Morning report: Renewed demand interest and tightening global supply prospects trigger gains for wheat. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 6-9 cents
Soybeans up 1-3 cents; Soymeal up $1.90/ton; Soyoil down $1.00/lb
Chicago wheat up 20-32 cents; Kansas City wheat up 30-31 cents; Minneapolis wheat up 16-17 cents
*Prices as of 6:55am CDT.
Feedback from the Field is live! There were a lot of you left bored and frustrated with rain delays yesterday and you told me all about it! Hang in there, everyone. Clear skies are on the way.
Meanwhile, we are starting to see more responses about planting progress being made, especially from readers in the Plains. Want to see how your farm’s progress tacks up against other growers across the country?
Just click this link to take the survey and share updates about your farm’s spring 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!
Breaking overnight (inputs and Ukraine)
The European Union continues to develop new ways to try to punish Russia economically for its unprovoked military invasion in Ukraine. The latest method announced overnight: a proposed sanction on Belarus’s state potash producer, Belaruskali OA, and Belaruskali’s exporting division, Belarusian Potash Co.
The European Union is expected to cut off Belarusian banks from SWIFT, the international payments system critical for global trade.
While the sanction has yet to be formally enacted, it is the latest in a set of increasingly aggressive moves by which the European Union seeks to pressure Russia to end its “special military operation” in Ukraine. The European Union is moving toward adopting a complete ban on Russian oil supplies, which will be gradually implemented through year end.
The U.S. Treasury sanctioned Belaruskali earlier this year. Belarusian president Alexander Lukashenko is a close ally of Russian president Vladimir Putin and Belaruskali generates significant cash resources for Lukashenko’s regime.
This is no small feat: Belaruskali owns 20% of global potash production and is the world’s second-largest potash producer. The company is a primary supplier of potash to China, India, and Brazil.
Corn
Planting delays continued to prop up corn prices in Chicago overnight, with prices rising $0.06-$0.08/bushel on the prospect of potentially losing some corn acres to soybeans. NOAA’s 6- to 10-day forecasts have turned slightly more wet for the Upper Midwest, which took some of the optimism for quick planting speeds next week out of the market’s sails.
Markets are growing increasingly wary of a lack of fresh demand news, as evidenced in yesterday’s trading session. So we will need to see either an export announcement this morning or favorable progress for weekly ethanol production in today’s weekly Petroleum Inventory Status report from the U.S. Energy Information Administration.
I think markets are going to be stuck in this holding pattern of waiting for new demand news until next week’s World Agricultural Supply and Demand Estimates (WASDE) report, which will release the first look at 2022/23 global production, supply, and demand forecasts. Until then, don’t be surprised if markets stay quiet – at least, as quiet as they can be relative to the extreme volatility these grain markets have experienced over the past few months.
Soybeans
Soybean prices rose $0.09-$0.11/bushel overnight as planting delays continue to plague growers across the Midwest. A rally in the energy markets also added strength to soy (and corn) prices this morning.
“Corn and soybean sowing in the U.S. continues to progress at a very slow pace due to unfavourable weather, which may have an impact on crop development and production,” ag consultancy ING said in a note. “Demand faces major headwinds due to COVID uncertainty in China and the ongoing interest rate hike cycle.”
Soy’s gains were capped by growing likelihood for a shift from corn acres into soybeans if the planting delays last long enough. 2022 soybean acres in the U.S. are already forecast at a record high 91 million acres. Any further acreage appreciation would extend the size of a potentially record-setting 2022 U.S. soybean crop.
Wheat
Tunisia issued a 3.7-million-bushel soft wheat tender overnight, according to European traders and the renewed buying interest sent global wheat prices up $0.15-$0.32/bushel at last glance. A smaller Indian wheat crop expected to be harvested this summer following a brutal heat wave in the country this spring also grew fears about supply constraints in the global wheat market overnight.
The dollar eased slightly during the night, which helped make these higher wheat prices a more palatable option for global buyers.
Inputs
The world’s largest fertilizer producer is weighing its decision to ramp up potash production capacity in response to sanctions levied against other major global producers Russia and Belarus.
Nutrien’s interim CEO Ken Zeitz announced earlier yesterday that the Canadian fertilizer production company continues to monitor the situation in Ukraine and is not yet convinced that the war’s potential longevity will substantially alter trade flows enough to justify further capital investments.
Nutrien had already announced back in March that it would be increasing its total annual potash production to 15 million metric tonnes (MMT), up 1 MMT from its previous forecasts. At that time, Nutrien’s production increases were expected to account for 70% of the total increases in world potash production for the year.
The company has the option to produce up to 18 MMT of potash from its Saskatchewan mines. “Though larger expenditures would be needed to reach 18 million to 23 million tonnes,” Seitz said in an interview with Reuters. “We intend to grow our volumes, but just not stop at 18 million tonnes.”
That’s good news for farmers because larger supplies will allow for better nutrient availability for soil fertility needs. Global supplies remain tight enough that price breaks may not be in order just yet for the fertilizer market.
Nutrien’s plans hinge largely on how the Russian war in Ukraine plays out over the next few years. The economic sanctions against Russian and Belarusian fertilizer producers in the war’s wake have restricted global availability to the fertilizer market. If Nutrien grows too fast too soon, it risks losses if the sanctions are lifted from the Eastern European supplies.
Nutrien estimates that Russia has the capacity to produce 15 MMT of potash per year, though it will likely only generate 6 MMT. Similarly, Belarus is believed to be able to produce 13 MMT of potash annually but will likely only mine 8 MMT amid the economic sanctions.
U.S.-based fertilizer producer Mosaic is also eyeing expansion plans with caution. In a conference call yesterday, the company expects tight agricultural markets to persist beyond the end of this year. “We don’t see how Belarus potash sanctions will be resolved by mid-year as previously expected,” a company spokesperson said.
Mosaic expects that the current deficits in the potash market will take between two and four years to remedy, which means that farmers can expect to see steep costs well into the 2025 planning and growing cycle.
On the buyer side of the equation, Brazilian politicians will be earning their passport stamps this week as they scavenge the world for fertilizer supplies before planting season begins in the fall.
Brazil’s newly appointed agriculture minister Marcos Montes announced plans yesterday to travel to Jordan, Egypt, and Morocco this week to procure fertilizer supplies for Brazilian crop producers. The South American country relies on imports for 85% of its total fertilizer supplies.
“It’s a pilgrimage that we are calling fertilizer diplomacy,” Montes said in an interview with Reuters late Monday night. “We are going to open doors.”
Weather
With yesterday’s scattered shower system largely shifted out of the Eastern Corn Belt, soils will likely only see a minimal chance of drying out today, according to NOAA’s short-range forecasts. That’s because another rain system has developed over the Central and Southern Plains today, which will bring beneficial rains to the winter wheat crop.
It is a slow-moving system, so it will reach the Mississippi River Valley tomorrow morning before moving into the Eastern Corn Belt by Friday morning. Today’s showers will bring up to two inches of accumulation to the Southern Plains and a max of about an inch and a half to the Central Plains.
Regardless of the volume, it will likely be very beneficial to winter wheat crops in the region as 43% of the country’s winter wheat crops are currently rated in poor to very poor condition.
Financials
Wall Street is growing increasingly anxious to hear the results of the Federal Reserve’s Federal Open Market Committee (FOMC) meeting, which concludes today. An interest rate hike of 0.5% is expected to result from the meetings, which is a more aggressive hike than the Fed had previously alluded.
But soaring inflation – especially in the food and energy sectors – has driven the Fed to adopt a more hawkish tone on interest rate hikes. The Fed previously implemented its first hike of 0.25% in March. The upcoming hike will likely leave interest rates at 0.75% until the next set of FOMC meetings.
“Because the market has priced in a 50-basis-point rate hike at the Federal Reserve’s May meeting, the focus will immediately shift to just how many half-point hikes the Fed expects to initiate over the balance of 2022,” Danielle DiMartino Booth, chief executive officer of Quill Intelligence in Dallas, told Bloomberg yesterday. “Powell’s greatest folly would be to insist that the economy is very strong in the face of overwhelming evidence that it is slowing and slowing fast.”
Stock markets are slated to open higher this morning as traders steel themselves against the looming Federal Reserve announcement. It will be the largest interest rate hike from the Federal Reserve since 2000 in response to inflationary pressures.
Also worth a read on our website, FarmFutures.com
The latest shortage at the farmgate? Properly trained technicians who can quickly and accurately diagnose and repair farm equipment.
Purdue University’s Ag Economy Barometer strengthened in April as high commodity prices improved producer outlooks.
Bryce Knorr previews next week’s WASDE reports, which will provide the first look at 2022/23 marketing year estimates.
The White House has earmarked $500 million from the most recent $33 billion aid package to Ukraine for U.S. farmers to increase access to farm loans and crop insurance incentives to farmers to help offset pain from the war in Ukraine.
Morning Ag Commodity Prices – 5/4/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
8.0675
8.01
8.0675
0.06
0.75%
JUL ’22 CORN
$ / BSH
8.03
7.93
8.0275
0.0975
1.23%
SEP ’22 CORN
$ / BSH
7.5825
7.4825
7.58
0.08
1.07%
DEC ’22 CORN
$ / BSH
7.4325
7.325
7.425
0.0725
0.99%
MAR ’23 CORN
$ / BSH
7.4675
7.3675
7.465
0.0725
0.98%
MAY ’23 CORN
$ / BSH
7.48
7.3825
7.4775
0.0725
0.98%
JUL ’23 CORN
$ / BSH
7.445
7.3475
7.445
0.0725
0.98%
MAY ’22 SOYBEANS
$ / BSH
16.6525
16.53
16.6525
0.0625
0.38%
JUL ’22 SOYBEANS
$ / BSH
16.445
16.2325
16.415
0.11
0.67%
AUG ’22 SOYBEANS
$ / BSH
15.9725
15.78
15.945
0.0975
0.62%
SEP ’22 SOYBEANS
$ / BSH
15.2625
15.1
15.23
0.095
0.63%
NOV ’22 SOYBEANS
$ / BSH
14.91
14.74
14.8775
0.095
0.64%
JAN ’23 SOYBEANS
$ / BSH
14.945
14.78
14.915
0.095
0.64%
MAR ’23 SOYBEANS
$ / BSH
14.795
14.6575
14.795
0.105
0.71%
MAY ’23 SOYBEANS
$ / BSH
14.79
14.6525
14.7825
0.0925
0.63%
JUL ’23 SOYBEANS
$ / BSH
14.81
14.665
14.7975
0.095
0.65%
MAY ’22 SOYBEAN OIL
$ / LB
84.22
#N/A
84.3
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
81.2
79.82
81.18
0.9
1.12%
MAY ’22 SOY MEAL
$ / TON
435.1
435.1
435.1
-1.3
-0.30%
JUL ’22 SOY MEAL
$ / TON
427.2
421.8
426.4
2.5
0.59%
AUG ’22 SOY MEAL
$ / TON
420.3
415.9
419.9
2.8
0.67%
SEP ’22 SOY MEAL
$ / TON
411.9
409.1
411.9
2.4
0.59%
OCT ’22 SOY MEAL
$ / TON
403.3
400.5
403.3
2.5
0.62%
MAY ’22 Chicago SRW
$ / BSH
10.535
10.4225
10.535
0.1975
1.91%
JUL ’22 Chicago SRW
$ / BSH
10.8575
10.4225
10.765
0.31
2.97%
SEP ’22 Chicago SRW
$ / BSH
10.88
10.46
10.7875
0.2925
2.79%
DEC ’22 Chicago SRW
$ / BSH
10.9025
10.495
10.8275
0.3
2.85%
MAR ’23 Chicago SRW
$ / BSH
10.91
10.5175
10.835
0.2925
2.77%
MAY ’22 Kansas City HRW
$ / BSH
0
#N/A
10.8175
0
0.00%
JUL ’22 Kansas City HRW
$ / BSH
11.3025
10.915
11.2475
0.32
2.93%
SEP ’22 Kansas City HRW
$ / BSH
11.3375
10.9625
11.28
0.3125
2.85%
DEC ’22 Kansas City HRW
$ / BSH
11.37
11.0075
11.3125
0.2975
2.70%
MAR ’23 Kansas City HRW
$ / BSH
11.2275
11.0475
11.2275
0.2275
2.07%
MAY ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
11.525
0
0.00%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.785
11.5475
11.785
0.23
1.99%
SEP ’22 MLPS Spring Wheat
$ / BSH
11.71
11.475
11.71
0.23
2.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
11.7
11.4675
11.6975
0.23
2.01%
MAR ’23 MLPS Spring Wheat
$ / BSH
11.6525
11.435
11.6525
0.22
1.92%
JUN ’21 ICE Dollar Index
$
103.625
103.355
103.395
-0.101
-0.10%
JU ’21 Light Crude
$ / BBL
107
102.95
106.91
4.5
4.39%
JU ’21 Light Crude
$ / BBL
105.36
101.41
105.25
4.35
4.31%
JUN ’22 ULS Diesel
$ /U GAL
4.21
4.1007
4.1962
0.1135
2.78%
JUL ’22 ULS Diesel
$ /U GAL
3.8565
3.7504
3.8565
0.1152
3.08%
JUN ’22 Gasoline
$ /U GAL
3.62
3.54
3.6176
0.1164
3.32%
JUL ’22 Gasoline
$ /U GAL
3.5368
3.4562
3.5354
0.1167
3.41%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
162.4
0
0.00%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
176.275
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
135.325
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
137.325
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
99.775
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
102.2
0
0.00%
MAY ’22 Class III Milk
$ / CWT
24.3
24.24
24.24
0.03
0.12%
JUN ’22 Class III Milk
$ / CWT
23.85
23.83
23.83
-0.1
-0.42%
JUL ’22 Class III Milk
$ / CWT
23.61
#N/A
23.73
0
0.00%
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