Morning report: Corn, soybeans edge slightly higher on slow Ukrainian shipping paces, broad economic and weather concerns. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 1-3 cents
Soybeans up 7-11 cents; Soymeal down $3.30/ton; Soyoil up $1.30/lb
Chicago wheat up 12-13 cents; Kansas City wheat up 12-13 cents; Minneapolis wheat up 17-18 cents
*Prices as of 6:50am CDT.
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(TM) MyMap, so farmers can see others’ responses from across the country – or even across the county!
Corn
Corn prices inched up $0.01-$0.03/bushel this morning with nearby contracts hovering just below the $6/bushel benchmark. Traders are largely unimpressed with the speed and volume of grain exports out of Ukraine and remain slightly spooked by hot and dry forecasts in the Midwest in Mid-August, foregoing better-than-expected USDA condition ratings released in Monday’s Crop Progress report.
The market is hopeful that Ukraine’s shipment volumes will increase from one ship per day, as stipulated by the U.N. and Turkish-brokered agreement between Ukraine and Russia, to three ships per day. Such a move would be bearish for futures prices, but it would help reduce significant supply pressure for buyers in a time of high global inflation.
“The price direction will depend on how much wheat and corn actually comes out of Ukraine in the coming weeks,” one Singapore-based trader told Reuters.
Soybeans
Soybean prices edged $0.05-$0.15/bushel higher this morning on a round of technical buying and lingering concerns that an impending heat wave in the Midwest in mid-August could decimate yield prospect for the 2022/23 U.S. soybean crop.
The soy complex was largely buoyed by gains in the soyoil market, with some of the upward momentum limited by broad global economic concerns, as well as diplomatic worries about the state of relations between the U.S. and China following Speaker Pelosi’s visit to Taiwan.
Top global edible oils buyer India saw its soyoil imports in July 2022 more than double the previous month’s paces after the Indian government removed import duties for vegetable oil shipments. The move has helped to support rallying U.S. soyoil prices over the past month.
“Then palm oil supply was also limited because of Indonesia’s export restrictions. Buying soyoil was then easy and profitable as well,” Sandeep Bajoria, chief executive of Sunvin Group, a leading vegetable oil broker, told Reuters.
India took in 493,000 tonnes of soyoil during July 2022. The volume notched a new record monthly high for Indian soyoil imports. Soyoil import volumes are typically only a fifth of India’s total vegetable oils imports, but availability limitations in the sunflower oil and palm oil markets mean that India could see soyoil imports rise to a third of its total edible oils import volumes this year.
Wheat
The last two trading sessions with lower prices has encouraged global buyers to take advantage of low wheat prices, spurring a demand uptick overnight in the wheat market. Jordan, Japan, Tunisia, the Philippines, South Korea, and Iran all issued wheat purchase tenders.
In the U.S., prices rose $0.10-$0.19/bushel at last glance on the demand prospects – particularly those from Southeast Asia. Orders to Asian countries excluding China were nearly 11% higher than a year ago as of late July 2022 as the Philippines compete with top U.S. wheat buyer Mexico for the largest share of U.S. wheat. Increased export sales volumes to Southeast Asia and Central America have been a driving force in propping up export demand for U.S. wheat over the past month.
Low river levels in Europe due to persistently dry weather continue to slow shipping activity in the region, which is especially critical for Ukrainian grain shipments depended upon river transport to reach the global markets. The phenomenon is raising shipping costs, which does not bode well for inflationary pressures in the seller’s – and buyer’s – region.
Plus – global wheat consumption is beginning to decline as price-sensitive consumers in Asia, the Middle East, and Africa flock to cheaper alternatives, including rice and corn. Wheat prices are forecast to be higher during the second half of 2022 for consumers, which could exacerbate this trend in the coming months.
“There is going to be a drop in wheat demand for animal feed in Europe and China. Wheat demand for human consumption has also slowed in key importing countries around the world,” Erin Collier, an economist at UN’s Food and Agriculture Organisation, told Reuters.
“High prices have raised food security worries in parts of Asia and Africa where countries are not able to secure enough supplies from the international market.”
For more, I highly recommend checking out this Reuters report on the issue.
Inputs
Chicago-based CF Industries – a top global fertilizer producer – announced yesterday that Russian fertilizer supplies are largely returning back to the market at pre-Black Sea Conflict levels of inventory as global trade flows have realigned since Moscow’s February 2022 invasion and ongoing occupation of Ukraine.
CF Industries noted that anhydrous ammonia remains to be an exception to that statement, with CEO Tony Will noting that “temporary demand destruction needs to happen for ammonia because there is not enough product to go every place it is desired.”
Fertilizer producer Mosaic also issued earnings reports yesterday, noting that fertilizer usage rates in North American during the first half of 2022 trended lower due to inflation, the Black Sea conflict, a late start to the growing season, and volatile commodity prices.
Mosaic noted that farmers are first rationing phosphate and potash applications before reducing nitrogen purchases amid the soaring fertilizer price environment. The company expects that Russian potash supplies are slowly making their way back to global buyers, but that Belarus and China will likely see limited export growth for their potash and phosphate, respectively, shipments over the next six months.
What does this mean for U.S. farmers? It’s likely that barring any other weather or production event, harvest estimates could be increased for the 2022/23 season. USDA’s World Ag Outlook Board (WAOB), the organization which publishes WASDE data, noted in the May 2022 WASDE that global fertilizer costs and availability represented a significant chance for potential yield decreases for the 2022/23 growing season.
Fun Facts
A Dutch chemical maker, DSM, that produces food additives noted earlier yesterday that it is beginning to see consumers shift away from expensive cuts of meat and move toward cheaper poultry purchases as global inflation squeezes the pocketbooks of the global population.
DSM also took an earnings hit in the second quarter on China’s COVID lockdowns, which led to weaker meat demand from China.
This is an important revelation because it suggests some bearish prospects for meat demand – and subsequently corn and wheat demand for feed – in the coming months as inflation continues to plague the world.
For more insights, check out this Reuters article.
Weather
Showers forecast for the Upper Midwest today will shift into the Eastern Corn Belt late this evening, according to NOAA’s short-range forecasts. The system is expected to hover over the Eastern Corn Belt through at least Friday. Up to two inches of precipitation accumulation is possible today between Southern Missouria and Michigan.
Above average temperatures continue to plague NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday. The persistent dryness in the Heartland is expected to continue through the first half of August. However, the Eastern Corn Belt could see an above average chance for showers early next week.
Financials
U.S. House of Representative Speaker Nancy Pelosi’s sudden visit to Taiwan was the top headline across all newswire outlets overnight. Pelosi met with Taiwanese president Tsai Ing-wen overnight, vowing to provide U.S. military support for Taiwan’s defense against China.
“Today the world faces a choice between democracy and autocracy,” Pelosi said. “America’s determination to preserve democracy here in Taiwan and around the world remains ironclad.”
Tensions have been heightened between China and the U.S. since the trade war escalated in 2018. Chinese officials were vocal about warning Pelosi not to meet with Taiwanese officials ahead of the visit and threatened to implement some sort of retaliatory measures following the Speaker’s visit with President Tsai.
So far, China banned fresh food imports on Taiwanese produce, citing “pests, excessive pesticide residue, and COVID-19” detection in recent food and citrus imports. China’s Foreign Ministry also lodged a complaint about Pelosi’s visit with the U.S. Ambassador in China shortly after the Speaker’s arrival in Taiwan on Tuesday, calling it a “severe provocation.”
For more about the background of China’s contentious past with Taiwan, I highly recommend this great Wall Street Journal article. In short, China has been seeking ways to gradually impose its rule of law on the island nation after Japan ceded the territory to China following the conclusion of World War II, despite Taiwan’s desire for independence.
Oil prices traded lower this morning, ahead of today’s OPEC meeting as the organization considers production increases in September against keeping production levels constant at current levels. A murky global economic outlook increases the likelihood that oil prices will remain high, even as U.S. gasoline prices drift down for the 49th day in a row.
Stock markets inched up this morning, with the S&P 500 adding 0.25% to $4,113.25 at last glance on optimism for today’s batch of earnings reports. Some profit-taking was also likely at play after yesterday’s losses.
“Markets are taking a bit of a breather to assess what’s going on globally. There is still a lot of inflation, central banks are keeping that hawkish rhetoric and we get some geopolitics on top of that,” Olivier Marciot, global macro portfolio manager at Unigestion, told the Wall Street Journal this morning. “August is usually a dry month in terms of liquidity” so any moves could be outsized, he added.
What else I’m reading this morning on our website, FarmFutures.com:
Advance Trading’s Brian Basting explores the accuracy of USDA’s August yield estimates vs. final harvest estimates published in January 2023.
Here are the top highlights from yesterday’s weekly Crop Progress report from USDA.
Bryce Knorr explains how the weather, dollar, and technical signs could point to an early summer bottom for grain prices.
Darren Frye offers three tips to help farm owners lead others through change.
KCoe Isom’s Davon Cook walks farmers though the lifecycle of a family business to help growers manage growth and make better decisions.
Morning Ag Commodity Prices – 8/3/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
5.97
5.8525
5.9325
0.02
0.34%
DEC ’22 CORN
$ / BSH
5.9975
5.8775
5.96
0.0175
0.29%
MAR ’23 CORN
$ / BSH
6.0725
5.95
6.0375
0.02
0.33%
MAY ’23 CORN
$ / BSH
6.115
5.9975
6.085
0.0225
0.37%
JUL ’23 CORN
$ / BSH
6.13
6.01
6.0975
0.02
0.33%
SEP ’23 CORN
$ / BSH
5.8475
5.75
5.83
0.0275
0.47%
DEC ’23 CORN
$ / BSH
5.7325
5.6425
5.715
0.0175
0.31%
AR2 ’24 CORN
$ / BSH
5.7925
5.7925
5.7925
0.02
0.35%
MAY ’24 CORN
$ / BSH
0
#N/A
5.8075
0
0.00%
AUG ’22 SOYBEANS
$ / BSH
15.8675
15.6975
15.805
0.1125
0.72%
SEP ’22 SOYBEANS
$ / BSH
14.31
14.0375
14.185
0.0275
0.19%
NOV ’22 SOYBEANS
$ / BSH
14.0625
13.75
13.91
0.045
0.32%
JAN ’23 SOYBEANS
$ / BSH
14.1325
13.8275
13.9825
0.045
0.32%
MAR ’23 SOYBEANS
$ / BSH
14.1275
13.83
13.99
0.05
0.36%
MAY ’23 SOYBEANS
$ / BSH
14.1125
13.8325
13.985
0.05
0.36%
JUL ’23 SOYBEANS
$ / BSH
14.075
13.8
13.94
0.0425
0.31%
AUG ’23 SOYBEANS
$ / BSH
13.7975
13.7975
13.7975
0.1525
1.12%
SEP ’23 SOYBEANS
$ / BSH
0
#N/A
13.1675
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
13.15
12.93
13.0475
0.04
0.31%
AN2 ’24 SOYBEANS
$ / BSH
13.1875
#N/A
13.04
0
0.00%
AUG ’22 SOYBEAN OIL
$ / LB
64.15
#N/A
65.2
0
0.00%
SEP ’22 SOYBEAN OIL
$ / LB
63.65
61.91
63.31
0.98
1.57%
AUG ’22 SOY MEAL
$ / TON
490
482.8
482.8
-6.4
-1.31%
SEP ’22 SOY MEAL
$ / TON
437.6
430.4
431.3
-2.9
-0.67%
OCT ’22 SOY MEAL
$ / TON
410.2
403.4
404.2
-1.9
-0.47%
DEC ’22 SOY MEAL
$ / TON
407.6
400.4
401.3
-1.8
-0.45%
JAN ’23 SOY MEAL
$ / TON
405.1
398.5
399
-2.3
-0.57%
SEP ’22 Chicago SRW
$ / BSH
7.9025
7.68
7.87
0.1225
1.58%
DEC ’22 Chicago SRW
$ / BSH
8.0925
7.8725
8.0575
0.1175
1.48%
MAR ’23 Chicago SRW
$ / BSH
8.28
8.0675
8.245
0.1175
1.45%
MAY ’23 Chicago SRW
$ / BSH
8.375
8.1675
8.365
0.1325
1.61%
JUL ’23 Chicago SRW
$ / BSH
8.3475
8.13
8.3125
0.1
1.22%
SEP ’23 Chicago SRW
$ / BSH
8.3525
8.15
8.3525
0.1125
1.37%
DEC ’23 Chicago SRW
$ / BSH
8.4
8.19
8.365
0.075
0.90%
SEP ’22 Kansas City HRW
$ / BSH
8.565
8.3475
8.55
0.1275
1.51%
DEC ’22 Kansas City HRW
$ / BSH
8.6425
8.425
8.6175
0.115
1.35%
MAR ’23 Kansas City HRW
$ / BSH
8.7075
8.5
8.6775
0.1125
1.31%
MAY ’23 Kansas City HRW
$ / BSH
8.6875
8.53
8.6875
0.1
1.16%
JUL ’23 Kansas City HRW
$ / BSH
8.585
8.48
8.585
0.0775
0.91%
SEP ’23 Kansas City HRW
$ / BSH
8.595
#N/A
8.4875
0
0.00%
DEC ’23 Kansas City HRW
$ / BSH
8.5875
8.5625
8.58
0.0725
0.85%
SEP ’22 MLPS Spring Wheat
$ / BSH
8.94
8.7125
8.9175
0.185
2.12%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.0725
8.85
9.05
0.1825
2.06%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.2025
8.9925
9.17
0.175
1.95%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.1575
9.1575
9.1575
0.0725
0.80%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.2425
9.2425
9.2425
0.1125
1.23%
SEP ’23 MLPS Spring Wheat
$ / BSH
9
8.8475
9
0.1125
1.27%
DEC ’23 MLPS Spring Wheat
$ / BSH
9
9
9
0.03
0.33%
SEP ’21 ICE Dollar Index
$
106.405
105.855
106.005
-0.099
-0.09%
SE ’21 Light Crude
$ / BBL
95.23
93.03
95.05
0.63
0.67%
OC ’21 Light Crude
$ / BBL
94.08
91.94
93.96
0.74
0.79%
SEP ’22 ULS Diesel
$ /U GAL
3.475
3.3414
3.4666
0.0862
2.55%
OCT ’22 ULS Diesel
$ /U GAL
3.4243
3.3
3.4196
0.0801
2.40%
SEP ’22 Gasoline
$ /U GAL
3.1102
3.0148
3.1065
0.0498
1.63%
OCT ’22 Gasoline
$ /U GAL
2.8252
2.7588
2.8224
0.0398
1.43%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
178.125
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
181.45
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
136.575
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
142.125
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
119.85
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
96.225
0
0.00%
AUG ’22 Class III Milk
$ / CWT
20.42
20.41
20.42
-0.01
-0.05%
SEP ’22 Class III Milk
$ / CWT
20.4
20.4
20.4
0
0.00%
OCT ’22 Class III Milk
$ / CWT
20.67
#N/A
20.78
0
0.00%
