Morning report: Catch the highlights from yesterday’s WASDE report. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 1-8 cents
Soybeans up 4-22 cents; Soymeal up $6.60/ton; Soyoil up $1.23/lb
Chicago wheat down 5-20; Kansas City wheat up 7-12 cents; Minneapolis wheat up 27-30 cents
*Prices as of 6:55am CST.
Editor’s note: Farm Futures is conducting its March 2022 survey to project 2022 acreage estimates ahead of USDA’s March 31 Prospective Plantings report. We will release the survey results ahead of USDA’s numbers so farmers can adjust grain marketing plans accordingly.
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Corn
Corn futures prices ticked up $0.04-$0.13/bushel overnight on gains in the wheat market, as well as crop damage prospects from Brazilian and Argentine corn crops due to lingering drought conditions. USDA raised U.S. corn exporting forecasts yesterday amid Black Sea market closures and the anticipated shortfall in the South American crop forecast.
The Rosario Grains Exchange (RGE) in Argentina released updated production forecasts for corn and soybeans overnight following yesterday’s WASDE report from USDA. Even amid beneficial and timely rains over the past couple weeks, the RGE still trimmed nearly 12 million bushels from 2021/22 corn production estimates, leaving it at 1.88 billion bushels for the season following a blistering drought.
USDA took 39 million bushels off of its 2021/22 Argentine corn crop estimate yesterday, leaving it at 2.09 billion bushels for the season.
A 135-million bushel increase in 2021/22 U.S. corn export paces could not stop losses in the corn futures market following yesterday’s WASDE report release from USDA. It signals that the short-term trade flow will be somewhat adequate enough to compensate for depleted South American corn crops and inaccessible Black Sea supplies.
USDA left 2021/22 Brazilian corn production estimates unchanged at 4.49 billion bushels while only slashing a mere 39 million bushels of production from the Argentine crop, now forecast at 2.09 billion bushels for the season.
But with planting for Brazil’s safrinha (second crop) corn underway amid a La Nina weather pattern this year, there is still more potential for future cuts to South American exportable corn supplies. Recent rains have helped coax along crop development, but time will be the deciding factor if Brazil and Argentina can be reliable global suppliers of corn in the coming months.
Meanwhile, the U.S. will likely be the chief beneficiary of realigned trade flows with the largest current stockpile on the market until harvest begins in Argentina later this month. The combination of high fuel prices and Black Sea market closures mean that $7/bushel old crop corn prices are likely here to stay.
Soybeans
Soybean futures rose $0.0.3-$0.19/bushel in the early morning trading session following yesterday’s USDA cuts to Brazilian, Argentine, and Paraguayan production forecasts for the current marketing year. Export prospects for U.S. soybeans helped lift the soy complex this morning.
The Rosario Grains Exchange in Argentina updated its 2021/22 soybean production forecast early this morning. Despite recent rains, the RGE still believes that drought damage from La Nina weather patterns will overpower the recent turn in crop conditions, especially this close to harvest.
The RGE took 18 million bushels off its previous estimates, dropping 2021/22 soybean output to 1.47 billion bushels. USDA’s take is more optimistic – even though it slashed 55 million bushels from its forecast in yesterday’s report, it still estimates this year’s Argentine soybean crop at 1.60 billion bushels.
Soybean futures continued yesterday morning’s modest rally following USDA’s release of the March 2022 WASDE report, rising between $0.01-$0.10/bushel after USDA cut 257 million bushels from Brazil’s 2021/22 crop, leaving it at 4.67 billion bushels – Brazil’s smallest crop since 2018/19. It was a much steeper cut than the market had originally been expecting as pre-report trade estimates averaged 4.74 billion bushels.
USDA cut a combined 356 million bushels of 2021/22 soybean production from Brazil, Argentina, and Paraguay in today’s report from February 2022 estimates. That represents a 5% decrease from February 2022 South American production volumes.
Just to quantify the scale of the South American crop losses, since early December 2021, nearly 1.04 billion bushels of combined Brazilian, Argentine, and Paraguayan soybean production for the 2021/22 has been erased – a 13.6% loss in three months.
High prices are likely to keep the U.S. domestic soybean processing industry from further expanding capacity in the coming months. But the tight global supply dynamic means that many global buyers – namely China – are likely to turn to the U.S. for what supplies are left from the 2021 crop.
But Chinese buyers are also growing unwelcome to this era of high commodity prices. USDA expects Chinese soybean imports are going to drop another 110 million bushels from last month’s identical reduction to 3.45 million bushels. Since releasing its 2021/22 forecasts last May, USDA has reduced China’s soybean import volume for the marketing year by a staggering 330.7 million bushels.
Wheat
Wheat markets have calmed down over the past couple days, helped in part by yesterday’s WASDE report from USDA that more clearly outlined realigned trade flow patterns for the next few months as the Black Sea wheat market remains closed off to global buyers. Australia, India, and the European Union are likely to step in and fulfil export orders previously booked in the Black Sea over the next few months.
Hopes for a peaceful end to the conflict in Ukraine are quickly fading as Russia continues to escalate its violence towards Ukrainian civilians. Chicago wheat futures slid down the limit earlier in the overnight trading session amid talks between Russia and Ukraine to end the conflict. But the talks stalled and Russia’s attacks on Ukraine have continued into the night, sending Chicago futures easing back from earlier losses.
Futures prices were mixed for Chicago contracts after sliding earlier in the morning, while Kansas City futures traded $0.19-$0.22/bushel higher on dry conditions in the U.S. Plains. Minneapolis futures rose $0.29-$0.30/bushel, keeping pace with the gains in the other two wheat markets.
Egypt was the latest country to issue an export ban on wheat overnight as global supplies remain tight amid Black Sea closures. Spoiler alert – it likely won’t impact prices too much beyond the initial headline shock. Egypt is actually the world’s largest importer of wheat, so it makes little sense that its export ban would rattle markets significantly.
As China’s winter wheat crop remains in concerningly poor condition, the government announced overnight it will spend $253 million to help farmers improve management strategies to ensure adequate food supplies. Sowings for about a third of China’s winter wheat crop were delayed last fall amid excessive rain showers.
The funds will be concentrated in China’s five main wheat-growing regions, but especially the provinces of Hebei and Shandong where the planting delays were most significant. Earlier this week, China’s agriculture minister told reporters that China’s winter wheat crop is currently in the worst condition in history.
Australia is slated to be one of the first sources Black Sea wheat buyers turn to in the coming weeks, shipping up to nearly 930 million bushels this year. But ongoing supply chain issues could keep exporting paces slower than global buyers would desire.
Trucking, rail, port, and labor constraints will slow down the time it takes to fulfill the recent surge in new export sales orders. Shipping slots are already at maximum capacity for the news few months on both coasts following a second consecutive bumper wheat crop currently being harvested.
“We simply can’t get as much out of the country in time to benefit from the global prices at the moment,” Rabobank agricultural analyst Dennis Voznesenski told Reuters, noting that Asian buyers are scrambling to book slots for June and July – months in which they would typically source Black Sea wheat.
“Everyone’s pretty much scrambling now,” said Graeme Cooney, founder of Mobile Conveying Services, which operates mobile ship loaders for the grains and coal industries. “So, yes, there is a bottleneck now.”
“We all know that unemployment is at record lows, so trying to find additional people to do additional work in Australia, even if we had more ports, is pretty much impossible,” Jim Riordan, a managing director at Riordan Grains trucking company said.
India and Australia are poised to partially offset 257 million bushels of exports from Russia and Ukraine, according to the latest World Agricultural Supply and Demand Estimates (WASDE) report from USDA issued yesterday morning. The revision kept wheat prices down the daily limit ($0.85/bushel for Kansas City and Chicago contracts, $0.60/bushel for Minneapolis contracts) as the Black Sea conflict continues to be the prevailing force for global wheat markets.
Top global wheat buyers North Africa and the Middle East are expected to be the most sensitive to high wheat prices, with USDA slashing nearly 2% of the regions’ collective wheat imports for the year. Markets saw real-time evidence of this dynamic after Tunisia did not accept any offers on a tender yesterday, citing too high prices.
USDA did not add any additional wheat exporting volumes to this year’s top wheat shipper, the European Union. An aggressive early export season means that the E.U. will be less likely than India and Australia to step in and fulfil global wheat purchase contracts.
More importantly, it somewhat eased market concerns about wheat availability – at least for the short term. Even if global buyers do not turn to the U.S. for additional wheat supplies as indicated in today’s report, the global wheat pipeline is expected to remain liquid enough to meet supply needs until harvest begins in the Northern Hemisphere.
However, high prices are likely going to price out human consumer of food before livestock. For a second straight month, USDA cut global food consumption estimates for wheat but this time by a staggering 82.7 million bushels to 23.0 billion bushels for 2021/22. Much of that cut went to increased livestock feedings as global alternative livestock feed costs remain high.
Weather
Cooler temperatures will persist across the Heartland again today, according to NOAA’s short-range forecasts. Snow and a wintry precipitation mix will dust the Central Plains and far Eastern Corn Belt today. The system over the Plains will slowly move East into the Central Mississippi River Valley and south into the Southern Plains over the next 24-36 hours.
Also worth a read on our website, FarmFutures.com
Our team’s coverage of the March 2022 WASDE report from USDA.
Bryce Knorr points out that fertilizer decisions – especially for nitrogen – will factor heavily into 2022 acreage.
Three European fertilizer producers, Yara, Hungarian-based Nitrogenmuvex, and Borealis, are cutting fertilizer production due to surging natural gas prices and limited supplies. That will likely add to growing risks of rising global food inflation.
These four links can help you monitor drought across the country this spring.
The Farm Progress group held several live events virtually last week to examine the market impacts from the Russian invasion into Ukraine. You can access recordings of those events here.
Mike Wilson interviews a U.S. farmer who owns land in Ukraine. “We plan to plant this spring,” Roger Denhart reassures Wilson, despite the ongoing Russian invasion.
Morning Ag Commodity Prices – 3/10/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
7.475
7.385
7.475
0.125
1.70%
MAY ’22 CORN
$ / BSH
7.485
7.29
7.445
0.115
1.57%
JUL ’22 CORN
$ / BSH
7.235
7.0325
7.195
0.1125
1.59%
SEP ’22 CORN
$ / BSH
6.7325
6.55
6.7
0.08
1.21%
DEC ’22 CORN
$ / BSH
6.455
6.275
6.4275
0.06
0.94%
MAR ’23 CORN
$ / BSH
6.415
6.255
6.385
0.045
0.71%
MAY ’23 CORN
$ / BSH
6.375
6.235
6.375
0.06
0.95%
MAR ’22 SOYBEANS
$ / BSH
17.0275
16.8125
17.0275
0.1625
0.96%
MAY ’22 SOYBEANS
$ / BSH
16.975
16.615
16.9125
0.195
1.17%
JUL ’22 SOYBEANS
$ / BSH
16.685
16.3425
16.6175
0.185
1.13%
AUG ’22 SOYBEANS
$ / BSH
16.1525
15.885
16.1075
0.195
1.23%
SEP ’22 SOYBEANS
$ / BSH
15.335
15.0875
15.275
0.13
0.86%
NOV ’22 SOYBEANS
$ / BSH
14.89
14.625
14.8425
0.105
0.71%
JAN ’23 SOYBEANS
$ / BSH
14.7025
14.47
14.6675
0.0925
0.63%
MAR ’23 SOYBEANS
$ / BSH
14.2175
14.0525
14.19
0.055
0.39%
MAY ’23 SOYBEANS
$ / BSH
14.0525
13.9875
14
0.0325
0.23%
MAR ’22 SOYBEAN OIL
$ / LB
79.7
79.19
80.07
0
0.00%
MAY ’22 SOYBEAN OIL
$ / LB
75.46
73.69
75.27
1.12
1.51%
MAR ’22 SOY MEAL
$ / TON
507.3
506.8
507.3
12.3
2.48%
MAY ’22 SOY MEAL
$ / TON
481.6
473.3
481.3
6.6
1.39%
JUL ’22 SOY MEAL
$ / TON
468
460.5
467.4
5.1
1.10%
AUG ’22 SOY MEAL
$ / TON
453.7
446.9
453.7
3.9
0.87%
SEP ’22 SOY MEAL
$ / TON
441.8
434.7
441.8
3.1
0.71%
MAR ’22 Chicago SRW
$ / BSH
7.4625
#N/A
11.995
0
0.00%
MAY ’22 Chicago SRW
$ / BSH
12.2125
11.09
12.0325
0.0175
0.15%
JUL ’22 Chicago SRW
$ / BSH
11.28
10.4325
11.1825
0.08
0.72%
SEP ’22 Chicago SRW
$ / BSH
10.4775
9.8375
10.3925
0.1225
1.19%
DEC ’22 Chicago SRW
$ / BSH
9.94
9.33
9.8825
0.185
1.91%
MAR ’22 Kansas City HRW
$ / BSH
0
#N/A
11.0625
0
0.00%
MAY ’22 Kansas City HRW
$ / BSH
11.51
10.58
11.36
0.215
1.93%
JUL ’22 Kansas City HRW
$ / BSH
11.305
10.45
11.18
0.2475
2.26%
SEP ’22 Kansas City HRW
$ / BSH
11.05
10.245
10.9425
0.215
2.00%
DEC ’22 Kansas City HRW
$ / BSH
10.815
10.1075
10.8075
0.2775
2.64%
MAR ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
11.2975
0
0.00%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.1875
10.5
11.1425
0.3025
2.79%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.9175
10.2275
10.89
0.2975
2.81%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.5525
9.9875
10.51
0.1825
1.77%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.4875
9.9275
10.4875
0.2275
2.22%
MAR ’21 ICE Dollar Index
$
98.305
97.985
98.18
0.227
0.23%
AP ’21 Light Crude
$ / BBL
114.21
107.01
113.21
4.51
4.15%
MA ’21 Light Crude
$ / BBL
110.3
103.68
109.31
4.26
4.06%
APR ’22 ULS Diesel
$ /U GAL
3.8424
3.4721
3.6746
0.2103
6.07%
MAY ’22 ULS Diesel
$ /U GAL
3.6442
3.331
3.519
0.1846
5.54%
APR ’22 Gasoline
$ /U GAL
3.4196
3.2609
3.3811
0.0873
2.65%
MAY ’22 Gasoline
$ /U GAL
3.3799
3.224
3.3388
0.0851
2.62%
MAR ’22 Feeder Cattle
$ / CWT
0
153.55
154.05
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
159.55
160.15
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
137.425
137.575
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
133.675
133.95
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
100.775
101.15
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
106.425
107.4
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.5
22.41
22.5
-0.04
-0.18%
APR ’22 Class III Milk
$ / CWT
24.19
24.08
24.19
-0.07
-0.29%
MAY ’22 Class III Milk
$ / CWT
24.25
24.25
24.25
0
0.00%
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