Corn up 7-9 cents
Soybeans up 5-9 cents; Soymeal down $0.30/ton; Soyoil up $0.81/lb
Chicago wheat down 3-9 cents; Kansas City wheat down 3-12 cents; Minneapolis wheat down 2-7 cents
*Prices as of 7:10am CDT.
Happy St. Patrick’s Day!
Corn
Grains traded mostly higher this morning, though much of the market action was derived from other financial market activity. Persistent drought in Argentina and Brazil kept corn prices elevated above the $7/bushel benchmark this morning.
Brent crude oil and West Texas intermediate oil futures both broke above the $100/barrel benchmark last night as declining Russian output in April reinvigorated energy markets, adding to this morning’s gains in the corn and soybean markets. Weekly ethanol output held steady at 43.1 million gallons/day of output through the week ending March 11 on the prospect of high energy costs.
Soybeans
Soybean prices followed corn’s gains slightly higher this morning thanks to an uptick in energy prices. Soymeal prices traded slightly lower even though Argentina, the world’s largest soymeal exporter, could potentially increase taxes on its soymeal and soyoil exports to reduce inflation. If realized, Argentina’s potential tax would likely be bullish for U.S. soy markets.
Indonesia announced overnight it would end its export restrictions on palm oil and instead increase an export tax on palm oil shipments.
“The world’s biggest exporter of the edible oil has required companies to sell 30% of their planned export volume of palm oil products, up from 20% imposed in January, under a so-called domestic market obligation (DMO) aimed at ensuring local supply amid soaring cooking oil prices,” a Reuters report said this morning.
The policy is likely to keep global edible oil prices high, but it could help prevent complete shortages through Indonesia and abroad as trade flows will begin to resume. Indonesia is the world’s largest producer and exporter of palm oil, which is a direct substitute for soyoil and other edible oils.
China will increase its 2022 soybean acreage by approximately 2.3 million acres this spring (20 million mu), according to a state media report issued overnight. The move is an effort to help curb soaring soybean prices in China and reduce dependency on foreign supplies following the 2018 trade war with the U.S. and harvest shortfalls and delays from Brazilian suppliers in 2021 and 2022.
Wheat
Wheat prices wavered between losses and gains this morning as markets continue to wait for a cease-fire in the Black Sea. At last glance, U.S. futures traded at a slight loss as hopes continue for a resumption of normal trade flows in the Black Sea and precipitation for the U.S. Plains, which could help improve winter wheat conditions in the region.
“Wheat buying has slowed down in the last few days. Buyers are hoping shipments from the Black Sea region could start soon and they don’t need to panic,” a New Delhi-based dealer with a global trading firm told Reuters this morning.
Inputs
Large global fertilizer maker Nutrien announced yesterday it would continue ongoing efforts to scale up production in its potash division. The move comes as retail potash prices in Illinois broke past 11-year highs at the beginning of last fall and are now soaring to record highs on surging global demand and further tightening supplies amid the Black Sea military conflict.
“Nutrien is responding to this period of unprecedented market uncertainty by safely expanding potash production to help provide our customers with the crop inputs they need. We continue to closely monitor market conditions and will evolve our long-term plans to ensure we utilize our assets in a safe and sustainable manner that benefits all our stakeholders,” Nutrien’s Interim President and CEO Ken Seitz said in a statement.
After adding 1 million metric tonnes (MMT) of new potash output in 2021 in response to the tightening global supply environment, Nutrien now expects 2022 production to propel the company’s potash output 20% higher than 2020 volumes. Nutrien produced 2.7MMT of potash in 2020 and 3.1MMT in 2021 – a 15% annual increase.
Nutrien’s global potash production is now forecast to rise to 3.2MMT for this year. The company’s output is estimated to “account for more than 70 percent of global production added” over the past two years, according to a statement released by the company last night.
Nutrien’s expansion plans could be temporarily thwarted by a looming strike at Canadian Pacific (CP) Railway. The company issued a statement last night announcing that it would “lock out its employees in 72 hours if there is no agreement with a union,” as employees threaten strike action in protest over benefits and wages, but primarily low pensions.
The Teamsters Canada Rail Conference (TCRC) rejected a deal from CP Railways yesterday on revised pensions, wages, and benefits. CP Railways is Canada’s second largest railway and facilitates grain, fertilizer, and energy transport through Canada all the way down to Kansas City. Grain transport is its primary revenue generator, though between 10%-20% of its business focuses on fertilizer shipments.
“Delaying resolution would only make things worse. We take this action with a view to bringing this uncertainty to an end,” CP CEO Keith Creel said last night.
The lockout deadline has been extended to March 20 with federal officials from Canada’s Ministry of Labour stepping in to mediate. “At the bargaining table, CP continues to dismiss our members’ demands and are unwilling to negotiate the issues they have created,” TCRC contended in a statement last night, noting it would remain entrenched in negotiations until a settlement could be agreed upon – however long it takes, said the union.
To sum it up – CP Railways continue to run, for now. But the union and CP will need to settle its labor disputes by Sunday to prevent a complete shutdown of railway operations.
As I’ve noted in earlier reports, Canada’s drought last summer has drastically trimmed feed supplies in Alberta, where many livestock feeders have become dependent upon American grain shipments to feed their herds. Feedstocks are so tight that many of those imported grain supplies are fed to cattle directly off the train tracks.
Similarly, as U.S. growers gear up for spring planting season, reduced access to Canada’s potash and other fertilizer supplies could tighten input availability this spring and further increase prices for growers who may not have yet locked in 2022 input pricing.
Weather
Cooler temperatures will likely bring mixed precipitation across the central Plains and Upper Midwest today, according to NOAA’s short-range forecasts. Rains will cover the southern edge of the system, reaching from Missouri and Northern Illinois down the to U.S. Gulf.
Financials
Federal Reserve chairman Jerome Powell greenlighted a 0.25% increase in the Federal Funds interest rate yesterday – the first time since 2018 that interest rates have risen. The move comes as part of a broad monetary policy effort to thwart rising inflation.
The February 2022 Consumer Price Index (CPI) showed a 7.9% annual increase in prices, the highest increase in goods in the past 40 years. Luckily, interest rates are significantly lower (and inflation rates are also) than the period of soaring inflation of the ’70’s and ’80’s that triggered devastatingly high interest rates.
Stock markets agreed with that sentiment, soaring to near session highs after Powell’s announcement yesterday. The Fed’s move yesterday will be part of a series of rate increases over the next two years. The Fed expects to move more aggressively on interest rates that previously thought, bringing the rate to 2% by the end of this year.
Fed officials project to raise interest rates to 2.75% by the close of 2023, which is higher than previously forecasted rises of 2.1% in response to rising inflation aggravated by the Black Se conflict. If the Fed sticks with that path, it will be the highest interest rate reading since 2008.
“As I looked around the table at today’s meeting, I saw a committee that’s acutely aware of the need to return the economy to price stability and determined to use our tools to do exactly that,” Powell said in a news conference following the close of yesterday’s Federal Open Market Committee (FOMC) meeting.
“That’s a very, very tight labor market–tight to an unhealthy level, I would say,” Powell noted after reconciling record wage rises with soaring inflation. The Fed expects six more interest rate hikes by the end of 2022 to curb inflation, four more than the original plan outlined late last year.
“The Fed recognized that the hikes will slow growth. The question is now how much will the tightening of the economy slow growth. That’s what markets are looking for,” Shaniel Ramjee, a multiasset fund manager at Pictet Asset Management, told the Wall Street Journal this morning.
On Wall Street, profit-takers were up early this morning to take the tops off yesterday’s rallies. Though much of the optimism from yesterday’s rate hike faded and trader focus turned back to the Black Sea conflict. Cease-fire talks continue between Russia and Ukraine, though Russia is showing little sign of cooperation as it continues to brutally attack and lay siege to Ukrainian cities and civilian targets.
Ukrainian President Volodymyr Zelenskyy pleaded to the U.S. Congress yesterday for more aid. President Biden will send $800 million worth of military support to Ukrainian guerilla forces, calling Russian President Vladimir Putin a “war criminal” in the process.
Also worth a read on our website, FarmFutures.com
My latest E-corn-omics column puts to rest fears about a looming potential global wheat shortage.
March Madness is here, and Bryce Knorr isn’t talking about basketball. Recent market volatility is at the highest Knorr has seen in 35 years in the markets. Check out Knorr’s tips for navigating these chaotic markets in a recent Ag Marketing IQ column.
Senior Editor Ben Potter has some last-minute tips to prep for profit as spring approaches.
A Twitter thread triggered conversations about opening up CRP acreage for planting this spring a couple weeks back. But Secretary of Agriculture Tom Vilsack says that’s not a likely solution to calming high commodity prices.
Rising nitrogen costs have sent farmers in search of cheaper alternatives. Potential options? Microbes, humates, and wine, writes Executive Editor Mike Wilson.
Morning Ag Commodity Prices – 3/17/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.415
7.285
7.375
0.075
1.03%
JUL ’22 CORN
$ / BSH
7.085
6.955
7.035
0.065
0.93%
SEP ’22 CORN
$ / BSH
6.5825
6.4675
6.5425
0.0725
1.12%
DEC ’22 CORN
$ / BSH
6.4075
6.285
6.375
0.0775
1.23%
MAR ’23 CORN
$ / BSH
6.43
6.305
6.395
0.09
1.43%
MAY ’23 CORN
$ / BSH
6.43
6.3075
6.405
0.095
1.51%
JUL ’23 CORN
$ / BSH
6.3925
6.285
6.3775
0.0875
1.39%
MAY ’22 SOYBEANS
$ / BSH
16.6475
16.4725
16.5725
0.08
0.49%
JUL ’22 SOYBEANS
$ / BSH
16.425
16.245
16.35
0.09
0.55%
AUG ’22 SOYBEANS
$ / BSH
16
15.85
15.95
0.0875
0.55%
SEP ’22 SOYBEANS
$ / BSH
15.2
15.085
15.1775
0.095
0.63%
NOV ’22 SOYBEANS
$ / BSH
14.725
14.5725
14.6725
0.07
0.48%
JAN ’23 SOYBEANS
$ / BSH
14.5875
14.4625
14.56
0.08
0.55%
MAR ’23 SOYBEANS
$ / BSH
14.1425
14.07
14.125
0.0625
0.44%
MAY ’23 SOYBEANS
$ / BSH
13.975
13.95
13.97
0.0525
0.38%
JUL ’23 SOYBEANS
$ / BSH
13.9475
13.89
13.9475
0.08
0.58%
MAY ’22 SOYBEAN OIL
$ / LB
74.6
72.97
74.42
0.87
1.18%
JUL ’22 SOYBEAN OIL
$ / LB
70.7
69.23
70.59
1.02
1.47%
MAY ’22 SOY MEAL
$ / TON
482
476.6
477.7
-0.3
-0.06%
JUL ’22 SOY MEAL
$ / TON
469.3
464.3
465.3
-0.4
-0.09%
AUG ’22 SOY MEAL
$ / TON
454.7
451.3
452
0.2
0.04%
SEP ’22 SOY MEAL
$ / TON
440.6
438.6
438.6
0
0.00%
OCT ’22 SOY MEAL
$ / TON
427.6
425.9
427.2
0.2
0.05%
MAY ’22 Chicago SRW
$ / BSH
10.86
10.3175
10.55
-0.1425
-1.33%
JUL ’22 Chicago SRW
$ / BSH
10.62
10.13
10.3475
-0.0775
-0.74%
SEP ’22 Chicago SRW
$ / BSH
10.1225
9.6825
9.93
0.0125
0.13%
DEC ’22 Chicago SRW
$ / BSH
9.685
9.29
9.5525
0.075
0.79%
MAR ’23 Chicago SRW
$ / BSH
9.3225
8.9775
9.27
0.165
1.81%
MAY ’22 Kansas City HRW
$ / BSH
10.7975
10.4
10.585
-0.14
-1.31%
JUL ’22 Kansas City HRW
$ / BSH
10.6875
10.3
10.5125
-0.0725
-0.68%
SEP ’22 Kansas City HRW
$ / BSH
10.46
10.1475
10.3
-0.04
-0.39%
DEC ’22 Kansas City HRW
$ / BSH
10.28
10
10.1
0
0.00%
MAR ’23 Kansas City HRW
$ / BSH
9.86
9.86
9.86
0.0925
0.95%
MAY ’22 MLPS Spring Wheat
$ / BSH
10.5575
10.2675
10.4875
-0.015
-0.14%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.43
10.1525
10.3825
0.005
0.05%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.25
10.005
10.2325
0.075
0.74%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.2225
10.0025
10.175
0.075
0.74%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.9225
9.9225
9.9225
-0.0725
-0.73%
JUN ’21 ICE Dollar Index
$
98.48
98.14
98.24
-0.381
-0.39%
AP ’21 Light Crude
$ / BBL
100.96
94.85
100.66
5.62
5.91%
MA ’21 Light Crude
$ / BBL
99.51
93.41
99.22
5.63
6.02%
APR ’22 ULS Diesel
$ /U GAL
3.4554
3.1312
3.4173
0.3172
10.23%
MAY ’22 ULS Diesel
$ /U GAL
3.2815
2.9949
3.2424
0.2714
9.13%
APR ’22 Gasoline
$ /U GAL
3.1329
2.9687
3.132
0.1445
4.84%
MAY ’22 Gasoline
$ /U GAL
3.0964
2.9347
3.0954
0.1434
4.86%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
157.25
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
162.625
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
139.35
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
135.525
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
102.375
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
111
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.41
22.41
22.41
0.03
0.13%
APR ’22 Class III Milk
$ / CWT
23.15
22.91
23.06
0.18
0.79%
MAY ’22 Class III Milk
$ / CWT
23.49
23.49
23.49
0.16
0.69%
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Morning report: Wheat falls on rains and snow in the Plains, hopes for a Black Sea cease-fire. (Comments are updated by 7:30 a.m. Central Time.)
