Soy rallies on Brazilian crop concerns. (Comments are updated by 7:30 a.m. Central Time.)
Delayed harvest activity and reduced crop quality send old crop futures up 2% overnight
Corn up 1-5 cents
Soybeans up 12-35 cents; Soymeal up $10.90/ton; Soyoil up $0.93/lb
Chicago wheat up 2-3 cents; Kansas City wheat up 4-5 cents; Minneapolis wheat up 4-5 cents
*Prices as of 6:50am CST.
Corn
Old crop corn futures rose $0.04-$0.05/bushel overnight while new crop futures barely eked out a $0.01-$0.02/bushel gain in the overnight trading session. A weaker dollar helped improve old crop export prospects while a rally in the soybean market largely lifted all prices in the grain sector this morning.
Ever present concerns about a Russian military invasion into Ukraine also lingered above corn markets overnight. Russia continues to stockpile weapons at the border and manipulate the U.S. into justifying Russia’s reasons to invade Ukraine.
Ethanol is back baby, and in a big way!
Monthly corn consumption data for ethanol usage released by USDA yesterday saw December 2021 corn consumption volumes for the fuel additive rise 4% from the previous month to a staggering 485.8 million bushels.
The December 2021 volume trails only December 2017’s of 487.7 million bushels as the largest corn volume used for ethanol production on record. It is also a stark reversal of pandemic-induced weakened fuel demand as more drivers returned to the roads for the 2021 holiday season.
Ethanol production continues to soar to new heights in the COVID era. Corn usage volumes for ethanol output in December 2021 were a staggering 12.5% higher than a year ago as vaccines allowed the population to return to pre-pandemic activities.
But how long will this bullish trend last for ethanol? This is a more complicated dynamic. High fuel prices increase the economic incentive for more ethanol output, which is added to gasoline to cheapen the price.
But as nearby Chicago corn futures price dance comfortably above the $6/bushel benchmark, it is becoming increasingly more expensive to source affordable corn supplies to continue fueling the ethanol expansion. Cash offerings at ethanol plants across the Heartland slipped by around a dime yesterday as ethanol margins tightened.
To be sure, basis sheets at these ethanol plants are still offering lucrative profit options for U.S. corn growers. But if demand rationing kicks in, those premium prices could deflate pretty quickly.
Soybeans
Harvest delays for the Brazilian soybean crop due to untimely showers in the northern and central regions of the country are helping to prop up massive gains in the soybean markets this morning. Showers are forecast in the country’s central and southern regions later this week, which could result in further harvest delays.
Old crop soybean futures rose $0.25-$0.33/bushel on the prospect of yield shortfalls in Brazil and increased late-season export potential for U.S. soy exporters. New crop futures posted a $0.11-$0.18/bushel gain. Additional price support came from derivative soy markets.
Another round of frigid weather continues to increase protein feed requirements for livestock feeders in the Upper Midwest, supporting a nearly $11/ton rally in the soymeal market this morning.
Global edible oil supplies continue to tighten as Malaysian palm oil exports in January 2022 dropped 32.9%-36.7% from December 2021 volumes. Malaysia and Indonesia, which announced an export curb on palm oil supplies late last week, are the world’s number two and one, respectively, producers of palm oil.
Malaysia’s export woes come at the hands of coronavirus restrictions that have reduced labor availability at palm oil plantations. Labor shortages at Malaysian palm oil plantations are likely to keep production at depressed levels through the first half of 2022.
Soyoil futures in Chicago rallied 1.4%-1.5% higher this morning as supply pressure in the global edible oils market continues to tighten. Global soyoil supplies are at the tightest levels since 1976. Additionally, traders are increasingly concerned about sunflower oil stocks as on the world’s top producers, Ukraine, faces threats of military invasion by neighboring Russia.
USDA released its monthly crush volume estimates for December 2020 yesterday and the results pointed to bullish domestic demand for U.S. soybeans. Yesterday’s figure came in on the high end of pre-report trade estimates, which ranged between a very narrow 197.3 million to 198.4 million bushels, with an average trade guess of 197.7 million bushels.
The December 2021 soybean crush totaled 198.2 million bushels. It set a new record high, besting the previous high of 196.9 million bushels set just two months ago in October 2021. The December 2021 crush was 4% larger than the previous month as domestic demand continues to soar.
Rarely are annual highs for soy crush volumes set in the month of December. Highs are typically set in October or January for the soybean marketing year. And based on global soybean fundamentals, crush volumes could rise even higher in next month’s report.
Global soyoil supplies currently rest – somewhat uncomfortably – at the tightest level since 1976. Cold weather blasts over the past month across the Upper Midwest has increased protein feed requirements for livestock. With rising yield concerns in Brazil and Argentina, tight soybean supplies and robust demand, profitable soybean prices are likely here to stay.
Wheat
A weaker dollar and ongoing concerns about a potential Russian-Ukrainian military conflict lifted wheat futures $0.02-$0.06/bushel this morning. A tender issued by Tunisia this morning suggested that international demand continues to remain firm even as prices continue to charge back towards near decade highs set late last fall.
Water levels on Germany’s Rhine River are back on the rise after recent rainfall but is not likely back at the level needed to sustain cargo shipping activity. The lower water levels not only reduce cargo volumes on the river, but also limit loading capacities and increase freight costs.
Germany trails France as the European Union’s second largest wheat producer.
USDA released quarterly flour milling data yesterday for the months spanning October – December 2021, or what would be considered the second quarter of the 2021/22 wheat marketing year. Quarterly flour consumption for milling rose 2% from Q1 2021.
It was the largest quarterly milling volume since Q2 of 2017/18 when 235.1 million bushels were milled into flour. So is another bread-baking boom on the way?!
Kind of, but not in the way you may expect. The high price of wheat has deterred international and domestic livestock feeder buying interest in U.S. wheat. That 235.1 million bushels milled in Q2 2021/22 represents 61% of total U.S. wheat usage during that same period.
Yesterday’s data shows that in the era of high commodity prices, wheat consumption for food is going to be the key demand driver for U.S. wheat in the months to come.
Inputs
India will likely purchase 1 million metric tonnes (MMT) of potash from Belarus’s state-owned Belarus Potash Company (BPC). BPC is one of the companies which the U.S. Treasury and other western countries slapped with economic sanctions due to growing hostility over President Alexander Lukashenko’s inhumane treatment of government dissidents.
The trade is likely to be denominated in rupees instead of dollars or euros due to the sanctions. It’s not the first time India has used such a tactic to take advantage of foreign discord. It previously used rupees to buy crude oil from Iran and export back rice supplies after the U.S. had levied sanctions against Tehran.
Weather
Snow, rain, ice and cold temperatures are all in the forecast for the Heartland today, according to NOAA’s short-range forecasts. Snow will continue to fall across the Central and Southern Plains today, as the system wraps east into the Great Lakes region over the next day or so.
Ice will likely fall on the southern edge of the system, falling in the Southern Plains and into parts of Southern Illinois and Central Indiana. Rainfall will douse regions even further south as a mixed pressure system soaks the southeast with rain over the coming days.
The Heartland will not likely see a reprieve from the wintery precipitation mix until early Friday morning.
Financials
Tech earnings are due out today from Google’s parent company Alphabet and Meta (….Facebook), which could help to ease some of the bleeding the tech sector has endured in 2022.
Inflationary pressures in the Euro zone due to rising energy costs could prompt today’s meeting of OPEC+ members to expand production past the previous 400,000-barrel-per-day increase it had previously forecast. A suspected cyberattack on a European oil distribution hub sent energy futures lower this morning.
S&P 500 futures rose 39.5 points (0.87%) to $4,574.50 on hopes for the tech sector. Gains were limited by ever-present concerns about tightening monetary policies and interest rate hikes from the U.S. Federal Reserve.
Also worth a read on our website, FarmFutures.com
Will corn rally to $7/bushel? Naomi Blohm weighs the odds.
Bryce Knorr compares 2022 to the 2012 drought era to justify a bull market may or may not continue.
The Port of Oakland designated a 25-acre neighboring site to allow more ag commodities to be filled easier, according to USDA’s Secretary of Agriculture, Tom Vilsack.
A little fear can be a helpful management motivator, writes Davon Cook. But even just a little too much can be harmful to a farm.
Morning Ag Commodity Prices – 2/2/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
6.3925
6.3325
6.3775
0.03
0.47%
MAY ’22 CORN
$ / BSH
6.385
6.3275
6.3675
0.03
0.47%
JUL ’22 CORN
$ / BSH
6.3275
6.27
6.3125
0.0325
0.52%
SEP ’22 CORN
$ / BSH
5.94
5.8975
5.9225
0.015
0.25%
DEC ’22 CORN
$ / BSH
5.8
5.7625
5.785
0.0075
0.13%
MAR ’23 CORN
$ / BSH
5.87
5.835
5.855
0.005
0.09%
MAY ’23 CORN
$ / BSH
5.8825
5.8675
5.8825
0.005
0.09%
MAR ’22 SOYBEANS
$ / BSH
15.6025
15.26
15.53
0.245
1.60%
MAY ’22 SOYBEANS
$ / BSH
15.6425
15.3175
15.565
0.2225
1.45%
JUL ’22 SOYBEANS
$ / BSH
15.54
15.255
15.4825
0.2025
1.33%
AUG ’22 SOYBEANS
$ / BSH
15.135
14.905
15.0725
0.1725
1.16%
SEP ’22 SOYBEANS
$ / BSH
14.425
14.2
14.3575
0.1325
0.93%
NOV ’22 SOYBEANS
$ / BSH
13.9875
13.7625
13.9325
0.1125
0.81%
JAN ’23 SOYBEANS
$ / BSH
13.95
13.735
13.8875
0.0975
0.71%
MAR ’23 SOYBEANS
$ / BSH
13.7275
13.55
13.67
0.075
0.55%
MAY ’23 SOYBEANS
$ / BSH
13.655
13.5375
13.625
0.0875
0.65%
MAR ’22 SOYBEAN OIL
$ / LB
66.92
65.9
66.61
0.78
1.18%
MAY ’22 SOYBEAN OIL
$ / LB
66.78
65.82
66.45
0.7
1.06%
MAR ’22 SOY MEAL
$ / TON
443.8
434.3
443
7
1.61%
MAY ’22 SOY MEAL
$ / TON
440.9
431.3
440
6.5
1.50%
JUL ’22 SOY MEAL
$ / TON
437.2
427.6
436.1
6.1
1.42%
AUG ’22 SOY MEAL
$ / TON
426.4
417.2
425.3
5.2
1.24%
SEP ’22 SOY MEAL
$ / TON
410.1
402.4
409.3
3.8
0.94%
MAR ’22 Chicago SRW
$ / BSH
7.735
7.59
7.7025
0.0125
0.16%
MAY ’22 Chicago SRW
$ / BSH
7.785
7.6425
7.7475
0.0075
0.10%
JUL ’22 Chicago SRW
$ / BSH
7.7125
7.5825
7.6825
0.0075
0.10%
SEP ’22 Chicago SRW
$ / BSH
7.7
7.5875
7.6725
0
0.00%
DEC ’22 Chicago SRW
$ / BSH
7.7375
7.6225
7.705
-0.0075
-0.10%
MAR ’22 Kansas City HRW
$ / BSH
7.915
7.7825
7.885
0.0225
0.29%
MAY ’22 Kansas City HRW
$ / BSH
7.9425
7.815
7.91
0.0175
0.22%
JUL ’22 Kansas City HRW
$ / BSH
7.93
7.815
7.9175
0.0325
0.41%
SEP ’22 Kansas City HRW
$ / BSH
7.955
7.8525
7.95
0.0275
0.35%
DEC ’22 Kansas City HRW
$ / BSH
8.0325
7.965
8.0325
0.03
0.37%
MAR ’22 MLPS Spring Wheat
$ / BSH
9.2025
9.1
9.1925
0.0425
0.46%
MAY ’22 MLPS Spring Wheat
$ / BSH
9.1625
9.065
9.15
0.035
0.38%
JUL ’22 MLPS Spring Wheat
$ / BSH
9.055
8.9925
9.0525
0.005
0.06%
SEP ’22 MLPS Spring Wheat
$ / BSH
8.79
8.78
8.78
-0.025
-0.28%
DEC ’22 MLPS Spring Wheat
$ / BSH
8.76
#N/A
8.73
0
0.00%
MAR ’21 ICE Dollar Index
$
96.3
95.835
95.865
-0.51
-0.53%
MA ’21 Light Crude
$ / BBL
88.8
87.86
88.3
0.1
0.11%
AP ’21 Light Crude
$ / BBL
87.01
86.12
86.55
0.09
0.10%
MAR ’22 ULS Diesel
$ /U GAL
2.7618
2.7404
2.7547
0.0135
0.49%
APR ’22 ULS Diesel
$ /U GAL
2.6706
2.6498
2.6598
0.0064
0.24%
MAR ’22 Gasoline
$ /U GAL
2.5879
2.5646
2.5839
0.0087
0.34%
APR ’22 Gasoline
$ /U GAL
2.6879
2.6664
2.6824
0.0061
0.23%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
163.7
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
169.15
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
140.3
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
145.375
0
0.00%
FEB ’22 Live Hogs
$ / CWT
0
#N/A
88.15
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
97.675
0
0.00%
FEB ’22 Class III Milk
$ / CWT
20.15
#N/A
20.13
0
0.00%
MAR ’22 Class III Milk
$ / CWT
21.21
#N/A
21.35
0
0.00%
APR ’22 Class III Milk
$ / CWT
21.25
#N/A
21.49
0
0.00%
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