas City HRW
$ / BSH
9.7675
9.6775
9.6925
0.0325
0.34%
JUL ’23 Kansas City HRW
$ / BSH
9.65
9.54
9.54
-0.01
-0.10%
SEP ’23 Kansas City HRW
$ / BSH
9.5875
9.585
9.585
0.0925
0.97%
DEC ’23 Kansas City HRW
$ / BSH
9.5925
#N/A
9.505
0
0.00%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.4375
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.755
9.675
9.7
0.0325
0.34%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.83
9.75
9.775
0.035
0.36%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.89
9.835
9.835
0.0475
0.49%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.8625
#N/A
9.785
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.5
9.48
9.48
0.0675
0.72%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.435
#N/A
9.385
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
0
0
0.00%
DEC ’21 ICE Dollar Index
$
113.36
112.515
112.675
-0.549
-0.48%
NO ’21 Light Crude
$ / BBL
88.05
86.88
87.55
0.28
0.32%
DE ’21 Light Crude
$ / BBL
86.79
85.65
86.31
0.25
0.29%
NOV ’22 ULS Diesel
$ /U GAL
4.0175
3.8669
4.0064
0.0736
1.87%
DEC ’22 ULS Diesel
$ /U GAL
3.6644
3.57
3.6576
0.036
0.99%
NOV ’22 Gasoline
$ /U GAL
2.655
2.6028
2.6405
0.0102
0.39%
DEC ’22 Gasoline
$ /U GAL
2.4882
2.448
2.474
0.0027
0.11%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
175.5
0
0.00%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
176.675
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
146.175
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
148.45
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
93.1
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
80.7
0
0.00%
OCT ’22 Class III Milk
$ / CWT
21.82
#N/A
21.85
0
0.00%
NOV ’22 Class III Milk
$ / CWT
21.37
21.25
21.25
-0.01
-0.05%
DEC ’22 Class III Milk
$ / CWT
20.72
#N/A
20.72
0
0.00%
