Corn up 2-3 cents
Soybeans up 6-9 cents; Soymeal up $6.00/ton; Soyoil up $0.73/lb
Chicago wheat up 7-8 cents; Kansas City wheat up 6-7 cents; Minneapolis wheat up 7-8 cents
*Prices as of 7:00am 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 MyMap, so farmers can see others’ responses from across the country – or even across the county!
My latest FFTF column is live on our site! Growers are progressing with soybean harvest much more quickly than their corn counterparts and many respondents are already feeling the pressure of dry soil on winter wheat sowing and crop development. Check out the article for all the latest farmer insights!
Breaking overnight
On the surface, this headline may not seem that exciting, but there are some important implications for supply chains and food demand that farmers should be aware of this morning.
Chinese officials are considering reducing COVID-19 quarantine requirements for international travelers coming into the country. China has held fast to its Zero-COVID policies throughout the pandemic, even as most other countries have eased back on testing requirements for entry in recent months.
A key reason for the stringent polices is that China’s vaccines have been less effective at curbing the virus’s transmission than the mRNA vaccines distributed by Western countries, so lockdowns remain the government’s primary method of controlling the virus’s spread.
But China’s Zero-COVID policies have continued to cause supply chain and shipping backlogs across the world long after the peak of the pandemic pandemonium. More importantly for global agriculture, the rolling lockdowns cause rapid and massive shifts to consumer food demand that has left global food markets vulnerable to an added layer of volatility in this post-pandemic world.
This is good news and will be even better news if China does end up scaling back its Zero-Covid policy in the near future.
Corn
Ag consultancy Strategie Grains cut European Union corn and wheat production forecasts for the 2022/23 growing season early this morning, which sent U.S. corn futures $0.02-$0.03/bushel higher during the early morning trading session. Some bargain buying may also be at play after the corn complex closed yesterday’s trading session lower for the fourth straight day.
Dry weather conditions in the European Union this summer decimated the bloc’s corn and wheat production forecasts and will likely lead the region to import more corn supplies in the coming months to meet demand.
Cash bids for corn around the country yesterday saw some bullish movement, specifically at elevator locations and also at a Western Corn Belt ethanol plant. Cash prices weakened at a Cedar Rapids, Iowa processor. Processing demand is a bright spot for corn cash prices currently, as most other end users (elevators, export terminals) are not offering as high of a cash bid.
By and large, spot corn prices are trading at a premium to futures prices in the Western Corn Belt where crops fell short this summer while prices in the Eastern Corn Belt are being bid out at a discount to futures prices.
After two months of lackluster ethanol production, yesterday’s Weekly Petroleum Status report from the U.S. Energy Information Administration (EIA) reported the highest weekly ethanol production volume since the beginning of August 2022.
Through the week ending October 14, average daily ethanol output was recorded at 1.016 million barrels/day (42.7M gallons/day). It marked a 9% increase from last week’s volumes and moved closer in line with Summer 2022 ethanol production volumes.
Stock volumes through the reporting period ended just a hair (0.1%) lower this week to 21.8 million barrels. Stock volumes have been falling amid slower production paces, though absolute blending volumes by refiners and blenders has not dipped as severely as ethanol production.
This suggests that the recent production cuts – which are widely regarded to be a consumer contractual response to high gasoline prices – enabled an efficient drawdown of available ethanol supplies, which indicates that any future ethanol cuts may not be as severe as the ones experienced over the past two months if consumers continue to pull back gasoline consumption in response to higher fuel prices.
Soybeans
Soybean prices rose overnight as tight pork supplies in China reaffirmed bullish demand prospects for Chinese soybean buyers. U.S. soybean prices rose $0.05-$0.11/bushel as a result. Some of the bullish price strength was also derived from the soyoil market.
Soyoil’s competitor, palm oil, pushed soyoil prices 1% higher during the overnight trading session after September 2022 Malaysian palm oil export forecasts were reported as lower than previous expectations.
Overnight, China’s state planner announced it would be coordinating with large hog breeding operations to send more sows to slaughter in an effort to cool pork prices. Live hog cash prices in China notched a record high last week – 28 yuan per kilogram or $175.54/cwt – as consumer demand for pork outpaces available hog supplies.
Large producers “will take the lead in ensuring supply and price stability in the market, release fattening pigs in a timely manner, and speed up the pace of slaughtering when necessary,” China’s National Development and Reform Commission (NDRC) said in a statement.
That’s a bullish sign for potential Chinese purchases of U.S. soybeans. But with river traffic on the Mississippi still slowed due to low water levels, U.S. growers may not be able to take advantage of this profit opportunity.
Export sales data is due out today from USDA today – but don’t hold on to any hopes that it will be a bullish report. Monday’s Export Inspections report, which is a preliminary look at how shipping volumes fared in the previous week, trended higher for soybeans (69.2M bu.) by nearly double the previous week’s volumes.
But even if today’s shipping volumes mirror Monday’s figure, the weekly soybean shipping pace would still lag over 9% behind year ago paces when U.S. Gulf export paces were slowed by Hurricane Sandy. Even worse, Monday’s figure is still a quarter lower than the same reporting period in the 2020/21 shipping season.
So don’t be surprised if today’s figures incite more bearish than bullish price action not just for soybeans – but for all the other grain commodities as well.
Argentina’s grain inspectors’ union, URGARA, is threatening strike activity which could slow export loading paces in the world’s third largest soybean exporter. URGARA employees work at export terminals and account for grain supplies loaded at the ports.
The Buenos Aires local government gave UGARA a five-day conciliatory period, which was an extension of an earlier agreement. After that time, workers could walk away from ports if an agreement is not reached with food processing and exporting companies in Argentina.
Cash prices for soybeans rose at elevator locations in the Eastern Corn Belt yesterday, though prices continue to be offered at a steep discount to futures prices. Similar to corn, cash bids offered by soybean processors are wider in the West and narrower in the East.
Basis weakened further on the Illinois River yesterday as low river levels downstream have slowed barge traffic on the country’s primary riverways. Cash bids at terminals on the Illinois, Ohio, and Mississippi Rivers range between a $0.20-$0.75/bushel discount to November 2022 futures prices.
Cash soymeal prices eased yesterday as the continued spread of highly pathogenic avian influenza (HPAI from the H5N1 strain) is threatening flocks across the country. Poultry consumes approximately 55% of soymeal supplies annually. Slow export paces at the Gulf of Mexico due to low Mississippi River levels also weighed on cash soymeal bids.
Wheat
Wheat prices rose $0.06-$0.08/bushel this morning on a lower dollar and forecast reductions from Strategie Grains for European Union soft wheat production this year. The E.U. trails Russia as the world’s second largest wheat exporter. Plus, dry conditions in the U.S. Plains continues to keep a sturdy price floor under Kansas City futures.
Argentina’s Rosario Grains Exchange slashed wheat harvest estimates again as dry weather continues to threaten the viability of the country’s wheat crop this year. The exchange cut 36.7 million bushels (1MMT) from its forecast, lowering it to 551 million bushels for the 2022/23 growing season.
That would put Argentina’s wheat crop as the smallest in the past 7 years. USDA’s current forecast for the crop stands at 643 million bushels, so big adjustments could be in store for next month’s WASDE report from USDA.
Soft red winter wheat cash bids were unchanged yesterday in the Eastern Corn Belt and continued to be offered at a $0.03-$0.30/bushel discount to nearby futures prices. Basis for hard red winter wheat in the Southern Plains remained flat in Texas and Oklahoma but firmed slightly at a Kansas location. Markets remain concerned about crop development in the Southern Plains as sowing for the 2023 crop progress amid dry soils.
Weather
Temperatures will rise today as skies clear across the Heartland, according to NOAA’s short-term forecasts. The clear skies will continue across the Midwest and Plains until Saturday afternoon, when a storm system building in the Northern Rockies will sneak into the Northern Plains.
But until that point, harvest progress will be able to continue uninterrupted across the country.
Any showers next week will likely dissipate by second half of the week, which should limit any potential harvest delays. NOAA’s 6-10-day forecasts are now trending cooler for the Upper Midwest, while forecasts for the Eastern Corn Belt continue to show warmer than average temperatures. Chances for rain are shifting away from the Heartland and into the Pacific Northwest and Southeast. Dry weather is likely to continue plaguing winter wheat conditions in the Southern Plains during the end of next week.
The 8-10-day outlook is trending warmer for the Midwest and Plains, but the Plains will continue to see slim chances for precipitation while the Midwest is expected to see near normal chances for rain during Halloween and the first couple days of November.
This could narrow the window for optimal harvest progress to be made this week, especially if widespread showers grace next week’s forecasts. The Great Lakes region will be the most susceptible to harvest delays and quality downgrades if showers over the next couple days keep growers out of the fields and will likely limit the area’s time available to harvest before the wetter forecasts move into the region next week.
Bonus
Cotton prices hit a 15-month low during yesterday’s trading session, falling 4.7% on the day to settle at $0.7843/lb. Cotton prices have been on a downward spiral due to a rising dollar and global recession fears since setting record highs this past May. Harvest pressure also added to the bearish sentiment.
“The credit spreads are nearly to the point where they’re indicating a recession in the world next year, so cotton traders anticipate that consumers will buy much less textiles next year,” Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi, told Reuters yesterday.
“These prices are pretty cheap… also for next year’s crop, the Dec. 23 contract is trading at substantial discounts to alternative crops. So we’re going to go into a spring in a few months, where the world does not plant that much cotton.”
Cotton prices have not been immune from slow shipping speeds on the Lower Mississippi River, either. But with COVID lockdowns persisting in China, the slow export paces are just another bearish hurdle soybean prices need to overcome.
Cotton acres will likely compete with soybean acres in the Mississippi Delta region next spring. A Farm Futures survey conducted this summer found that growers in that region were more likely to plant cotton than soybeans when cotton prices were higher.
But if cotton prices continue their downward descent, soybean acreage could see a boost from Southern producers. Definitely worth keeping an eye on.
What else I’m reading this morning on our website, FarmFutures.com:
Virginia Tech ag economist David Kohl explains why working capital can help farmers manage volatility during the remainder of the year.
Advance Trading’s Tom Barry helps farmers to embrace volatility by demystifying futures and options tools.
USDA and USAID are implementing new research strategies to emphasize agriculture’s role in global food security.
Senior editor Ben Potter analyzes how interest rate hikes will impact farmers.
The Inflation Reduction Act is slated to provide nearly $800 million to distressed USDA borrowers, with another $500 million also expected.
Bryce Knorr explains how small supplies and demand dynamics could influence grain market prices in the coming weeks.
Morning Ag Commodity Prices – 10/20/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.83
6.7675
6.81
0.0275
0.41%
MAR ’23 CORN
$ / BSH
6.8925
6.83
6.88
0.035
0.51%
MAY ’23 CORN
$ / BSH
6.895
6.835
6.8825
0.0325
0.47%
JUL ’23 CORN
$ / BSH
6.84
6.78
6.8225
0.0275
0.40%
SEP ’23 CORN
$ / BSH
6.37
6.32
6.365
0.03
0.47%
DEC ’23 CORN
$ / BSH
6.24
6.1925
6.235
0.03
0.48%
AR2 ’24 CORN
$ / BSH
6.3025
6.28
6.3025
0.0275
0.44%
AY2 ’24 CORN
$ / BSH
6.33
6.2975
6.33
0.0325
0.52%
JUL ’24 CORN
$ / BSH
6.2675
6.2675
6.2675
0.0075
0.12%
NOV ’22 SOYBEANS
$ / BSH
13.835
13.7025
13.83
0.105
0.77%
JAN ’23 SOYBEANS
$ / BSH
13.93
13.8
13.9275
0.1
0.72%
MAR ’23 SOYBEANS
$ / BSH
14.015
13.8875
14.015
0.0975
0.70%
MAY ’23 SOYBEANS
$ / BSH
14.0925
13.975
14.0925
0.095
0.68%
JUL ’23 SOYBEANS
$ / BSH
14.1275
14.0125
14.125
0.0925
0.66%
AUG ’23 SOYBEANS
$ / BSH
13.9525
13.87
13.9525
0.0525
0.38%
SEP ’23 SOYBEANS
$ / BSH
13.6325
13.565
13.585
-0.015
-0.11%
NOV ’23 SOYBEANS
$ / BSH
13.555
13.4575
13.555
0.07
0.52%
AN2 ’24 SOYBEANS
$ / BSH
13.5875
#N/A
13.5225
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.4775
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.4475
#N/A
13.4675
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
71.73
70.48
71.39
0.75
1.06%
JAN ’23 SOYBEAN OIL
$ / LB
68.92
67.74
68.59
0.58
0.85%
DEC ’22 SOY MEAL
$ / TON
409
401.9
408.2
6.5
1.62%
JAN ’23 SOY MEAL
$ / TON
402.3
396.6
401.7
5.1
1.29%
MAR ’23 SOY MEAL
$ / TON
395.6
391
394.9
3.9
1.00%
MAY ’23 SOY MEAL
$ / TON
392.8
388.8
392.4
3.8
0.98%
JUL ’23 SOY MEAL
$ / TON
393.1
389.3
392.6
3.4
0.87%
DEC ’22 Chicago SRW
$ / BSH
8.5575
8.3675
8.505
0.0925
1.10%
MAR ’23 Chicago SRW
$ / BSH
8.735
8.5525
8.685
0.09
1.05%
MAY ’23 Chicago SRW
$ / BSH
8.83
8.6525
8.7825
0.095
1.09%
JUL ’23 Chicago SRW
$ / BSH
8.81
8.6225
8.7625
0.1025
1.18%
SEP ’23 Chicago SRW
$ / BSH
8.825
8.645
8.8025
0.13
1.50%
DEC ’23 Chicago SRW
$ / BSH
8.9025
8.7
8.8525
0.13
1.49%
AR2 ’24 Chicago SRW
$ / BSH
8.8675
8.8375
8.85
0.1325
1.52%
DEC ’22 Kansas City HRW
$ / BSH
9.55
9.3825
9.5025
0.085
0.90%
MAR ’23 Kansas City HRW
$ / BSH
9.53
9.365
9.47
0.0725
0.77%
MAY ’23 Kansas City HRW
$ / BSH
9.5125
9.355
9.4625
0.0875
0.93%
JUL ’23 Kansas City HRW
$ / BSH
9.45
9.2875
9.3975
0.09
0.97%
SEP ’23 Kansas City HRW
$ / BSH
9.4275
9.2975
9.425
0.145
1.56%
DEC ’23 Kansas City HRW
$ / BSH
9.385
9.3375
9.385
0.0825
0.89%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.235
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.6625
9.5275
9.6125
0.0775
0.81%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.705
9.5925
9.6725
0.08
0.83%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.765
#N/A
9.645
0
0.00%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.7525
#N/A
9.6475
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.4125
9.4025
9.4125
0.1
1.07%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.3475
#N/A
9.2825
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.03
0
0.00%
DEC ’21 ICE Dollar Index
$
113.03
112.305
112.5
-0.379
-0.34%
NO ’21 Light Crude
$ / BBL
87.56
85.88
87.44
1.89
2.21%
DE ’21 Light Crude
$ / BBL
86.5
84.49
86.23
1.71
2.02%
NOV ’22 ULS Diesel
$ /U GAL
3.8754
3.78
3.8465
-0.0578
-1.48%
DEC ’22 ULS Diesel
$ /U GAL
3.6062
3.5113
3.5745
0.0139
0.39%
NOV ’22 Gasoline
$ /U GAL
2.6833
2.6363
2.6716
0.0194
0.73%
DEC ’22 Gasoline
$ /U GAL
2.5129
2.4634
2.5005
0.0198
0.80%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
175.225
0
0.00%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
178.075
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
149.35
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
151.35
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
87.375
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
89
0
0.00%
OCT ’22 Class III Milk
$ / CWT
21.78
21.77
21.77
0.02
0.09%
NOV ’22 Class III Milk
$ / CWT
21.3
21.3
21.3
0
0.00%
DEC ’22 Class III Milk
$ / CWT
19.98
#N/A
20.01
0
0.00%
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Morning report: Soybeans also rise on hopes for Chinese demand, strong edible oil market activity. (Comments are updated by 7:30 a.m. Central Time.)
