Morning report: China’s growth is fading amid its COVID-19 lockdowns. What does that mean for U.S. growers? (Comments are updated by 7:30 a.m. Central Time.)
Corn up 4-7 cents
Soybeans up 8-10 cents; Soymeal up $0.50/ton; Soyoil up $0.49/lb
Chicago wheat up 14 cents; Kansas City wheat up 10-11 cents; Minneapolis wheat up 12-14 cents
*Prices as of 6:55am CDT.
Feedback from the Field is live! I have received few Feedback from the Field responses over the past few days, which leads me to believe that planting activities are in full swing across the Heartland! 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!
It’s National Nurses’ Week!
So be sure to give the nurses in your life some extra love this week! My mom has been a pediatric/med-surg nurse for over 35 years. During that time, she has helped grow our family’s dairy farm and raised five kids along the way. She has always taught us by example that caring for others is the ultimate sign of strength and I am so proud to have her love and strength in my life. Happy Nurses’ Week to all the strong nurses out there!
Corn
More rain delays expected in the Upper Midwest sent July 2022 corn futures inching closer to the $8/bushel benchmark. The contract currently rests at $7.8125/bushel, with the larger corn complex up $0.05-$0.07/bushel overnight on continued planting delays. Markets are also waiting for tomorrow’s WASDE reports, which will give the first look at 2022/23 production and usage forecasts.
“The upcoming May 12 WASDE (world agricultural supply and demand estimates) will introduce the USDA’s 2022/23 balance projections and provide useful yardsticks in the current environment of critically low agri stocks,” JPM Commodities Research told Reuters last night.
Are high prices really the cure to high prices? Academically speaking, yes. But for U.S. corn and soybean producers this year, high prices are likely to stick around.
In my latest E-corn-omics column, I take a deeper dive into the two factors that will cool prices: acreage and/or yield expansion. In the U.S., acreage expansion has been largely flat over the past decade signaling yields are the best hope for cooling commodity prices this year.
So with slower planting rates this spring, are all hopes for trendline yields completely out the window? While some may think so, I argue that we shouldn’t throw the baby out with the bathwater just yet when it comes to yields. There are still many more factors that impact yield that have yet to be realized in the growing season and I am optimistic about planting paces over the next week and a half.
We are late enough in the season that I would not be surprised if some corn acres in the Upper Midwest switch to soybeans in the coming weeks. But these regions are largely expected lower corn acreage this year anyway, so I doubt it will be a massive shift. At any rate, the slow start to the season is likely to keep high prices in place for the time being.
Soybeans
Soybean prices also rose $0.08-$0.10/bushel overnight on continued planting delays in the Heartland and continued strength from the global edible oils complex. Gains were capped by an uncertain economic outlook from China.
China’s economic slowdown is putting a damper on commodity import paces, which could present challenges for global grain exporters in the coming months. Most recently, China has scaled back its purchases of palm oil as strict COVID lockdown policies have forced many Chinese citizens in larger cities to rely on food prepared solely at home.
The zero-COVID policies have expanded amid rising caseloads, due largely to the more contagious nature of new virus variants, and sent China’s economy into contraction as residents of many cities are not allowed to leave their residences. Shanghai – China’s industrial center – has struggled with factory closures and port delays amid virus outbreaks and lockdown measures, which will surely exacerbate ongoing supply chain struggles.
“China may not be the steam engine for world growth,” edible oil analyst Dorab Mistry, director of Indian consumer goods company Godrej International, said overnight at the Globoil conference in Dubai.
Mistry notes that markets should expect China to play a lesser role in the global commodity markets through the second half of the year. The lockdowns will not only ease consumer demand for certain food products, but it could also domestic production expansion hopes outlined by the Chinese government earlier this year. Chinese buyers could also be waiting on the sidelines for more favorable pricing opportunities amid the era of high commodity prices.
“Prices can fall sharply once the Indonesian ban is relaxed and after the Ukraine conflict is resolved, as interest rates rise, production picks up, stocks around the Black Sea are unfrozen,” Mistry said.
What does that mean for U.S. oilseed and grain producers? China is the world’s top food buyer, so on the surface it seems that this development should be a bearish signal for prices. But global and domestic food demand continues to rise at a faster clip than production, so China’s muted buying paces are likely to be offset by rising usage rates closer to home – for now.
Wheat
Wheat prices rose $0.10-$0.15/bushel overnight amid tightening global supply concerns, particularly in the Black Sea and the U.S. Spring wheat planting delays in the U.S. Northern Plains paired with drought stress on the U.S. winter wheat crop across the rest of the Plains could result in smaller than expected wheat production forecasts in tomorrow’s WASDE reports.
The sentiment lifted futures prices across the board this morning. A weaker dollar also contributed to higher grain prices overnight.
India sold a record-setting 51.4 million bushels of wheat to export buyers in April, with May export volumes expected to exceed April’s.
“In May, shipments could rise to 55 million bushels,” a New Delhi-based dealer with a global trading firm told Reuters overnight. “Wheat supplies and railway cars’ availability have improved in the last few weeks and that will help ship out more wheat in May.”
India exported only 257 million bushels of wheat during its 2021 fiscal year, which ended on March 31, 2022. India is not historically a wheat exporter, but five consecutive bumper crops, rising global prices, and the Black Sea conflict sent Middle Eastern, North African, European, and Asian buyers flocking to Indian shores for affordable and accessible wheat over the past two months.
A heat wave spanning across India over the past month has thrown into doubt the country’s ability to continue its exporting activities in the upcoming season.
Weather
Steamy temperatures across the Heartland today should help soils dry out enough for planting progress to ramp up, according to NOAA’s short-range forecasts. Though skies are likely to remain clear enough to continue planting progress elsewhere in the Heartland, the Northern Plains and Upper Midwest will likely see showers and thunderstorms today that could drop up to an inch of precipitation over the next 24 hours and slow planting progress.
Financials
Updated data from the Consumer Price Index (CPI) will be released this morning, providing an updated look at inflationary pressures. S&P 500 futures edged up 0.25% to $4,001.05 this morning, following four consecutive trading sessions worth of losses. The CPI reading today will show any early effects of the Federal Reserve’s rising interest rate policy, which has been enacted to help cool surging inflation.
Also worth a read on our website, FarmFutures.com
Bryce Knorr weighs the odds of $11/bushel corn after looking at options prices ahead of the mid-May benchmark for corn planting progress.
Are you still holding on to 2021 grain and oilseed crops? Advance Trading’s Cat Sullivan has a few tips on how to cash in on those supplies.
Davon Cook helps growers navigate partnership dynamics where the behavior of one partner may be extreme enough to not be overlooked.
For farmers with decision fatigue, Darren Frye recommends evaluating if a decision aligns with an operation’s goals and values, if it makes financial sense to the farm, and evaluating the potential benefits before going forward with that decision.
Naomi Blohm expects markets to go for a “fierce, fast, and ferocious” ride following next week’s WASDE reports.
Morning Ag Commodity Prices – 5/11/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.9325
7.88
7.9325
0.0675
0.86%
JUL ’22 CORN
$ / BSH
7.8375
7.755
7.8125
0.06
0.77%
SEP ’22 CORN
$ / BSH
7.4275
7.355
7.4075
0.0575
0.78%
DEC ’22 CORN
$ / BSH
7.2575
7.19
7.245
0.055
0.76%
MAR ’23 CORN
$ / BSH
7.2925
7.23
7.285
0.055
0.76%
MAY ’23 CORN
$ / BSH
7.2925
7.2375
7.2825
0.0475
0.66%
JUL ’23 CORN
$ / BSH
7.245
7.1925
7.2375
0.05
0.70%
MAY ’22 SOYBEANS
$ / BSH
16.4025
16.29
16.4
0.1
0.61%
JUL ’22 SOYBEANS
$ / BSH
16.0625
15.875
16.0175
0.095
0.60%
AUG ’22 SOYBEANS
$ / BSH
15.6025
15.44
15.5675
0.09
0.58%
SEP ’22 SOYBEANS
$ / BSH
14.9925
14.855
14.955
0.0825
0.55%
NOV ’22 SOYBEANS
$ / BSH
14.6825
14.5275
14.635
0.0875
0.60%
JAN ’23 SOYBEANS
$ / BSH
14.7075
14.56
14.6675
0.09
0.62%
MAR ’23 SOYBEANS
$ / BSH
14.5975
14.46
14.565
0.0875
0.60%
MAY ’23 SOYBEANS
$ / BSH
14.5825
14.4575
14.5475
0.08
0.55%
JUL ’23 SOYBEANS
$ / BSH
14.5675
14.4925
14.545
0.085
0.59%
MAY ’22 SOYBEAN OIL
$ / LB
88.45
88.45
88.45
0.49
0.56%
JUL ’22 SOYBEAN OIL
$ / LB
82.75
80.6
82.42
1.38
1.70%
MAY ’22 SOY MEAL
$ / TON
0
#N/A
407.9
0
0.00%
JUL ’22 SOY MEAL
$ / TON
403.5
398.8
402.3
0.8
0.20%
AUG ’22 SOY MEAL
$ / TON
397.1
393.4
396.3
0.4
0.10%
SEP ’22 SOY MEAL
$ / TON
392.8
389.7
391.9
0.3
0.08%
OCT ’22 SOY MEAL
$ / TON
389.3
386.5
388.3
0.2
0.05%
MAY ’22 Chicago SRW
$ / BSH
11.15
11.085
11.085
0.2525
2.33%
JUL ’22 Chicago SRW
$ / BSH
11.16
10.9425
11.08
0.1525
1.40%
SEP ’22 Chicago SRW
$ / BSH
11.19
10.9725
11.1125
0.1475
1.35%
DEC ’22 Chicago SRW
$ / BSH
11.23
11.02
11.165
0.145
1.32%
MAR ’23 Chicago SRW
$ / BSH
11.255
11.065
11.1825
0.1375
1.24%
MAY ’22 Kansas City HRW
$ / BSH
0
#N/A
11.6825
0
0.00%
JUL ’22 Kansas City HRW
$ / BSH
11.95
11.75
11.865
0.115
0.98%
SEP ’22 Kansas City HRW
$ / BSH
11.985
11.7875
11.9
0.1125
0.95%
DEC ’22 Kansas City HRW
$ / BSH
12.0125
11.8625
11.935
0.105
0.89%
MAR ’23 Kansas City HRW
$ / BSH
11.9425
11.93
11.9325
0.12
1.02%
MAY ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
12.1225
0
0.00%
JUL ’22 MLPS Spring Wheat
$ / BSH
12.32
12.135
12.27
0.135
1.11%
SEP ’22 MLPS Spring Wheat
$ / BSH
12.31
12.1475
12.2625
0.1275
1.05%
DEC ’22 MLPS Spring Wheat
$ / BSH
12.27
12.1325
12.2125
0.11
0.91%
MAR ’23 MLPS Spring Wheat
$ / BSH
12.205
12.19
12.1925
0.1225
1.01%
JUN ’21 ICE Dollar Index
$
103.98
103.415
103.625
-0.318
-0.31%
JU ’21 Light Crude
$ / BBL
104.08
98.2
104
4.24
4.25%
JU ’21 Light Crude
$ / BBL
102.68
96.93
102.64
4.19
4.26%
JUN ’22 ULS Diesel
$ /U GAL
4.0472
3.9246
4.0462
0.114
2.90%
JUL ’22 ULS Diesel
$ /U GAL
3.784
3.6649
3.7837
0.1044
2.84%
JUN ’22 Gasoline
$ /U GAL
3.6187
3.5057
3.6183
0.0768
2.17%
JUL ’22 Gasoline
$ /U GAL
3.5067
3.4075
3.5067
0.0718
2.09%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
158.925
0
0.00%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
171.85
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
132.4
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
134.1
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
101.075
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
101.575
0
0.00%
MAY ’22 Class III Milk
$ / CWT
24.7
24.7
24.7
0.04
0.16%
JUN ’22 Class III Milk
$ / CWT
23.51
23.42
23.42
-0.09
-0.38%
JUL ’22 Class III Milk
$ / CWT
23.32
23.32
23.32
-0.05
-0.21%
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