Morning report: Plus – a recap of Friday’s USDA reports. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 3-6 cents
Soybeans mixed; Soymeal down $1.50/ton; Soyoil down $0.15/lb
Chicago wheat up 8-10 cents; Kansas City wheat up 9-13 cents; Minneapolis wheat up 9-11 cents
*Prices as of 6:50am CDT.
Feedback from the Field updates! How is harvest progress going on your farm this fall?! Click this link to take the survey and share updates about your farm’s harvest progress. I review and upload results daily to the FFTF Google MyMap, so farmers can see others’ responses from across the country – or even across the county!
I published an updated Feedback from the Field column to our site on Tuesday. Check it out for the best farmer insights from across the country. More harvesting progress has been made over the past week, but it is still slow going as many farmers continue to wait for crops to mature.
Good morning! I am working on a couple of columns about Friday’s USDA reports that will be published to our website throughout the week. In the meantime, I’m sprinkling some of those insights throughout this morning’s reports. Enjoy and have a great week!
Corn
Corn prices continued Friday’s bullish run over the weekend, rising $0.01-$0.06/bushel at last glance on last week’s lower stocks estimate and lingering concerns about trade flow viability in the Black Sea amid Russian grumblings about the West. A rally in the energy market also helped support corn’s gain this morning.
Corn enjoyed some bullish price action in response to Friday’s Quarterly Grain Stocks report. September 1 corn stocks were reported at 1.377 billion bushels, 135 million bushels lower than the average pre-report trade estimate and 43 million bushels lower than the lowest trade estimate.
Larger fourth quarter usage rates were a key contributor of the tightened corn stocks. My redneck math finds that 2.969 billion bushels were consumed between June 1 and September 1, 2022, which was actually a 3% increase from year ago paces. The trade had been expecting to see a 1.5% annual decrease in Q4 corn usage prior to NASS’s data release.
I contribute some of this strength to robust ethanol production, especially in those last few days before summer demand tapered and consumers grew increasingly sensitive to higher fuel prices. I’m expecting August 2022 corn consumption for ethanol will likely trend higher when NASS releases its monthly data set on Monday, as June and July consumption was only a fraction (0.01%) higher than year ago volumes.
Corn’s stocks-to-use ratio (STU), which measures year-end supply tightness for a commodity, shrunk from USDA’s latest estimate of 10.27% for the 2021/22 to 9.21%. That is the ninth tightest corn supply on record.
And if USDA holds 2022/23 corn usage steady in the October 2022 WASDE report, U.S. corn supplies are likely to shrink even further over the next year. My redneck math puts 2022/23’s STU ratio for corn at 7.5%, which equates to the third tightest supply in U.S. history and suggests bullish price opportunities ahead.
Soybeans
Soybean prices fought to stave off further bearish price movement after Friday’s USDA reports found larger than expected supplies, trading between gains and losses in a $0.07/bushel range around $0. However, another selloff was likely avoided by higher energy prices and rallying edible oil prices.
Soybeans took a double economic hit on Friday’s reports, with upward supply and downward demand revisions implied in the Quarterly Grain Stocks report. The situation was not dissimilar to receiving two concussions in a five-day span, so in that regard soybean growers and Tua Tagovailoa have a lot in common this fall.
NASS increased the size of the record-setting 2021 soybean crop to the tune of 30 million bushels. NASS accomplished this feat by increasing harvested acreage for 2021 soybeans and boosting yields to 51.7 bushels per acre, which remains the second highest soybean yield in U.S. history.
But on the usage side of the balance sheet, Q4 soybean usage came in lower than expected, as it failed to compete with record-breaking usage volumes in the prior quarter, according to Quarterly Grain Stocks data. As of September 1, 274 million bushels of soybeans were reported on hand – 32 million bushels higher than (and nowhere close to) what the trade was expecting leading up to the report’s release.
That translates into a Q4 usage rate of 698 million bushels. And while that figure was over a third (36%) higher than year-ago soybean stocks, it brought to light a new set of issues for the U.S. soybean market.
First, 2021/22 usage rates shrunk by 3.6 million bushels in Friday’s report. Old crop soybean consumption was already slated to be lower than its 2020/21 counterpart. But this downward usage adjustment reflected buyer resistance to high-priced U.S. soybeans which unveiled the second issue at play in the soybean market.
The 2021/22 ending stocks-to-use ratio of 5.4% prior to Friday’s report indicated U.S. soybean stocks were at the twelfth tightest on record – a metric that kept bullish price pressure alive for soybean markets. But my redneck math estimates that the new 2021/22 stocks to use ratio for soybeans will likely be closer to 6.1% in the October 2022 WASDE report, reflecting more ample supplies.
That would be the 15th tightest U.S. soybean crop. But it would also give 2022/23 soybean stocks more breathing room. USDA currently has a 4.5% stocks-to-use ratio forecasted for 2022/23 soybean supplies – the fifth tightest on record.
But adding an additional 35(ish) million bushels to 2022/23 beginning stocks and leaving usage unchanged would grow that STU ratio to 5.3% – the 10th tightest soybean supply on record. To be clear, soybean supplies are still tight in the U.S. But this report adds a bit more wiggle room to supplies, which translates to bearish price action.
Wheat
Wheat was the star of last Friday’s USDA reports after a surprise disappearance led to an even smaller than expected U.S. wheat crop in 2022. Plus, the lingering concerns about Russia and Ukraine’s wheat availability to global buyers continues to prop up global wheat prices even as the dollar continues to strengthen amid increasing global macroeconomic uncertainty.
“Bullish data from the USDA and continued escalation of Black Sea war issues helped support (prices),” research firm Hightower Report said in a note, as reported by Reuters.
Mark Twain propagated the phrase which best describes the reaction to USDA’s wheat figures on Friday: “There are three kinds are lies: lies, damned lies, and statistics.”
One of the most shocking findings in USDA’s September 30 reports was NASS’s sweeping cuts to 2022 U.S. wheat production. The markets were prepared for slightly lower figures across the board ahead of the report, but even the lowest pre-report trade estimates missed all of NASS’s cuts except white wheat production.
The biggest misses came from additional cuts to hard red winter wheat production, which faced yield headwinds due to persistent drought this year, but also to soft red winter wheat production estimates.
NASS issued significant cuts to both winter wheat yields and harvested acreage in Friday’s report, which saw winter wheat production contract by nearly 8% from previous estimates (and 14% from last year) to 1.104 billion bushels.
What changed? NASS was able to factor in prevent plant acreage data from the Farm Service Agency (FSA) as well as other failed acreage reports to the Risk Management Agency (RMA) to arrive at a more representative estimate of 2021/22 winter wheat acreage.
Acreage was on everyone’s mind in NASS’s traditional #StatChat on Twitter, featured an hour after reports are released and hosted by Lance Honig, NASS’s crop branch chief. Honig explained that FSA data was the primary driver of lower winter wheat production estimates in Friday’s reports.
Similar to the September 2022 Crop Production report for corn and soybeans, NASS also used field survey data to reconcile objective yields with farmer surveys for Friday’s report. In essence, NASS finally had the data available to more accurately quantify both acreage and yield for wheat production relative to previous forecasts.
Spring wheat production volumes were met by additional confusion on Twitter, especially after condition ratings through entire the growing season trended favorably. But a cold and slow start to the season took over half a million acres out of production and yields didn’t bounce back from the cold – or a dry 2021 growing season – as much as the trade was expecting.
All told, 2022 U.S. wheat production shrunk by 133 million bushels from USDA’s previous estimates released in August. That will likely lead to USDA’s World Ag Outlook Board (WAOB) cutting 2022/23 wheat usage in the October 2022 World Agricultural Supply and Demand Estimates (WASDE) report.
Nearby December 2022 Chicago soft red winter wheat futures closed 3% higher on Friday to $9.2325/bushel on the tightened supply sentiments. Nearby Kansas City hard red winter wheat contracts gained 2.6% in Friday’s trading session and spring wheat futures on the Minneapolis exchange rose 1.8% as a bullish era dominates current wheat trading.
Weather
Warm weather is on the way for much of the Heartland today, with highs reaching the 80s and 90s in the Plains and topping out in the 70s elsewhere in the Midwest, according to NOAA’s short-term forecasts.
Growers in the Northern and Central Plains will battle more showers early this week, with some of that precipitation expected to creep into the Upper Midwest by Wednesday. The showers are likely to be light, though Nebraska could see up to a half inch of accumulation over the next 24 hours.
The favorable weather conditions will likely continue into the middle of October. NOAA’s 6-10-day outlook is showing cooler temperature probabilities for continental region to the east of the Mississippi River, though chances for perception continue to hover below average for much of the country during that time. The 8-14-day outlook is still trending slightly warmer and continues to show below average chances for precipitation for the entire Heartland through the end of next week.
That’s good news for corn, soybean, and spring wheat growers eager to make significant strides on harvest progress over the next two weeks. But for growers in the Plains who are eager to receive moisture for newly planted winter wheat crops, the next couple weeks could be a little more anxiety-producing if no rains move into the Plains.
Financials
After a very volatile end to the 2022 third quarter last week in the financial markets, the fourth quarter is off to a cautious start. S&P 500 futures rose 0.4% to $3,616.00 at last glance on a round of bargain buying following Friday’s losses.
Energy prices were sent soaring yesterday after OPEC+ announced it would likely cut 1 million barrels of production over the next year as growing fears about a global recession hint at slower energy consumption. It is widely considered as OPEC+’s largest cut since the pandemic and sent West Texas Intermediate crude futures 4.3% higher to $79.49/barrel.
Nerd alert
It’s Nobel Prize week, which is one of my favorite times of the year! Today’s award for medicine was awarded to Swedish geneticist Svante P??bo for mapping genomes of the predecessor species to humans and applying the knowledge to the present-day human species. Celebrating humans who are helping other humans is always a great way to start the day!
What else I’m reading this morning on our website, FarmFutures.com:
Bryce Knorr evaluates whether harvest prices will make cash sales a better choice than storage for 2022 corn and soybeans.
Our team’s coverage of Friday’s USDA reports!
Naomi Blohm reminds market watchers that China still needs soybeans.
My latest E-corn-omics column examines the fast start to Brazil’s soybean planting season and explains why the Brazilian crop is so important this year.
AgMarket.Net’s Brian Splitt explains why corn demand could face bearish headwinds in the near future.
Commstock’s Matthew Kruse weighs the pros and cons of rain in Brazil as soybean planting season ramps up.
Morning Ag Commodity Prices – 10/3/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.875
6.8
6.8425
0.0675
1.00%
MAR ’23 CORN
$ / BSH
6.9375
6.86
6.91
0.07
1.02%
MAY ’23 CORN
$ / BSH
6.94
6.8625
6.9175
0.0725
1.06%
JUL ’23 CORN
$ / BSH
6.88
6.7925
6.8575
0.075
1.11%
SEP ’23 CORN
$ / BSH
6.3625
6.295
6.3475
0.055
0.87%
DEC ’23 CORN
$ / BSH
6.225
6.1675
6.21
0.0425
0.69%
AR2 ’24 CORN
$ / BSH
6.29
6.2625
6.2625
0.03
0.48%
AY2 ’24 CORN
$ / BSH
6.2825
6.2775
6.2775
0.025
0.40%
JUL ’24 CORN
$ / BSH
6.225
6.225
6.225
0.005
0.08%
NOV ’22 SOYBEANS
$ / BSH
13.7575
13.6225
13.6575
0.01
0.07%
JAN ’23 SOYBEANS
$ / BSH
13.865
13.73
13.77
0.015
0.11%
MAR ’23 SOYBEANS
$ / BSH
13.95
13.8
13.85
0.0175
0.13%
MAY ’23 SOYBEANS
$ / BSH
14.02
13.88
13.915
0.01
0.07%
JUL ’23 SOYBEANS
$ / BSH
14.0425
13.9075
13.955
0.025
0.18%
AUG ’23 SOYBEANS
$ / BSH
13.88
13.7925
13.81
0.0175
0.13%
SEP ’23 SOYBEANS
$ / BSH
13.5625
13.525
13.535
0.025
0.19%
NOV ’23 SOYBEANS
$ / BSH
13.4925
13.38
13.4075
-0.0025
-0.02%
AN2 ’24 SOYBEANS
$ / BSH
13.4575
13.43
13.43
-0.005
-0.04%
AR2 ’24 SOYBEANS
$ / BSH
13.4275
#N/A
13.3775
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.355
0
0.00%
OCT ’22 SOYBEAN OIL
$ / LB
65.5
65.5
65.5
0.15
0.23%
DEC ’22 SOYBEAN OIL
$ / LB
62.31
61.39
62.19
0.63
1.02%
OCT ’22 SOY MEAL
$ / TON
405
403.2
404
0.8
0.20%
DEC ’22 SOY MEAL
$ / TON
405.1
400.8
401.1
-1.9
-0.47%
JAN ’23 SOY MEAL
$ / TON
403.6
399.2
399.5
-1.8
-0.45%
MAR ’23 SOY MEAL
$ / TON
399.4
395.1
395.9
-1.3
-0.33%
MAY ’23 SOY MEAL
$ / TON
396.8
393
393.2
-1.8
-0.46%
DEC ’22 Chicago SRW
$ / BSH
9.3875
9.26
9.3225
0.1075
1.17%
MAR ’23 Chicago SRW
$ / BSH
9.485
9.3675
9.425
0.105
1.13%
MAY ’23 Chicago SRW
$ / BSH
9.5275
9.42
9.47
0.1025
1.09%
JUL ’23 Chicago SRW
$ / BSH
9.275
9.1475
9.19
0.0675
0.74%
SEP ’23 Chicago SRW
$ / BSH
9.19
9.08
9.09
0.04
0.44%
DEC ’23 Chicago SRW
$ / BSH
9.175
9.065
9.1025
0.0525
0.58%
AR2 ’24 Chicago SRW
$ / BSH
9.08
9.025
9.0775
0.0925
1.03%
DEC ’22 Kansas City HRW
$ / BSH
10.075
9.95
10.0425
0.1275
1.29%
MAR ’23 Kansas City HRW
$ / BSH
10.005
9.8875
9.96
0.1075
1.09%
MAY ’23 Kansas City HRW
$ / BSH
9.93
9.835
9.8775
0.0825
0.84%
JUL ’23 Kansas City HRW
$ / BSH
9.655
9.5525
9.56
0.025
0.26%
SEP ’23 Kansas City HRW
$ / BSH
9.5
9.5
9.5
0.0925
0.98%
DEC ’23 Kansas City HRW
$ / BSH
9.4775
#N/A
9.3975
0
0.00%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.3275
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.95
9.82
9.935
0.115
1.17%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.9525
9.875
9.9325
0.0825
0.84%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.97
9.9125
9.97
0.1075
1.09%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.8525
9.8525
9.8525
0.065
0.66%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.42
9.42
9.42
-0.005
-0.05%
DEC ’23 MLPS Spring Wheat
$ / BSH
0
#N/A
9.365
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
8.5825
0
0.00%
DEC ’21 ICE Dollar Index
$
112.53
111.715
112.335
0.251
0.22%
NO ’21 Light Crude
$ / BBL
83.32
80.87
82.98
3.49
4.39%
DE ’21 Light Crude
$ / BBL
82.44
80.19
82.17
3.45
4.38%
NOV ’22 ULS Diesel
$ /U GAL
3.3554
3.2649
3.3408
0.1192
3.70%
DEC ’22 ULS Diesel
$ /U GAL
3.2569
3.1728
3.2381
0.1111
3.55%
NOV ’22 Gasoline
$ /U GAL
2.4859
2.3887
2.4734
0.1036
4.37%
DEC ’22 Gasoline
$ /U GAL
2.3829
2.3072
2.3732
0.0943
4.14%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
174.175
0
0.00%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
174.625
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
143.275
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
147.05
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
89.225
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
76.225
0
0.00%
SEP ’22 Class III Milk
$ / CWT
19.84
19.84
19.84
-0.01
-0.05%
OCT ’22 Class III Milk
$ / CWT
21.8
21.6
21.61
-0.14
-0.64%
NOV ’22 Class III Milk
$ / CWT
20.63
20.55
20.63
0
0.00%
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