Afternoon report: USDA’s latest WASDE report once again moves the needle on prices
Earlier on Wednesday, USDA released it’s November World Agricultural Supply and Demand Estimates report, which led to mixed but mostly lower grain prices today. (Click here for more highlights and analysis of the newest report.) Wheat prices saw the most downside, incurring double-digit losses. Some contracts spilled more than 2.5% lower than the close. Losses for corn were much more moderate, meantime, at around 0.5%. Soybeans stayed in the green, in contrast, with nearby contracts climbing another 1% higher today.
Rain – and snow (!) in some areas – is coming to large portions of the central U.S. between Thursday and Saturday, per the latest 72-hour cumulative precipitation map from NOAA. Also of note, Hurricane Nicole is expected to make landfall in Florida later tonight – making it the first November hurricane to strike the U.S. in almost 40 years. Further out, NOAA’s new 8-to-14-day outlook predicts mostly drier-than-normal conditions for the Corn Belt between November 16 and November 22, with much cooler than usual conditions for the entire central U.S. during that time.
On Wall St., the Dow eroded 489 points lower to 32,670 as traders ponder whether Republicans or Democrats will gain control of Congress following Tuesday’s midterm elections. Rising U.S. crude oil inventories and worries over Chinese lockdowns pushed energy futures lower today. Crude oil was down more than 3% this afternoon to $86 per barrel. Gasoline also spilled around 3% lower, with diesel dropping 2.25%. The U.S. Dollar firmed moderately.
On Tuesday, commodity funds were net buyers of soymeal (+2,000) contracts but were net sellers of corn (-5,500) soybeans (-2,000), soyoil (-4,500) and CBOT wheat (-6,000).
Corn
Corn prices faced cuts of around 0.5% after some generally unfavorable USDA supply and demand data, which led to some technical selling. December and March futures each dropped 3.5 cents to close at $6.64 and $6.7025, respectively.
Corn basis bids were mostly steady to firm after trending 9 to 10 cents higher at three Midwestern locations on Wednesday. An Iowa processor bucked the overall trend after spilling 10 cents lower today.
Today’s WASDE report from USDA shows the agency expects to see the seventh-largest corn crop on record this year, with a new estimate of 13.93 billion bushels. Yield estimates firmed 2% compared to October, with a new projection of 172.3 bushels per acre. “The 2022 U.S. corn and soybean crops are slightly bigger than the previous month’s estimates, but we can’t ignore that even the slight yield increases are well below trendline estimates and will keep some supply tightness in the markets that appear to have a stabilizing impact on prices – for now,” according to Farm Futures grain market analyst Jacqueline Holland.
Ethanol production was on the rise for the sixth-consecutive week, per the latest data from the U.S. Energy Information Administration. Production reached a daily average of 1.051 million barrels in the week through November 4. That’s the highest weekly total since late June. Ethanol stocks were largely steady this past week.
Prior to Thursday morning’s export report from USDA, analysts expect the agency to show corn sales ranging between 11.8 million and 27.6 million bushels for the week ending November 3.
Brazil’s Conab is predicting a 2022/23 corn production of 4.976 billion bushels for the 2022/23 season. Corn exports are expected to reach 1.772 billion bushels in the current marketing year.
Taiwan purchased 2.6 million bushels of corn, likely sourced from Brazil, in an international tender that closed earlier today. The grain is for shipment in January.
Preliminary volume estimates were for 420,002 contracts, firming slightly above Tuesday’s final count of 415,325.
Soybeans
Soybean prices were boosted by two new flash sales announced this morning as traders weighed robust export demand against slightly larger production estimates from USDA. November futures rose 15.5 cents to $14.5950, with January futures up 5.5 cents to $14.52.
Soybean basis bids were steady to firm across the central U.S. after rising 10 to 23 cents higher at five Midwestern locations on Wednesday.
Private exporters announced two more large soybean sales to USDA today. The first was for 9.7 million bushels to China, and the second was for 7.3 million bushels to unknown destinations. Both sales are for delivery during the 2022/23 marketing year, which began September 1.
USDA’s latest supply and demand data for soybeans showed the agency expects to see the fourth-largest crop on record, with a production of 4.346 billion bushels. That assumes average yields of 50.2 bushels per acre (the fifth-largest on record).
Ahead of tomorrow morning’s export report from USDA, analysts think the agency will show soybean sales ranging between 22.0 million and 45.9 million bushels for the week ending November 3. Analysts also expect to see soymeal sales ranging between 100,000 and 335,000 metric tons last week, plus up to 30,000 MT of soyoil sales.
Brazil’s Conab expects the country’s 2022/23 soybean footprint grow another 4.2% to an unprecedented 106.848 million acres. That could lead to an expected record-breaking production of 5.642 billion bushels. Conab forecasts Brazilian soybean exports at 3.544 billion bushels in the current marketing year.
Preliminary volume estimates were for 169,251 contracts, trending moderately higher than Tuesday’s final count of 144,152.
Wheat
Wheat prices faced moderate cuts after USDA upped its global supply estimates in today’s WASDE reports, which triggered another round of technical selling. A strengthening U.S. Dollar continues to apply additional headwinds. December Chicago SRW futures lost 22.25 cents to $8.0550, December Kansas City HRW futures fell 16.75 cents to $9.29, and December MGEX spring wheat futures dropped 13 cents to $9.3750.
USDA slightly lowered 2022/23 U.S. wheat ending stocks from 576 million bushels in October down to 571 million bushels in today’s report. World ending stocks shifted slightly higher, in contrast – moving from 9.829 billion bushels last month to 9.840 billion bushels in November.
Ahead of Thursday morning’s export report from USDA, analysts expect to see wheat sales ranging between 9.2 million and 23.9 million bushels for the week ending November 3.
A deal facilitating the safe export of grain in the Black Sea is set to expire just 10 days from now unless it is renegotiated before then. High level talks are expected to commence on Friday. Russia briefly pulled out of the deal last week and is threatening not to extend it due to some Western sanctions on Russian feed and fertilizer exports.
Algeria’s latest milling wheat purchases, stemming from an international tender that closed on Tuesday, is believed to total around 18.7 million bushels. A substantial portion of that total is expected to be sourced from Russia. The grain is for shipment in November and/or December, depending on origins.
The Philippines issued a tender to purchase 2.2 million bushels of animal feed wheat that closes on Thursday. The grain is for shipment in a range of potential periods stretching from late November to early March.
Japan plans to hold a simultaneous buy-and-sell auction on November 16 in hopes to purchase 2.6 million bushels of feed wheat and 1.8 million bushels of feed barley. The grain is for arrival in late February.
Preliminary volume estimates were for 144,148 CBOT contracts, which was moderately above Tuesday’s final count of 122,865.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-Dec
671.75
658
664.5
-3.5
23-Mar
677.25
664
670.5
-3.5
Soybeans
22-Nov
1460.75
1435.5
1459.75
15.5
23-Jan
1457.75
1433.5
1452
5.5
Soymeal $/ton
23-Jan
416.6
409.3
412.3
-1.2
Soyoil cents/lb
23-Jan
73.7
72
73.18
0.59
Wheat $/bushel
22-Dec
834
805.25
806.5
-22.25
23-Mar
853.75
826.75
827.75
-20.5
KC Wheat
22-Dec
951.25
928.75
930
-16.75
23-Mar
947
925.25
926.75
-15.5
MPLS Wheat
22-Dec
955.25
936.75
938.25
-13
23-Mar
968.75
949.5
950.75
-13.5
Live Cattle cents/lb
22-Oct
152.9
151.525
151.6
-1.45
Feeder Cattle cents/lb
23-Jan
180.55
179.125
179.75
-0.15
Lean Hogs cents/lb
23-Feb
89.45
87.9
89.275
0.775
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Dec
89.24
85.54
85.81
-3.1
Diesel
22-Dec
3.7886
3.646
3.6525
-0.1182
Unleaded Gasoline $/gallon
22-Dec
2.6421
2.5402
2.5447
-0.092
Natural Gas
23-Jan
6.745
6.131
6.269
-0.255
U.S. Dollar Index
22-Dec
110.545
109.355
110.505
0.963
Gold $/ounce
22-Dec
1725.8
1705.1
1707.3
-4.8
Copper
22-Nov
3.719
3.6765
3.7185
0.013
Fertilizer Swaps
(as of 11/04)
DAP Tampa-index
700.0
0
DAP-New Orleans
764.5
-26.46
Urea-New Orleans
583.1
-28.66
Urea-Middle East
587.5
-60
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
599.7
-14.88
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