Soy soars to 8-month highs on USDA cuts. (Comments are updated by 7:30 a.m. Central Time.)
Plus – a recap of yesterday’s WASDE findings
Corn up 5-8 cents
Soybeans up 28-33 cents; Soymeal up $11.40/ton; Soyoil up $0.79/lb
Chicago wheat up 13-14 cents; Kansas City wheat up 12-13 cents; Minneapolis wheat up 15-17 cents
*Prices as of 7:05am CST.
Good morning! Still trying to digest yesterday’s USDA reports? You’ve come to the right place! The February WASDE typically does not rile up the markets too significantly. And all things considered, yesterday’s data was not really an exception to that trend.
This morning’s price movement suggests that markets may have already moved past the reports and are doubling down on South American crop losses, which suggests that deeper cuts may be headed down the pike in upcoming WASDE reports.
I’ll sprinkle insights from the report in today’s commentary. Have a great day!
Corn
Corn prices rose $0.04-$0.05/bushel this morning as drought concerns in Brazil and Argentina continue to fuel bullish price pressure in the grain and oilseed markets.
“The market is still cutting its South American crop estimates,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters. “And Argentina’s weather suggests that revision process likely has not finished.”
Old crop corn futures saw more price appreciation than those of new crop corn futures prices after yesterday’s WASDE report, even as both nearby and new crop soybean prices rose. The corn market remains largely content to shrug off rewarding farmers for planting more corn acres in 2022 and instead has turned its focus completely to incentivizing soybean acres.
USDA left Chinese corn imports unchanged, even though recent USDA attach? reports suggest China will be importing fewer corn bushels in the coming months. That dynamic largely limited gains for new crop corn futures prices, even as old crop futures rose on lower Brazilian corn crop estimates.
USDA also left domestic corn usage rates unchanged yesterday, which came as a bit of a surprise on the heels of a robust ethanol sector recovery. But again, the lowered Brazilian second crop and export forecasts kept healthy export optimism alive in the old crop corn markets this morning.
Soybeans
Soybean prices rallied $0.28-$0.33/bushel higher overnight as traders reassessed USDA’s reductions to Brazilian and Argentine soybean crops. The market expects that further cuts could be in order for both crops in South America as unfavorable weather conditions continue to plague growers in that region. Rising domestic usage rates also added fuel to the bullish pressure at play in the soybean markets this morning.
Based on the pre-report trade estimates for the South American crops, I was worried that smaller cuts in USDA’s forecasts would trigger a selloff. USDA tends to lean on the conservative side of South American production estimates relative to trade figures, oftentimes awaiting export volume data before finalizing production values.
Thankfully for growers, even though USDA’s reductions on the South American crops came in lower than the analyst guesses, corn and soybean futures trading largely remained positive in the report’s aftermath. To be sure, the daily highs in the soybean market during the pre-report trading session were halved following WASDE’s release, reflecting realigned trading sentiments.
About 239 million bushels of soybean production were erased from 2021/22 Brazil and Argentina production forecasts, which tightened the global soybean export market by 169 million bushels. USDA also increased U.S. usage rates – specifically for crush volumes – and tightening domestic stocks to the 21st tightest volume on record, up three places from last month’s estimates.
Some of the profit taking in the soybean market also came from lower Chinese soybean import forecasts during 2021/22, which may be interpreted as a sign of demand rationing as soybean futures prices soar to new heights amid tight supplies, strong global demand, and high prices.
That could potentially limit some of the late-season export optimism growers have been pocketing in recent weeks as Brazil and Argentine crop forecasts continue to be downgraded.
Buyers in the soybean market continue to compete for scarce global supplies even though prices are higher and stock volumes are not as tight as the same time last year. To my mind, the recent rally is the market trying to buy more soybean acres for 2022 production more convincingly than it was able to last year.
Wheat
France lowered its 2022 acreage estimates for its soft wheat crops overnight, turning late night losses into gains for the wheat market. Some optimism from yesterday’s WASDE reports was also sticking around in the early morning trading session.
Wheat surprised me in yesterday’s report WASDE report. Based on a recent USDA attach? report, I was expecting USDA to increase 2021/22 Argentine production forecasts and reduce some of the supply stress in the wheat market, but that didn’t happen.
Instead, import volumes for top buyers in North Africa and the Middle East increased. This dynamic largely overpowered weakened usage rates expected in the U.S. over the next five months and kept wheat prices trading in the green in the report’s aftermath.
It was a surprise to the rest of the market as well, as pre-report trade guesses were not anticipating much new news from the wheat sector. But the rest of the world’s craving for wheat is not likely to diminish anytime soon, as evidenced by shrinking global stock volumes in today’s data release.
Digging deeper into the numbers told a more interesting story. High wheat prices will likely continue to contribute to food inflation, which led USDA to cut 2021/22 global wheat consumption for food values.
But those cows still need to eat. After lowering global livestock feed usage rates for wheat last month, USDA raised livestock feed rates for wheat nearly 42 million bushels from last month’s estimates to a record-setting 5.9 billion bushels in the February 2022 WASDE.
As tensions between Russia and the West regarding Russia’s potential invasion into Ukraine take a breather, this was exactly the fundamental news the wheat market needed to maintain positive price momentum.
Weather
It will be another warm day across the Midwest and Plains, according to NOAA’s short-range forecasts. Temperatures will climb into the 40s in the Upper Midwest today while the Plains are likely to see the mercury rise into the 50s and 60s.
Snow is likely on the way for the Upper Midwest today as a storm system over the Canadian Prairie moves south into the Northern Plains and Great Lakes basin late this evening.
Also worth a read on our website, FarmFutures.com
2021 ag exports shattered all previous records, soaring to $177 billion.
In a recent E-corn-omics column, I examine how fertilizer costs and outside economic pressures will largely drive 2022 acreage decisions.
As soybeans hit nosebleed altitudes, Bryce Knorr asks – is it time to take some risk out of the market?
Tim Schafer explains how feedback improves farm operations.
In Ed Usset’s latest Advanced Marketing Class, we are introduced to Justin Price, who is focused on breakeven costs and booking “scale up” sales ahead of harvest.
Morning Ag Commodity Prices – 2/10/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
6.5375
6.445
6.535
0.0675
1.04%
MAY ’22 CORN
$ / BSH
6.525
6.4325
6.525
0.065
1.01%
JUL ’22 CORN
$ / BSH
6.4675
6.375
6.4675
0.0625
0.98%
SEP ’22 CORN
$ / BSH
6.0725
5.9875
6.07
0.055
0.91%
DEC ’22 CORN
$ / BSH
5.94
5.865
5.94
0.055
0.93%
MAR ’23 CORN
$ / BSH
6.005
5.9325
6.005
0.05
0.84%
MAY ’23 CORN
$ / BSH
6.03
5.9625
6.03
0.045
0.75%
MAR ’22 SOYBEANS
$ / BSH
16.2825
15.9
16.27
0.3225
2.02%
MAY ’22 SOYBEANS
$ / BSH
16.295
15.9075
16.285
0.33
2.07%
JUL ’22 SOYBEANS
$ / BSH
16.255
15.85
16.245
0.3425
2.15%
AUG ’22 SOYBEANS
$ / BSH
15.9075
15.53
15.9025
0.3425
2.20%
SEP ’22 SOYBEANS
$ / BSH
15.145
14.7575
15.145
0.33
2.23%
NOV ’22 SOYBEANS
$ / BSH
14.695
14.3275
14.695
0.32
2.23%
JAN ’23 SOYBEANS
$ / BSH
14.66
14.2925
14.66
0.3175
2.21%
MAR ’23 SOYBEANS
$ / BSH
14.4
14.045
14.4
0.325
2.31%
MAY ’23 SOYBEANS
$ / BSH
14.2825
13.9325
14.2825
0.3175
2.27%
MAR ’22 SOYBEAN OIL
$ / LB
64.98
63.85
64.82
0.72
1.12%
MAY ’22 SOYBEAN OIL
$ / LB
65.04
63.91
64.86
0.71
1.11%
MAR ’22 SOY MEAL
$ / TON
474.5
461.4
474
12.1
2.62%
MAY ’22 SOY MEAL
$ / TON
472.8
459.8
472.4
11.7
2.54%
JUL ’22 SOY MEAL
$ / TON
471.4
458.7
471.1
11.5
2.50%
AUG ’22 SOY MEAL
$ / TON
461.1
449
460.9
11.7
2.60%
SEP ’22 SOY MEAL
$ / TON
444.8
432.7
444.8
11.9
2.75%
MAR ’22 Chicago SRW
$ / BSH
7.9875
7.815
7.975
0.125
1.59%
MAY ’22 Chicago SRW
$ / BSH
8.0475
7.8825
8.0425
0.1325
1.68%
JUL ’22 Chicago SRW
$ / BSH
7.9975
7.8325
7.9875
0.1275
1.62%
SEP ’22 Chicago SRW
$ / BSH
7.995
7.875
7.995
0.1225
1.56%
DEC ’22 Chicago SRW
$ / BSH
8.0275
7.8975
8.0225
0.1075
1.36%
MAR ’22 Kansas City HRW
$ / BSH
8.2925
8.1125
8.275
0.125
1.53%
MAY ’22 Kansas City HRW
$ / BSH
8.305
8.13
8.2925
0.125
1.53%
JUL ’22 Kansas City HRW
$ / BSH
8.31
8.155
8.3025
0.1175
1.44%
SEP ’22 Kansas City HRW
$ / BSH
8.34
8.1925
8.34
0.12
1.46%
DEC ’22 Kansas City HRW
$ / BSH
8.4175
8.2775
8.41
0.11
1.33%
MAR ’22 MLPS Spring Wheat
$ / BSH
9.7
9.4725
9.7
0.1625
1.70%
MAY ’22 MLPS Spring Wheat
$ / BSH
9.6625
9.435
9.6625
0.1625
1.71%
JUL ’22 MLPS Spring Wheat
$ / BSH
9.6
9.385
9.6
0.165
1.75%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.265
9.115
9.265
0.125
1.37%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.165
9.04
9.165
0.1
1.10%
MAR ’21 ICE Dollar Index
$
95.6
95.45
95.53
0.036
0.04%
MA ’21 Light Crude
$ / BBL
90.92
89.32
90.35
0.69
0.77%
AP ’21 Light Crude
$ / BBL
89.57
88.16
89.11
0.58
0.66%
MAR ’22 ULS Diesel
$ /U GAL
2.8526
2.82
2.8271
0.0022
0.08%
APR ’22 ULS Diesel
$ /U GAL
2.7488
2.7194
2.7346
0.0082
0.30%
MAR ’22 Gasoline
$ /U GAL
2.6793
2.6422
2.6708
0.0174
0.66%
APR ’22 Gasoline
$ /U GAL
2.8057
2.7698
2.7971
0.0193
0.69%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
168.275
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
172.575
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
142.9
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
147.825
0
0.00%
FEB ’22 Live Hogs
$ / CWT
0
#N/A
90.225
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
104.775
0
0.00%
FEB ’22 Class III Milk
$ / CWT
20.7
20.7
20.7
0.04
0.19%
MAR ’22 Class III Milk
$ / CWT
22.15
22
22.03
-0.01
-0.05%
APR ’22 Class III Milk
$ / CWT
22.51
22.3
22.39
-0.12
-0.53%
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