Morning report: Soybeans notch new 4-week high, wheat rises on global supply concerns. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 3-5 cents
Soybeans up 2-10 cents; Soymeal down $4.00/ton; Soyoil up $0.72/lb
Chicago wheat up 22-23 cents; Kansas City wheat up 17-18 cents; Minneapolis wheat up 14-20 cents
*Prices as of 6:55am CDT.
Good morning! 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 will officially begin tomorrow and last through the rest of the week. We hope it helps you to better understand the new dynamics shaping agriculture, energy, and fertilizer markets.
Feedback from the Field is ready for your responses! Corn and soybean plants are emerging almost as quickly as they were planted 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, spring wheat producers across North Dakota are already weighing the possibility of prevent plant acreage as rain delays continue to mount. Little progress has been made and it could drastically alter USDA’s 2022 spring wheat production forecasts calculated from last week’s USDA all wheat and winter wheat projections.
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 climbed $0.03-$0.06/bushel higher overnight as the trade waits with bullish anticipation about (likely slow) planting speeds expected in today’s Crop Progress report. Higher energy prices also helped support gains in the corn market this morning.
All eyes will be on corn planting paces in today’s Crop Progress report from USDA. Last week’s report saw 49% of the crop planted as of May 15. While planting windows vary by region, it is widely viewed that mid-May tends to be the optimal planting date to ensure trendline yields. Any crops planted after that point will likely see yield downgrades by the time harvest rolls around.
As Naomi Blohm points out in a recent Ag Marketing IQ column, planting delays in Minnesota and North Dakota mean that 13% of the anticipated 2022 corn crop is in danger of not being planted at all, let alone in a suboptimal yield window.
The Upper Midwest will see a few more days of clear skies before a chance of showers returns mid-week. Planting progress has been more rapid in other parts of the Corn Belt so far this year, so expect today’s Crop Progress report to show just that.
Monthly Cattle on Feed results released by USDA last Friday had a couple bearish surprises for cattle markets (which trended favorably for corn prices). While total Cattle on Feed inventories came in on the low end of analyst expectations, placement and marketing volumes were higher than expected.
As of May 1, 11.967 million head of cattle were being fed across the country. That volume dropped 1.1% from the previous month in a seasonally expected drop due to summer grilling season. The May 1 cattle inventory was 2% higher than year-ago volumes, which is likely just an aftershock of high cattle inventories earlier this year and less indicative of the herd contraction phase cattle markets have been in over the past couple months (and will likely stay in until at least the end of next year).
To that end, April 2022 placements came in above analyst expectations at 1.809 million head. Analysts had been expecting the upper limit for the volume to come in at 1.699 million head leading up to the report.
But it was a deceptive reaction. Placement volumes fell 9.1% from the previous month as drought conditions in the Plains limit available pasture access. A struggling winter wheat crop and dry spring sowing season will likely further potential feedstocks for cattle feeders over the coming year.
So it came as little surprise when USDA’s monthly sales for slaughter volume exceeded analyst guesses (1.86M – 1.88M head) for April 2022, coming in at 1.893M head for the month. April 2022 marketings dipped lower 5.4% lower than the previous month, which is not an unusual seasonal trend. March 2022 also saw heavy cow numbers included in the sales for slaughter figure, representing constrained feed options for growers.
This news continues to be bearish for corn markets, as cattle feedings typically represent the largest share of end user demand for U.S. corn production (37.2% in 2021/22). But this year, it has made little difference for corn markets, as tight global supplies and surging ethanol and export demand continue to keep corn prices profitable for U.S. growers.
Soybeans
Soybean prices only rose $0.03-$0.10/bushel this morning, but it was enough to set a new four-week high for the July 2022 contract. The July 2022 contract wavered between losses and gains this morning, resting at last glance just above the $17/bushel benchmark at $17.035/bushel.
Soyoil prices continued higher. Indonesia is expected to end its ban on palm oil exports today, which had significant price implications for the competing soyoil complex. Markets are readjusting to Indonesia’s return to the market favorably, as global edible oil supplies remain tight. Indonesia will replace the ban with domestic sales quotas and export permits, which will likely keep trade flows out of the world’s top palm oil producer slower than what the market would prefer.
Soybean planting will likely continue to lag behind corn in today’s Crop Progress report from USDA, with emergence rates nipping at the planter’s heels. Through the week ending May 15, 30% of anticipated 2022 soybean acres had been planted.
That figure was only 9% lower than the five-year average. Spotty showers through last week will likely keep planting progress from accelerating too quickly in today’s report, but I don’t think that the soybean planting delays this year will be as significant as those of corn, especially with so many more acres being double cropped with winter wheat this year.
Wheat
Wheat prices rose $0.15-$0.20/bushel overnight on a multitude of factors. A lower dollar during peak export season boded favorably for U.S. wheat export prospects. Last week’s wheat tour through Kansas pointed to the smallest winter wheat yields for the nation’s top wheat-producing state since 2018.
France, the European Union’s top soft wheat producer, saw soft wheat condition ratings fall for a second straight week. Russia presented resistance to a U.N.-brokered deal to alleviate some supply pressure on the global wheat and food markets, accusing the West overnight of being responsible for the global food crisis after it imposed severe sanctions on Russia following Russia’s unprovoked invasion of Ukraine.
“Wheat supplies for exports are only shrinking because of the Ukraine war, exports ban and deteriorating weather conditions,” a Mumbai-based trader with a global trading house told Reuters this morning.
Spring wheat sowings in the Northern Plains will likely continue to hold back nationwide planting progress in today’s Crop Progress report. Last week’s report saw spring wheat planting at 39% complete, significantly behind the five-year average benchmark of 67% for the same time period due to cool and wet weather hindering progress in North Dakota and Minnesota.
Feedback from the Field growers in North Dakota continued to see cool, wet weather last week that prevented further progress, so today’s Crop Progress reading will likely have bullish results for Minneapolis wheat futures contracts.
Showers are expected today in the Southern Plains. Any rainfall is likely too little, too late for winter wheat crops as most of the hard red winter wheat crop in the Plains has already reached the heading phase, as Kansas Farmer editor Jennifer Latzke pointed out in her coverage of last week’s Kansas Wheat Quality Council’s annual Wheat Tour.
Yields in drought-afflicted regions of Kansas, Nebraska, Oklahoma, and Texas are expected to fall well below trendline estimates this year. USDA-NASS expects that winter wheat abandonment this year will be the highest since 2002 due to the drought conditions. Last week’s Crop Progress report found only 27% of U.S. winter wheat acres to be in good or excellent condition.
So I’m skeptical that any further condition rating changes in today’s Crop Progress report will have a significant price impact one way or the other. Markets are already bracing for a U.S. winter wheat crop shortfall, so now the bigger market focus will likely turn to measuring just how big that crop shortfall will be this year.
Weather
Temperatures will be significantly cooler in the Heartland this week compared to the last couple weeks, according to NOAA’s short-range forecasts. Mostly clear skies are forecast in the Mississippi River Valley and Eastern Corn Belt today, though a belt of rain showers and thunderstorms are expected to stretch across the entire Plains region today.
Most of the shower activity will be concentrated in the Southern Plains, where up to two and a half inches of accumulation are possible from Eastern Kansas to the Texas-Mexico border. Showers in the Northern and Central Plains are only expected to accumulate a half inch of precipitation.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending wetter for much of the Heartland.
Financials
S&P 500 futures traded up 0.95% this morning to $3,936.50 as bargain buyers swooped in following last week’s market selloff. Equity markets continue to face bearish pressure and volatile trading environments as inflationary pressures sow seeds of doubt into economic expansion over the next year.
Stock prices were also driven higher this morning by a comment from President Biden about potentially eliminated tariffs on trade transactions with China that were previously imposed during President Trump’s tenure.
“Today’s appetite for risk has been sparked by the US President’s announcement that trade tariffs imposed on China by the previous Trump administration will be discussed,” Pierre Veyret, a technical analyst at ActivTrades, told Bloomberg this morning. “Investors see this as a possible de-escalation of the trade war between the two economic superpowers, and this has revived trading optimism towards riskier assets.”
What else I’m reading this morning on our website, FarmFutures.com:
Roger Wright explains what happens when a put option has no potential value.
Mike Downey breaks down what 2022 ag market outlooks will mean for potential land buyers and/or cash renters. Spoiler alert – a robust profit outlook will likely require more flexibility in negotiating land rents this year.
Global corn and wheat acres are expected to contract this year due to high input costs and the conflict in the Black Sea. Soybean acreage is expected to rise, but total acreage for the three crops will shrink for the first time since 2019. Is the global acreage expansion over?
Naomi Blohm breaks down the impact of slow planting paces in the Upper Midwest on future production and usage rates. Blohm calculates that planting progress for 13% of the 2022 corn crop is “exceptionally” delayed and that Pacific Northwest exports may be at highest risk.
Julio Bravo shares the latest fertilizer insights in the South American Crop Watch, where Middle Eastern companies are investing in fertilizer expansion to meet Brazil’s crop nutrient needs amid the Black Sea conflict.
Morning Ag Commodity Prices – 5/23/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.8525
7.8
7.8225
0.035
0.45%
SEP ’22 CORN
$ / BSH
7.5425
7.475
7.51
0.04
0.54%
DEC ’22 CORN
$ / BSH
7.4
7.32
7.3675
0.0475
0.65%
MAR ’23 CORN
$ / BSH
7.4275
7.355
7.3975
0.0425
0.58%
MAY ’23 CORN
$ / BSH
7.42
7.35
7.405
0.055
0.75%
JUL ’23 CORN
$ / BSH
7.3625
7.3
7.335
0.04
0.55%
SEP ’23 CORN
$ / BSH
6.765
6.725
6.75
0.0475
0.71%
JUL ’22 SOYBEANS
$ / BSH
17.2
17.06
17.0725
0.02
0.12%
AUG ’22 SOYBEANS
$ / BSH
16.54
16.41
16.44
0.0225
0.14%
SEP ’22 SOYBEANS
$ / BSH
15.7875
15.6825
15.71
0.04
0.26%
NOV ’22 SOYBEANS
$ / BSH
15.3475
15.21
15.275
0.0575
0.38%
JAN ’23 SOYBEANS
$ / BSH
15.37
15.24
15.3
0.0575
0.38%
MAR ’23 SOYBEANS
$ / BSH
15.29
15.155
15.23
0.0875
0.58%
MAY ’23 SOYBEANS
$ / BSH
15.27
15.145
15.2125
0.085
0.56%
JUL ’23 SOYBEANS
$ / BSH
15.2525
15.13
15.2175
0.11
0.73%
AUG ’23 SOYBEANS
$ / BSH
0
#N/A
14.905
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
82.05
80.76
81.71
0.78
0.96%
AUG ’22 SOYBEAN OIL
$ / LB
79.07
77.99
78.85
0.86
1.10%
JUL ’22 SOY MEAL
$ / TON
433.2
426.2
426.3
-3.6
-0.84%
AUG ’22 SOY MEAL
$ / TON
427
421.9
422.1
-2.1
-0.50%
SEP ’22 SOY MEAL
$ / TON
420
415
415
-2.5
-0.60%
OCT ’22 SOY MEAL
$ / TON
411.5
407.1
407.1
-2.8
-0.68%
DEC ’22 SOY MEAL
$ / TON
413
407.6
407.6
-2.7
-0.66%
JUL ’22 Chicago SRW
$ / BSH
11.9675
11.7475
11.905
0.2175
1.86%
SEP ’22 Chicago SRW
$ / BSH
12.025
11.8075
11.955
0.21
1.79%
DEC ’22 Chicago SRW
$ / BSH
12.075
11.855
12.01
0.2175
1.84%
MAR ’23 Chicago SRW
$ / BSH
12.0625
11.8625
12.0275
0.2275
1.93%
MAY ’23 Chicago SRW
$ / BSH
11.8825
11.78
11.8825
0.2225
1.91%
JUL ’22 Kansas City HRW
$ / BSH
12.7925
12.61
12.6975
0.17
1.36%
SEP ’22 Kansas City HRW
$ / BSH
12.8225
12.65
12.7275
0.16
1.27%
DEC ’22 Kansas City HRW
$ / BSH
12.8625
12.7175
12.775
0.165
1.31%
MAR ’23 Kansas City HRW
$ / BSH
12.825
12.7075
12.815
0.215
1.71%
MAY ’23 Kansas City HRW
$ / BSH
12.57
12.5175
12.57
0.2375
1.93%
JUL ’22 MLPS Spring Wheat
$ / BSH
13.05
12.89
12.9625
0.1725
1.35%
SEP ’22 MLPS Spring Wheat
$ / BSH
13.05
12.8775
12.95
0.1625
1.27%
DEC ’22 MLPS Spring Wheat
$ / BSH
12.9675
12.8625
12.95
0.2025
1.59%
MAR ’23 MLPS Spring Wheat
$ / BSH
12.93
12.885
12.93
0.19
1.49%
MAY ’23 MLPS Spring Wheat
$ / BSH
12.8625
#N/A
12.68
0
0.00%
JUN ’21 ICE Dollar Index
$
103.07
102.09
102.235
-0.938
-0.91%
JU ’21 Light Crude
$ / BBL
111.96
109.51
111.15
0.87
0.79%
AU ’21 Light Crude
$ / BBL
108.76
106.47
108.07
0.9
0.84%
JUN ’22 ULS Diesel
$ /U GAL
3.7902
3.7342
3.7515
0.0124
0.33%
JUL ’22 ULS Diesel
$ /U GAL
3.6734
3.61
3.6321
0.0103
0.28%
JUN ’22 Gasoline
$ /U GAL
3.8638
3.8052
3.8376
0.0006
0.02%
JUL ’22 Gasoline
$ /U GAL
3.7252
3.6655
3.7042
0.0145
0.39%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
153.4
0
0.00%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
163.925
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
131.575
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
131.55
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
108.875
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
109
0
0.00%
MAY ’22 Class III Milk
$ / CWT
25.11
25.11
25.11
0.02
0.08%
JUN ’22 Class III Milk
$ / CWT
24.45
24.32
24.34
-0.14
-0.57%
JUL ’22 Class III Milk
$ / CWT
24.75
24.65
24.75
0.1
0.41%
Get our top content delivered right to your inbox. Subscribe to our morning and afternoon newsletters!
