Morning report: Plus – a deep dive into the Russian-Ukrainian “humanitarian corridor” agreement stipulating a grains-for-fertilizers exchange. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 8-12 cents
Soybeans down 1-5 cents; Soymeal down $1.90/ton; Soyoil up $0.08/lb
Chicago wheat down 19-22 cents; Kansas City wheat down 14-16 cents; Minneapolis wheat down 1-2 cents
*Prices as of 6:55am CDT.
Black Swan in the Black Sea: Our May/June 2022 print edition cover story was about the ongoing crisis in the Black Sea. Our online series, which has been updated to reflect current market conditions, will go live this week.
The four-part Black Swan in the Black Sea series continues today through the rest of the week. We hope it helps you to better understand the new dynamics shaping agriculture, energy, and fertilizer markets.
The first article in the series examines the war’s impacts to the corn market. Part two, released yesterday, examined how wheat trade flows have shifted – and could further shift – due to the Black Sea conflict.
Today’s installment will examine the impact of the Black Sea conflict on global fertilizer markets and address who will first feel the pain of tight global fertilizer supplies. It will also feature updated analysis from the latest USDA-World Agricultural Supply and Demands Estimate report issued in early May on global acreage shifts that could impact next year’s fertilizer prices.
Ukraine’s impacts on global food security is taking a key role in at the World Economic Forum in Davos, Switzerland this week. “The world has realised that food can be a weapon and it is being currently used,” Svein Tore Holsether, CEO of Yara International, one of the world’s largest suppliers of plant nutrients based out of Norway, told Reuters at the conference yesterday.
“We need to work on an emergency response for the most vulnerable. For that we urgently need to unlock funds of the world food programme (WFP), which has a $10 billion funding gap,” he said.
Currently, Yara is scrambling to access affordable natural gas supplies as the European Union previously relied on Russia for 40% of its natural gas.
“Currently, we have an extreme combination of events when food supplies are going down, fertilisers supplies are doing down, gas supplies are going down and prices for gas and fertilisers are rising,” said Holsether. “We need to build a system that is less reliant on Russia and is more green including by using renewable energy for fertiliser production.”
Feedback from the Field updates! Planting progress may be slowing down in the Heartland, but growers in the Upper Midwest continue to face planting obstacles, according to responses from growers in our latest Feedback from the Field column. Planting is progressing, but not as quickly as most growers would like.
Most notably, corn and spring wheat producers across North Dakota and Minnesota are already weighing the possibility of prevent plant acreage as rain delays continue to mount. We even had a response from a grower on the Canadian prairies this week who also indicated that delays in that region could cause acreage shifts.
“We are getting more rain today,” the farmer shared late last week. “So we are delayed planting for a few more days. Soon it will be late for spring wheat here.”
Want to see how your farm’s progress stacks up against other growers across the country? Just click this link to take the survey and share updates about your farm’s spring 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!
Corn
Corn prices fell $0.08-$0.13/bushel overnight to a seven-week low on optimism that Ukrainian corn supplies will soon be freed from Russian occupation thanks to a U.N.-brokered agreement issued yesterday. But the losses were capped by skepticism surrounding the deal.
“Supply scarcity will ease significantly if exports start from Ukraine,” a Mumbai-based dealer with a global trading firm told Reuters last night. “But the market is sceptical. Port infrastructure in Ukraine was badly damaged in the clashes and it needs time to restore it.”
“I’d be very surprised if these corridors open. It would be a huge about-face for Russia and it won’t come without some serious conditions,” a London-based grains dealer cautioned in a Reuters report this morning.
Corn export prospects also dimmed U.S. prices this morning as a deal announced on Tuesday between China and Brazil could drastically reduce Chinese purchases of U.S. corn. Brazil and China still need to agree upon trading of genetically modified (GM) grain before any shipments are made.
China already buys GM soybeans from Brazil and has already booked Brazilian corn shipments through September. So this hurdle may be a purely cosmetic one, as it seems likely China will agree to any sort of “biotechnology equivalence” agreement outlined by Brazil.
Soybeans
Soybean prices edged $0.01-$0.03/bushel lower overnight as China’s COVID lockdowns have sunk soyoil demand. Soyoil is a primary ingredient used in Chinese restaurants. The lockdowns prohibit citizens from leaving their residences, so any non-at-home dining establishments in China are currently facing severe economic headwinds as demand trickles to a stop.
Losses were capped by optimism after top global edible oils buyer India eliminated duties on sunflower oil and soyoil imports. That could be a valuable new market for global soyoil sellers.
Wheat
Wheat prices continued to fall overnight, with Chicago and Kansas City futures shedding $0.12-$0.18/bushel on hopes for improved access to Ukrainian wheat supplies. But losses were capped and could revert to steep gains if the U.N.-brokered Russian-Ukrainian humanitarian corridor agreement does not hold.
Minneapolis futures only gave up a penny’s worth of losses, with planting delays and potential acreage shifts to other crops in the Northern Plains adding bullish pressure to offset easing global supply concerns.
Even though Russia agreed to a “humanitarian corridor” yesterday to allow Ukrainian grain cargoes to safely pass through Russian naval blockades in the Black Sea, experts are questioning Russia’s good faith in these negotiations.
The U.N.-brokered deal would free trapped Ukrainian grain supplies in exchange for non-sanctioned purchases of Russian and Belarusian fertilizer exports. U.N Secretary-General Antonio Guterres negotiated the agreement between Russia, Ukraine, Turkey, the United States and the European Union over the past week.
But Russia has already stipulated questionable conditions to this agreement. Namely, that no Western security escorts would be allowed to accompany the Ukrainian grain cargoes. Ukrainian officials have protested that condition as mines continue to litter Black Sea ports.
“For now, Russia seems to hold all the cards,” a Reuters report published this morning said.
“A swap like this won’t happen now,” said a Russian grain industry source in the Reuters report, who asked not to be named due to the sensitivity of the issue. “If the grain is going to be exchanged, it’s likely to be for something more.”
Russia typically competes against Ukraine for wheat market share among buyers in Africa and the Middle East. Its fertilizers are already being shipped to large producers – including a substantial shipment to Brazil earlier this month – so this may not be the leverage Russia truly needs to gain a foothold in global negotiations.
Russia expects to harvest its largest wheat crop on record this summer since the Soviet Union was dissolved over 30 years ago. So there may be a lot of incentive to hold off on agreeing to humanitarian negotiations until Russia requires further market access for its bumper wheat crop.
“So Russia can address the global food security issue – and do it at high prices,” the Reuters source added. “And Ukraine can wait for now.”
Will Russia ever be willing to negotiate humanitarian corridors in good faith? Maybe by the August-September period. At that time, Ukraine will be beginning its 2022 harvest and will likely be scrambling to find available storage capacity as 2021 crops remain stuck in the countryside as Black Sea ports are closed. It is forecast that 35% of available storage will be used for old crops at that time.
Russia will likely have more bargaining power at that point and could demand more drastic actions to address sanctions – including lifting them in exchange for Ukrainian grain export market access.
“So the 2022/23 farming year will be hungry and cold,” the Reuters source added. “You reap what – and how – you sow. They will reap the whirlwind.”
Weather
Temperatures will warm into the 60s-70s today across much of the Heartland, according to NOAA’s short-range forecasts. Mostly clear skies are forecast today for North Dakota and Northern Minnesota, which should help to coax along planting progress in the region.
Elsewhere in the Heartland today, the rain system that hovered over the Central Mississippi River Valley yesterday shifted into the Eastern Corn Belt overnight. It will linger there for a couple more days, dropping up to 1.25 inches of precipitation on the region over the next 24 hours.
That will likely slow planting progress in the top corn-producing states, but it will enable clear skies in the Northern Plains, which could help that region catch up with national sowing rate averages over the next couple days before another rain system moves in on Saturday.
NOAA’s 6- to 10-day forecasts updated yesterday are trending wetter for much of the Heartland while the 8- to 14-day forecast is beginning to show a period of clear skies for the Upper Midwest.
Financials
S&P 500 futures continued their retreat from the bear market overnight, rising 0.62% and breaking above the $4,000 benchmark to trade at $4,000.75 at last glance. Optimism over potential tech earnings to be released today helped float market gains this morning.
What else I’m reading this morning on our website, FarmFutures.com
AgMarket.Net’s Bill Biedermann thinks producers should expect sideways grain markets this summer – at least until June 30 USDA reports.
Congress is investigating price fixing concerns in the beef market.
The U.S. is once again challenging Canada’s dairy policies via a USMCA dispute. Senior policy editor Jacqui Fatka breaks down the key details.
Advance Trading’s Eric Meyer asks – what is keeping you from locking in high prices?
AgMarket.Net’s Betsy Jibben reports that planting progress in Ukraine continues despite the Russian occupation. The next big question – will the exported totals shipped this year count for Russia’s or Ukraine’s trade total?
Bryce Knorr is calling it – weather markets are here and bringing price rallies for growers.
Kansas Farmer editor Jennifer Latzke shares the big takeaways from the 2022 Winter Wheat Tour last week.
Morning Ag Commodity Prices – 5/26/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.64
7.575
7.5925
-0.13
-1.68%
SEP ’22 CORN
$ / BSH
7.32
7.2525
7.2725
-0.125
-1.69%
DEC ’22 CORN
$ / BSH
7.16
7.0925
7.125
-0.1075
-1.49%
MAR ’23 CORN
$ / BSH
7.195
7.1325
7.1575
-0.1125
-1.55%
MAY ’23 CORN
$ / BSH
7.2075
7.13
7.1675
-0.0975
-1.34%
JUL ’23 CORN
$ / BSH
7.14
7.08
7.1025
-0.105
-1.46%
SEP ’23 CORN
$ / BSH
6.5525
6.475
6.5325
-0.085
-1.28%
JUL ’22 SOYBEANS
$ / BSH
16.84
16.6725
16.7825
-0.0275
-0.16%
AUG ’22 SOYBEANS
$ / BSH
16.2325
16.08
16.185
-0.02
-0.12%
SEP ’22 SOYBEANS
$ / BSH
15.515
15.375
15.47
-0.0225
-0.15%
NOV ’22 SOYBEANS
$ / BSH
15.1525
15.0225
15.1075
-0.02
-0.13%
JAN ’23 SOYBEANS
$ / BSH
15.2
15.065
15.165
-0.0075
-0.05%
MAR ’23 SOYBEANS
$ / BSH
15.14
15.015
15.1075
-0.015
-0.10%
MAY ’23 SOYBEANS
$ / BSH
15.155
15.0175
15.1125
-0.0125
-0.08%
JUL ’23 SOYBEANS
$ / BSH
15.135
15.0025
15.0925
-0.0175
-0.12%
AUG ’23 SOYBEANS
$ / BSH
0
#N/A
14.92
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
79.2
78.3
79.05
0.13
0.16%
AUG ’22 SOYBEAN OIL
$ / LB
77.1
76.25
77
0.1
0.13%
JUL ’22 SOY MEAL
$ / TON
426.2
421.6
422.7
-1.5
-0.35%
AUG ’22 SOY MEAL
$ / TON
420.4
416.4
416.9
-2
-0.48%
SEP ’22 SOY MEAL
$ / TON
413.9
410.7
411.4
-1.5
-0.36%
OCT ’22 SOY MEAL
$ / TON
406.3
404
404.6
-1.7
-0.42%
DEC ’22 SOY MEAL
$ / TON
407.9
404.7
404.8
-2.5
-0.61%
JUL ’22 Chicago SRW
$ / BSH
11.3825
11.15
11.2575
-0.225
-1.96%
SEP ’22 Chicago SRW
$ / BSH
11.46
11.235
11.34
-0.2275
-1.97%
DEC ’22 Chicago SRW
$ / BSH
11.51
11.3075
11.405
-0.23
-1.98%
MAR ’23 Chicago SRW
$ / BSH
11.525
11.3525
11.44
-0.2225
-1.91%
MAY ’23 Chicago SRW
$ / BSH
11.4075
11.2425
11.295
-0.2325
-2.02%
JUL ’22 Kansas City HRW
$ / BSH
12.35
12.0675
12.16
-0.1725
-1.40%
SEP ’22 Kansas City HRW
$ / BSH
12.4025
12.1225
12.2025
-0.18
-1.45%
DEC ’22 Kansas City HRW
$ / BSH
12.4425
12.19
12.27
-0.1725
-1.39%
MAR ’23 Kansas City HRW
$ / BSH
12.415
12.2
12.29
-0.16
-1.29%
MAY ’23 Kansas City HRW
$ / BSH
12.1775
11.96
11.96
-0.25
-2.05%
JUL ’22 MLPS Spring Wheat
$ / BSH
12.805
12.5625
12.745
-0.06
-0.47%
SEP ’22 MLPS Spring Wheat
$ / BSH
12.795
12.5575
12.7375
-0.0675
-0.53%
DEC ’22 MLPS Spring Wheat
$ / BSH
12.735
12.5625
12.7
-0.0775
-0.61%
MAR ’23 MLPS Spring Wheat
$ / BSH
12.7125
12.5525
12.6825
-0.0775
-0.61%
MAY ’23 MLPS Spring Wheat
$ / BSH
12.655
12.655
12.655
-0.04
-0.32%
JUN ’21 ICE Dollar Index
$
102.29
101.79
101.975
-0.102
-0.10%
JU ’21 Light Crude
$ / BBL
111.47
110.27
111.17
0.84
0.76%
AU ’21 Light Crude
$ / BBL
108.71
107.6
108.47
0.72
0.67%
JUN ’22 ULS Diesel
$ /U GAL
3.8914
3.859
3.87
0.0036
0.09%
JUL ’22 ULS Diesel
$ /U GAL
3.7773
3.7494
3.7594
0.0103
0.27%
JUN ’22 Gasoline
$ /U GAL
3.861
3.8288
3.8511
0.0194
0.51%
JUL ’22 Gasoline
$ /U GAL
3.755
3.7152
3.7458
0.0205
0.55%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
154.6
0
0.00%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
167.95
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
132.3
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
132.525
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
109.05
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
107.95
0
0.00%
MAY ’22 Class III Milk
$ / CWT
25.18
#N/A
25.11
0
0.00%
JUN ’22 Class III Milk
$ / CWT
24.23
24.23
24.23
0.03
0.12%
JUL ’22 Class III Milk
$ / CWT
24.45
24.36
24.36
-0.09
-0.37%
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