Morning report: The renewed supply prospect sent wheat and corn prices falling this morning. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 12-15 cents
Soybeans down 13-22 cents; Soymeal down $5.80/ton; Soyoil down $0.98/lb
Chicago wheat down 37-38 cents; Kansas City wheat down 36-38 cents; Minneapolis wheat down 26-31 cents
*Prices as of 6:55am CDT.
Black Swan in the Black Sea: Our May/June 2022 print edition cover story was about the ongoing crisis in the Black Sea. Our online series, which has been updated to reflect current market conditions, will go live this week.
The four-part Black Swan in the Black Sea series continues today through the rest of the week. We hope it helps you to better understand the new dynamics shaping agriculture, energy, and fertilizer markets.
The first article in the series examines the war’s impacts to the corn market.
Today’s installment examines how wheat trade flows have shifted – and could further shift – due to the Black Sea conflict. It includes updated production information from the latest USDA-World Agricultural Supply and Demands Estimate report issued in early May on Ukrainian production and updated Russian export forecasts.
Want more on Ukraine’s planting progress? A Reuters report published overnight dove into forecasts for Ukraine’s harvest season. Diesel shortages are rampant through Ukraine and are currently expected to be the most significant constraint for Ukrainian growers at harvest time.
“Fuel is the biggest problem at the moment, more than anything,” Kees Huizinga, a Dutch national who runs a 15,000 hectare dairy and crop farm in central Ukraine, told Reuters.
Diesel deliveries now have wait times spanning from two to four weeks in Ukraine. Planting progress has been able to continue thanks to on-hand supplies but harvest availability of diesel is now a primary concern for Ukrainian farmers.
“Things have worsened. We are facing severe fuel shortages all over the country,” said Roman Gorobets, director of FE Astra, which cultivates about 2,000 hectares in the central Poltava region.
Tomorrow’s installment will examine the impact of the Black Sea conflict on global fertilizer markets. It will also feature updated analysis from the latest USDA-World Agricultural Supply and Demands Estimate report issued in early May on global acreage shifts that could impact next year’s fertilizer prices.
Feedback from the Field updates! Planting progress may be slowing down in the Heartland, but growers in the Upper Midwest continue to face planting obstacles, according to responses from growers in our latest Feedback from the Field column. Planting is progressing, but not as quickly as most growers would like.
Most notably, corn and spring wheat producers across North Dakota and Minnesota are already weighing the possibility of prevent plant acreage as rain delays continue to mount. We even had a response from a grower on the Canadian prairies this week who also indicated that delays in that region could cause acreage shifts.
“We are getting more rain today,” the farmer shared late last week. “So we are delayed planting for a few more days. Soon it will be late for spring wheat here.”
Want to see how your farm’s progress stacks 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!
Corn
Corn futures shed $0.09-$0.13/bushel overnight on progress for Ukrainian corn shipments, a new deal between China and Brazil, and advancing U.S. corn planting progress. New crop futures hovered just above the $7.10/bushel benchmark but any more bearish news for the corn market today could send those prices below the $7/bushel resistance mark.
China announced yesterday it would begin importing Brazilian corn – a new trade relationship that could significantly alter global corn trade flows. China’s Ministry of Commerce announced the agreement between Brazilian exporters and China’s customs authority yesterday, with the underlying implication that Brazilian corn imports could help China reduce dependence on U.S. corn in the wake of the Black Sea conflict.
“The agreement on sanitary guidelines for corn exports will guarantee access to Brazilian grain, a move that could threaten the U.S. dominance in the Chinese corn market,” The Hightower Report said in a research note.
The move is widely viewed as a smart diversification strategy on Beijing’s part, as the country traditionally relies heavily on U.S. and Ukrainian corn supplies. But China doesn’t take supply issues lightly and has pursued preventative action as domestic growth continues to climb.
“It was strategic consideration by the state to diversify imports origins,” a China-based trader told Reuters overnight.
Brazil currently acts as somewhat of a residual corn supplier, with its largest current trading partners including Iran, Spain, Japan, Egypt, and South Korea. China was Ukraine’s top corn buyer leading up to Russia’s invasion in late February 2022.
Chinese purchases of U.S. corn currently make up a third of U.S. corn export volumes. This agreement could reduce the U.S. corn volume of Chinese exports and potentially move the U.S. into a position of residual global corn supplier as prices continue to soar in the Black Sea conflict era – similar to U.S. wheat export markets.
Soybeans
Easing Chinese demand for soyoil amid ongoing COVID lockdowns had a bearish impact on prices in the U.S. soy complex this morning. Soybean prices traded $0.10-$0.15/bushel lower on the sentiment with additional bearish pressure being felt from the soyoil complex.
India issued an 11-year low forecast for palm oil imports overnight, due in large part to Indonesia’s export bans but also more competitive (lower priced) soyoil prices. India is the world’s top edible oil importer. Overnight it announced that it would eliminate duties on soy and sunflower oils to be imported into the country.
The news is bullish for U.S. soyoil futures but concerns about India’s demand lulls for palm oil compounded with lingering demand concerns about China amidst its ongoing COVID lockdowns. Uncertainty surrounding top exporter Indonesia’s latest export policies on palm oil helped cap losses.
Wheat
Wheat futures across the globe tumbled after Russia agreed to allow “humanitarian corridors” for agricultural shipments out of Ukraine, according to a Reuters report released overnight.
Russian Deputy Foreign Minister Andrei Rudenko alluded overnight that Russian forces would allow Ukrainian grain shipments to be safely loaded at Black Sea ports and shipped through Russian naval blockades without any attacks.
“We have repeatedly stated on this point that a solution to the food problem requires a comprehensive approach, including the lifting of sanctions that have been imposed on Russian exports and financial transactions,” Rudenko said.
“And it also requires the demining by the Ukrainian side of all ports where ships are anchored. Russia is ready to provide the necessary humanitarian passage, which it does every day.”
It’s a delicate situation, however. The Black Sea has been riddled with drifting mines that pose serious risks for cargo vessels, regardless of the Russian blockade. And diplomatic efforts from the West are likely to be ill-received by the Russians.
Rudenko suggested that any Western escort of Ukrainian grain cargoes would “seriously exacerbate the situation in the Black Sea.”
An estimated 20 million metric tonnes of grain are believed to be trapped around the Ukrainian countryside as Black Sea ports remain blocked. Some corn has trickled out of the country by rail, but the volumes are drastically lower than shipments that can be loaded via cargo vessels.
Weather
Temperatures will warm into the 60s-70s today across much of the Heartland, according to NOAA’s short-range forecasts. Mostly clear skies are forecast today for North Dakota and Northern Minnesota, which should help to coax along planting progress in the region.
Elsewhere in the Heartland today, the storm system that hovered over the Southern Plains yesterday shifted northeast into the Central Mississippi River Valley overnight. The system will spend the next couple days lingering over the Eastern Corn Belt. Up to an inch of precipitation is expected to fall over the next 24 hours from Wisconsin and Iowa, down to the Mississippi Delta. Eastern Kansas will likely see one to two inches of rain during that time.
That will likely slow planting progress in the top corn-producing states, but it will enable clear skies in the Northern Plains, which could help that region catch up with national sowing rate averages this week.
NOAA’s 6- to 10-day forecasts updated yesterday are trending wetter for much of the Heartland while the 8- to 14-day forecast is beginning to show a period of clear skies for the Upper Midwest.
Financials
The U.S. Federal Reserve will release meeting minutes from its Federal Open Market Committee (FOMC) meeting earlier this month. The minutes provide more detailed outlooks of the U.S. and global economy. U.S. stock indices wavered this morning ahead of the minutes’ release, with the S&P 500 trading 0.49% lower at last glance to $3,921.25.
Volatility continues to be the overarching theme in U.S. stock markets this morning. Recession fears continue to overshadow the markets as traders wait to see the impacts of higher interest rates shake out in monthly economic datasets. Data on durable goods orders released this morning will provide more economic insights.
What else I’m reading this morning on our website, FarmFutures.com:
Advance Trading’s Eric Meyer asks – what is keeping you from locking in high prices?
AgMarket.Net’s Betsy Jibben reports that planting progress in Ukraine continues despite the Russian occupation. The next big question – will the exported totals shipped this year count for Russia’s or Ukraine’s trade total?
Bryce Knorr is calling it – weather markets are here and bringing price rallies for growers.
Kansas Farmer editor Jennifer Latzke shares the big takeaways from the 2022 Winter Wheat Tour last week.
Roger Wright explains what happens when a put option has no potential value.
Naomi Blohm breaks down the impact of slow planting paces in the Upper Midwest on future production and usage rates. Blohm calculates that planting progress for 13% of the 2022 corn crop is “exceptionally” delayed and that Pacific Northwest exports may be at highest risk.
Morning Ag Commodity Prices – 5/25/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.72
7.6
7.615
-0.1025
-1.33%
SEP ’22 CORN
$ / BSH
7.4175
7.285
7.295
-0.115
-1.55%
DEC ’22 CORN
$ / BSH
7.26
7.125
7.135
-0.1175
-1.62%
MAR ’23 CORN
$ / BSH
7.2925
7.165
7.1725
-0.1175
-1.61%
MAY ’23 CORN
$ / BSH
7.2875
7.1625
7.165
-0.1225
-1.68%
JUL ’23 CORN
$ / BSH
7.225
7.11
7.1175
-0.1125
-1.56%
SEP ’23 CORN
$ / BSH
6.63
6.5775
6.5775
-0.09
-1.35%
JUL ’22 SOYBEANS
$ / BSH
16.9775
16.7575
16.775
-0.155
-0.92%
AUG ’22 SOYBEANS
$ / BSH
16.3675
16.185
16.1975
-0.125
-0.77%
SEP ’22 SOYBEANS
$ / BSH
15.6425
15.475
15.485
-0.1075
-0.69%
NOV ’22 SOYBEANS
$ / BSH
15.24
15.06
15.07
-0.105
-0.69%
JAN ’23 SOYBEANS
$ / BSH
15.28
15.1075
15.1125
-0.0975
-0.64%
MAR ’23 SOYBEANS
$ / BSH
15.2125
15.0425
15.05
-0.09
-0.59%
MAY ’23 SOYBEANS
$ / BSH
15.21
15.04
15.0525
-0.0825
-0.55%
JUL ’23 SOYBEANS
$ / BSH
15.1875
15.0175
15.02
-0.0925
-0.61%
AUG ’23 SOYBEANS
$ / BSH
10.75
#N/A
14.9025
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
80.56
79.29
79.44
-0.68
-0.85%
AUG ’22 SOYBEAN OIL
$ / LB
78.05
77.13
77.23
-0.5
-0.64%
JUL ’22 SOY MEAL
$ / TON
428.6
422
422.3
-4.8
-1.12%
AUG ’22 SOY MEAL
$ / TON
423
416.4
416.7
-4.9
-1.16%
SEP ’22 SOY MEAL
$ / TON
417
410.2
410.7
-4.4
-1.06%
OCT ’22 SOY MEAL
$ / TON
410.3
403.6
403.7
-4.3
-1.05%
DEC ’22 SOY MEAL
$ / TON
411.6
404.5
405.1
-3.7
-0.91%
JUL ’22 Chicago SRW
$ / BSH
11.585
11.1725
11.205
-0.3425
-2.97%
SEP ’22 Chicago SRW
$ / BSH
11.6625
11.2525
11.2925
-0.34
-2.92%
DEC ’22 Chicago SRW
$ / BSH
11.725
11.3025
11.35
-0.35
-2.99%
MAR ’23 Chicago SRW
$ / BSH
11.735
11.33
11.37
-0.3625
-3.09%
MAY ’23 Chicago SRW
$ / BSH
11.6275
11.225
11.2325
-0.3975
-3.42%
JUL ’22 Kansas City HRW
$ / BSH
12.3975
12.0175
12.0375
-0.34
-2.75%
SEP ’22 Kansas City HRW
$ / BSH
12.45
12.0625
12.0975
-0.3275
-2.64%
DEC ’22 Kansas City HRW
$ / BSH
12.495
12.11
12.125
-0.3475
-2.79%
MAR ’23 Kansas City HRW
$ / BSH
12.475
12.1375
12.15
-0.315
-2.53%
MAY ’23 Kansas City HRW
$ / BSH
12.25
11.9075
11.9075
-0.3175
-2.60%
JUL ’22 MLPS Spring Wheat
$ / BSH
12.7925
12.445
12.52
-0.2525
-1.98%
SEP ’22 MLPS Spring Wheat
$ / BSH
12.78
12.43
12.48
-0.29
-2.27%
DEC ’22 MLPS Spring Wheat
$ / BSH
12.67
12.3975
12.47
-0.26
-2.04%
MAR ’23 MLPS Spring Wheat
$ / BSH
12.4025
12.4025
12.4025
-0.31
-2.44%
MAY ’23 MLPS Spring Wheat
$ / BSH
12.6175
#N/A
12.655
0
0.00%
JUN ’21 ICE Dollar Index
$
102.4
101.75
102.35
0.48
0.47%
JU ’21 Light Crude
$ / BBL
111.68
110.14
110.94
1.17
1.07%
AU ’21 Light Crude
$ / BBL
108.97
107.56
108.32
1.12
1.04%
JUN ’22 ULS Diesel
$ /U GAL
3.878
3.7783
3.8425
0.0607
1.61%
JUL ’22 ULS Diesel
$ /U GAL
3.7535
3.6576
3.7207
0.0664
1.82%
JUN ’22 Gasoline
$ /U GAL
3.8859
3.81
3.88
0.069
1.81%
JUL ’22 Gasoline
$ /U GAL
3.7597
3.6927
3.7449
0.0552
1.50%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
154.5
0
0.00%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
168.15
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
132.725
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
132.75
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
109.025
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
109.05
0
0.00%
MAY ’22 Class III Milk
$ / CWT
25.08
#N/A
25.08
0
0.00%
JUN ’22 Class III Milk
$ / CWT
24.15
24.14
24.15
0
0.00%
JUL ’22 Class III Milk
$ / CWT
24.22
#N/A
24.33
0
0.00%
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