Soy hits $16/bushel overnight on South American crop losses. (Comments are updated by 7:30 a.m. Central Time.)
Plus – Nutrien releases Q4 2021 earnings with mixed outlook for farmers
Corn mixed
Soybeans up 6-12 cents; Soymeal up $3.90/ton; Soyoil up $0.12/lb
Chicago wheat up 4-5 cents; Kansas City wheat up 5-6 cents; Minneapolis wheat down 2-4 cents
*Prices as of 7:00am CST.
Inputs
Nutrien released its quarterly earnings report yesterday, with the fourth quarter of 2021 results sending shares in the U.S. rising over 5% higher in afterhours trading. High potash prices amid ongoing economic sanctions to shipments from Belarus were cited as a key reason for the company’s robust profit outlook.
But that is not necessarily good news for farmers (of course, unless you own stock in Nutrien). The Canadian-headquartered company expects that supply chain issues will continue into 2022 and will likely keep prices elevated for farmers in the coming months.
On the other side of the coin, Nutrien also expects corn and soybean prices to keep farmer profits elevated above 10-year average levels, reducing the likelihood that farmers will purchase fewer of the company’s fertilizer and input products.
Elsewhere in the fertilizer world, Brazilian president Jair Bolsonaro spent yesterday meeting with Russian fertilizer producers in Moscow to discuss a potential doubling of Brazilian purchases of Russian fertilizer supplies. “The supply will be doubled,” Bolsonaro told reporters in the conference’s aftermath.
Brazilian farmers have struggled to access timely fertilizer and chemical supplies this growing season as supply chain headaches continue to plague the agricultural industry. Brazil imports 95% of its potash from Canada, Russia, and Belarus.
As the U.S. continues to battle Russia on ongoing fertilizer tariff disputes, Bolsonaro’s move is a clear sign that Brazil is ready to take advantage of readily available and low-cost fertilizer supplies to lower cost of production costs for its grain crop to become a lower-cost competitor on the global grain market against U.S. producers.
Corn
Corn prices were mixed this morning, with old crop futures rising $0.01-$0.03/bushel on export optimism and ongoing fears of South American crop shortfalls. New crop futures prices fell $0.01/bushel lower on lower prices in the energy complex.
Soybeans
Soybean prices drifted $0.06-$0.14/bushel higher overnight as the markets weighed further forecast risks in South America that will likely continue to exacerbate current crop losses in the region. Old crop futures broke through technical resistance overnight, hitting the $16/bushel benchmark in early morning trade. Meanwhile, new crop futures flirted with the $15/bushel level.
A fire was reported yesterday at the largest soybean processing facility in the U.S. The facility, owned and operated by the Louis Dreyfus Company (LDC), at Claypool, Indiana suspended affected operations on Tuesday evening after smoke was found in a bagging room.
Bagging rooms are at high risk for accumulating fine-partial dust, which is highly flammable and very difficult to stop from spreading if ignited. No employees were injured, and the fire was extinguished just over an hour after employees had reported smelling the smoke.
Fire damages are currently unknown, though operations are expected to resume in areas of the plant not impacted by the fire. “It probably looked and sounded worse than what it actually was,” Rick Hurley, chief of the Claypool Volunteer Fire Department, told Reuters.
Regardless, the production disruption added to bullish soy complex pricing. The plant can crush up to 175,000 bushels of soybeans a day and even though at the time of the fire it was not operating at full capacity (92%), the delayed production schedule will likely result in high soymeal prices and limited supplies for local livestock producers as well as delayed biodiesel shipments for refiners.
Much of the market chatter surrounding the ongoing drought in South America has focused on crop losses in Brazil and Argentina. But the La Nina-induced drought has also taken a significant toll on neighboring Paraguay as well.
Paraguay is not as large of a soybean producer as the even Argentina, but it does add shipments to the global export market. This year, Paraguay was originally forecast to harvest 367 million bushels of soybeans. But over the last two months, production estimates have dropped a staggering 136 million bushels (37%) as drought has ravaged its crop.
In a recent Reuters report, the Paraguayan Chamber of Oilseed and Cereal Processors (Cappro) estimates that total soybean losses of this year’s crop could fall 60% lower from last year’s harvest of 367 million bushels. This will likely cause shortages in the country as the chamber estimates that 60%-70% of crush plants will have to idle after this June when soybean supplies are expected to run dry.
“This figure could worsen, depending on rainfall in the coming months,” the chamber told Reuters. “Given this situation, it is expected that firms will hardly be able to continue processing soybeans during the second half of the year.”
Soaring soybean prices and rapid buying paces from China mean that few local alternatives will likely be available for crush facilities in Paraguay to affordably purchase and keep operating. But Paraguay may be forced to import soybeans for the first time in its history and scale back the import and tax laws that render soybean imports economically unviable.
Overnight, Argentina said it would send soybean shipments to Paraguay over the next year to ensure crush plants can continue operations. Typically, Argentina imports soybeans from its neighbor instead of this year’s reversal to source its crush plants operations.
Wheat
A stronger dollar weakened Minneapolis wheat prices overnight, though Chicago and Kansas City futures charged higher on continued uncertainty over a potential Russian invasion into Ukraine and strong international demand for wheat, even out of the Black Sea. According to an overnight Reuters report, “Russian-backed rebels and Ukrainian forces traded accusations on Thursday of firing shells across the ceasefire line in eastern Ukraine.”
Even amidst tightening global wheat stocks and soaring prices, top import Egypt will continue to source its wheat supplies from a diverse array of buyers this year. Even amid the backdrop of tensions between Russia and the West over Ukraine, Egypt’s wheat harvest is about to come online and offer some protection against the boiling tensions in two of its top suppliers.
U.N. data observed points to a 32% drop in Egyptian wheat imports in 2021 as global commodity prices skyrocket. Egypt’s stalwart food subsidy program, which supplies bread to almost two-thirds of its population, is currently undergoing foundational changes which would limit usage and food waste from the program in the future.
Weather
Cooler temperatures will settle over the Plains and Midwest today after yesterday’s precipitation system traversed the region, according to NOAA’s short-range forecasts. Pockets of snow are likely today on the Northern edge of the system, spanning from Eastern Kansas to Michigan.
Meanwhile, the system’s Southern edge, reaching from Arkansas and Louisiana will reach from Southern Illinois and Missouri to New England today, dropping up to an inch of rain over the Eastern Corn Belt as it moves East.
Financials
Stocks drifted lower as doubts continued to mount over Russia’s willingness to cooperate with the West regarding a potential invasion into Ukraine. S&P 500 futures drifted 12 points (0.27%) lower to $4,458 on the sentiment.
Also worth a read on our website, FarmFutures.com:
Darren Frye explains how elevators make money in the latest Finance First column.
U.S. Trade Representative Katherine Tai shared trade updates on Mexico and Phase 1 during yesterday’s U.S. Grains Council annual meeting.
Iowa State economist Bobby Martens has some fresh insights about how to strengthen resiliency in the supply chain.
Advance Trading’s Brian Basting breaks down a single day in the soybean futures market to show how price prediction is a less effective marketing tool than using risk strategies.
Wholesale urea prices continue to slide. But high fuel costs could offset any potential price savings, warns Bryce Knorr.
Drone swarms, spot spraying technology – weed control is in a new era, writes Ben Potter.
Morning Ag Commodity Prices – 2/17/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
6.49
6.435
6.4775
0.0075
0.12%
MAY ’22 CORN
$ / BSH
6.48
6.42
6.4675
0.01
0.15%
JUL ’22 CORN
$ / BSH
6.425
6.3675
6.415
0.0075
0.12%
SEP ’22 CORN
$ / BSH
6.055
6.02
6.0475
-0.005
-0.08%
DEC ’22 CORN
$ / BSH
5.9375
5.9025
5.9275
-0.01
-0.17%
MAR ’23 CORN
$ / BSH
6.0025
5.9825
5.995
-0.01
-0.17%
MAY ’23 CORN
$ / BSH
6.04
6.0175
6.0325
-0.0075
-0.12%
MAR ’22 SOYBEANS
$ / BSH
16.015
15.765
15.9925
0.1175
0.74%
MAY ’22 SOYBEANS
$ / BSH
16.05
15.7975
16.025
0.1125
0.71%
JUL ’22 SOYBEANS
$ / BSH
16.005
15.765
15.99
0.1
0.63%
AUG ’22 SOYBEANS
$ / BSH
15.6525
15.4325
15.6475
0.1
0.64%
SEP ’22 SOYBEANS
$ / BSH
14.9925
14.8675
14.9925
0.0825
0.55%
NOV ’22 SOYBEANS
$ / BSH
14.6375
14.475
14.6275
0.0725
0.50%
JAN ’23 SOYBEANS
$ / BSH
14.6175
14.4675
14.5975
0.06
0.41%
MAR ’23 SOYBEANS
$ / BSH
14.3275
14.235
14.3275
0.0625
0.44%
MAY ’23 SOYBEANS
$ / BSH
14.2175
14.1625
14.21
0.055
0.39%
MAR ’22 SOYBEAN OIL
$ / LB
67.28
66.5
66.98
0.01
0.01%
MAY ’22 SOYBEAN OIL
$ / LB
67.37
66.58
67.06
0.02
0.03%
MAR ’22 SOY MEAL
$ / TON
455.5
446.8
453.7
4.3
0.96%
MAY ’22 SOY MEAL
$ / TON
453.3
444.7
451.5
4.2
0.94%
JUL ’22 SOY MEAL
$ / TON
452
443.8
450.3
3.9
0.87%
AUG ’22 SOY MEAL
$ / TON
443.4
436.7
441.9
3.8
0.87%
SEP ’22 SOY MEAL
$ / TON
431.1
427.5
430.8
3
0.70%
MAR ’22 Chicago SRW
$ / BSH
7.93
7.755
7.83
0.025
0.32%
MAY ’22 Chicago SRW
$ / BSH
7.9875
7.815
7.885
0.0225
0.29%
JUL ’22 Chicago SRW
$ / BSH
7.945
7.785
7.8475
0.0225
0.29%
SEP ’22 Chicago SRW
$ / BSH
7.95
7.8
7.855
0.015
0.19%
DEC ’22 Chicago SRW
$ / BSH
7.99
7.8425
7.8925
0.0125
0.16%
MAR ’22 Kansas City HRW
$ / BSH
8.195
8.035
8.105
0.025
0.31%
MAY ’22 Kansas City HRW
$ / BSH
8.235
8.08
8.1525
0.0325
0.40%
JUL ’22 Kansas City HRW
$ / BSH
8.25
8.1
8.16
0.025
0.31%
SEP ’22 Kansas City HRW
$ / BSH
8.2875
8.1375
8.2025
0.0225
0.28%
DEC ’22 Kansas City HRW
$ / BSH
8.3625
8.235
8.2775
0.02
0.24%
MAR ’22 MLPS Spring Wheat
$ / BSH
9.585
9.4825
9.4875
-0.0325
-0.34%
MAY ’22 MLPS Spring Wheat
$ / BSH
9.5775
9.465
9.465
-0.0375
-0.39%
JUL ’22 MLPS Spring Wheat
$ / BSH
9.51
9.405
9.4175
-0.0175
-0.19%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.2075
9.12
9.12
-0.0225
-0.25%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.09
9.07
9.07
-0.0175
-0.19%
MAR ’21 ICE Dollar Index
$
96.115
95.725
95.75
0.053
0.06%
MA ’21 Light Crude
$ / BBL
93.32
90.62
92.03
-1.63
-1.74%
AP ’21 Light Crude
$ / BBL
91.46
88.83
90.26
-1.57
-1.71%
MAR ’22 ULS Diesel
$ /U GAL
2.8465
2.7917
2.8033
-0.0542
-1.90%
APR ’22 ULS Diesel
$ /U GAL
2.781
2.7258
2.7463
-0.0438
-1.57%
MAR ’22 Gasoline
$ /U GAL
2.671
2.5995
2.6256
-0.0515
-1.92%
APR ’22 Gasoline
$ /U GAL
2.8197
2.7563
2.7804
-0.0479
-1.69%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
167.45
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
172.175
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
143.125
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
146.925
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
105.4
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
109.15
0
0.00%
FEB ’22 Class III Milk
$ / CWT
20.84
20.83
20.84
0.09
0.43%
MAR ’22 Class III Milk
$ / CWT
22.07
21.94
21.94
-0.37
-1.66%
APR ’22 Class III Milk
$ / CWT
22.64
22.52
22.52
-0.19
-0.84%
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