Morning report: Soy stumbles on lackluster Chinese importing paces in August 2022. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 1-2 cents
Soybeans mixed; Soymeal down $2.50/ton; Soyoil up $0.50/lb
Chicago wheat up 9-12 cents; Kansas City wheat up 10-11 cents; Minneapolis wheat up 6-11 cents
*Prices as of 7:00am CDT.
Feedback from the Field updates! Are you combining yet?! 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 yesterday. So far, few of our respondents have crops that are ready for harvest, but with warm and dry weather on the horizon, that is not likely to remain the trend. Here are a few of my favorite insights from the past couple weeks’ responses.
“Irrigated corn looks good,” an Eastern Nebraska corn producer reported. “Three weeks ago, dryland corn looked decent but needed to catch some rain. We didn’t and it’s significantly hurt the yield.”
“Considering the low rainfall amount, the corn is better than I thought it would be,” said a Central Iowa grower. “Favorable growing conditions,” echoed an Eastern Iowa corn farmer. “Very even maturing and extremely healthy.”
“Irrigated beans look decent,” a soybean farmer in Eastern Nebraska observed of local soybean crops. “Again, dryland beans 3 weeks ago look decent needed to catch some rain to finish them out. We didn’t and it affected yield.”
“Very little rain all summer,” observed a soybean grower in Central Iowa, “but 2.2 inches two weeks ago saved the soybeans in this area.”
Breaking overnight
In a rare, televised speech, Russian President Vladimir Putin called upon 300,00 reserved forces overnight to strengthen Russia’s presence in Ukraine. Putin expressed severe displeasure with Western countries for providing military and intelligence aid to thwart recent advances by Ukrainian troops.
Ukrainian forces have made notable progress against Russian advances in recent weeks, particularly in northeastern areas of Ukraine. The losses have come at a great expense to the Russian military even though the casualty count on either side is not fully clear.
This “partial mobilization” is not yet a full-fledged draft, which Putin has hoped to avoid. Previous conscriptions in Russia during both World Wars came at an exceptionally high human toll for Russian draftees and citizens alike. The subsequent disruptions to Russia’s population growth are viewed very unfavorably among Russian citizens across several generations.
So far in the Ukrainian conflict, Putin has avoided a military draft and does not yet count this “partial mobilization” as one. Over the past month, the Kremlin has used monetary incentives to recruit “a combination of impoverished ethnic minorities, Ukrainians from the separatist territories, mercenaries and militarized National Guard units,” according to the New York Times.
But the Russian troops filtering into war zones are likely to lack the experience – and even equipment in some cases – needed to fight an effective strategy in Ukraine.
In the overnight address, Putin also issued a thinly veiled threat of nuclear retaliation against the West, who in his mind has “crossed all lines” by supporting Ukraine with advanced weapon systems and intelligence.
Putin lashed out against the U.S. and Europe, accusing the Western allies of engaging in “nuclear blackmail” against Russia and that Russia has the force to respond with similar nuclear efforts, according to the New York Times.
“To those who allow themselves such statements about Russia, I want to remind you that our country also has various means of destruction, and some components are more modern than those of the NATO countries,” Putin warned in the broadcast.
What does that mean for farmers?
Grain markets only edged up modestly on the address. Wheat reaped the highest gains, trading $0.06-$0.15/bushel higher on the renewed uncertainty and corn gained $0.01-$0.04/bushel on the news.
Russia has cooperated with the “Black Sea Grain Initiative” over the past month and a half, allowing for safe passage of Ukrainian grain cargoes through Black Sea naval blockades. But Putin’s speech and “partial mobilization” last night are proof that Russia may be increasingly unwilling to cooperate with diplomatic and humanitarian efforts going forward, especially if Putin views the West as accumulating any unfair gains from his negotiations.
That should sound familiar if you’re a regular reader here – Putin lamented “unfairness” in his criticisms of the “Grain Imitative” over the past few weeks.
Could that halt grain flows in the Black Sea again? Based on this morning’s gains, the markets aren’t too worried about that yet, but the price gains indicate that the market is recognizing that as a possibility.
The global markets also reacted to the increased economic uncertainty surrounding Putin’s speech. Markets have been operating in something of a freefall lately as global inflation persists and the chances of a global economic contraction increase.
Putin’s speech added fuel to that fire, sending U.S. Treasury bond yields and the dollar higher. T-bond yields and the U.S. dollar are viewed as safe-haven assets during periods of economic uncertainty and their rising values mean that more nervous global investors are piling into those assets as opposed to Wall Street stocks and/or indices.
Author’s note: I opted for the New York Times’ coverage of the Russian drama this morning as it has proved to be a reliable source on this topic throughout the conflict. But Reuters (which is my ride or die) also publishes a great daily column about all of the recent developments in the conflict that you can access here.
And as always, I cannot recommend the Wall Street Journal or Bloomberg enough for market reactions to political and diplomatic happenings. They are all accurate, reliable, and dependable.
Good luck navigating these waters, friends! Expect market volatility to continue persisting this week in the wake of these events.
Corn
Corn prices moved $0.01-$0.02/bushel higher at last glance as the market weighs ongoing global economic jitters against Putin’s overnight comments. Accelerating harvest progress is also building supply pressure, which is a bearish indicator for prices.
The U.S. Federal Reserve concludes its two-day Federal Open Market Committee (FOMC) meeting today and is likely to announce another steep increase to interest rates as inflation in the U.S. continues to linger at four-decade highs.
“Markets remain defensive ahead of tonight’s FOMC (Federal Open Market Committee),” analysts at Westpac said in a note, as reported by Reuters. “A more aggressive rate hike and hawkish signals could intensify recession fears and worries about demand for commodities.”
Soybeans
Soybean prices wavered between losses and gains this morning as the market juggled compounding sentiments between a looming global recession, Fed rate hikes, conflicting soybean demand signals from China, and unusually rapid shipping paces from Argentinian soybean competitors.
“Argentina’s short-term policy stimulus to promote concentrated soybean exports has created strong pressure on U.S. soybean new crop exports,” analysts at Zhongzhou Futures in China said in a note as reported by Reuters.
Soybean prices in the U.S. continue to face headwinds from Argentina’s foreign exchange rate manipulation. Argentine farmers are increasing their cash soybean sales thanks to the government incentives, which will in turn provide the government revenue with which to battle persistently high inflation in the South American country.
“Argentine farmers continued to offload soy stockpiles last week following a series of carrot-and-stick measures aimed at spurring exports, with 61.8% of the 2021/2022 harvest sold by the end of the week, the agriculture ministry said on Tuesday,” Belen Liotti wrote for Reuters yesterday.
“Between Sept. 8 and 14, producers sold 84.5 million bushels (2.3MMT) of the 2021/2022 harvest, up from 77.2 million bushels (2.1MMT) the prior week, per official data.”
This is less than ideal for U.S. growers because it increases global soybean competition during what is traditionally peak soybean export season in the U.S. Soybean prices have remained strong during the first week or so of harvest, but U.S. farmers will need Argentina’s shipping paces to slow to keep more bullish price pressure at play in the soybean markets.Luckily, Argentina’s central bank scaled back some of its foreign currency privileges for farmers yesterday, which is expected to slow down farmer sales and benefit U.S. farmers.
Wheat
Wheat prices saw the biggest benefit from renewed Black Sea uncertainties which were revived with Putin’s overnight comments. Wheat futures rose $0.06-$0.13/bushel at last glance on the Black Sea concerns as well as broad market jitters about the global economic outlook ahead of the Fed’s expected interest rate hike after the FOMC meeting today.
Chicago December 2022 wheat futures prices rose past the $9/bushel benchmark overnight on Putin’s comments, breaking past the $9/bushel benchmark for the first time in three months – since the June 30 USDA Acreage Report.
Wheat’s gains – especially in the spring wheat complex in Minneapolis – were limited overnight as global markets brace for a larger than expected Russian spring wheat crop. Reuters global agriculture columnist Karen Braun published a great analysis of the Russian wheat crop and export forecasts yesterday, noting the threats to global wheat supplies will continue to persist if sanctions continue to slow Russian wheat exports. I highly recommend checking it out.
Weather
Cooler temperatures and rain showers are going to move into the Central Plains, Central Mississippi River Valley, and Eastern Corn Belt today, according to NOAA’s short-range forecasts. Showers are likely to be heaviest in Colorado (yes!) and Western Kansas and Nebraska with over an inch of accumulation forecast (c’mon, Mother Nature! Help my yard out!). Accumulation is expected to be significantly lighter elsewhere in the Heartland today.
Hurricane Fiona is barreling up the U.S.’s Southern Atlantic coast and could disrupt weather patterns in the coming days. While the storm – now classified as a Class 3 storm – is not likely to make landfall in that region, it is expected to run parallel up the East Coast and is likely to have the most significant weather impact on New England.
The 6-10-day NOAA outlook continues to forecast high heat and excessive dryness for most of the Heartland through the end of September. The 8-14-day NOAA outlook is also trending warmer, much like the 6-10-day forecast. But the end of September is likely to be drier across the country. That will aid harvesting progress, which is likely to hit its peak activity by the end of September.
What else I’m reading this morning on our website, FarmFutures.com:
Harvest is ramping up across the Heartland! Our upcoming Farm Progress 365 session has the latest insights to help farmers maximize yields and time sales effectively – join online from September 27 – September 29!
Advance Trading’s Brady Huck outlines the four factors moving grain markets right now. Spoiler alert – none of them are occurring in the U.S.!
Water Street Solutions’ CEO Darren Frye has three tips for farmers to keep harvest progress flowing smoothly and efficiently this fall.
Bryce Knorr summarizes the latest USDA report’s hits and misses in today’s Ag Marketing IQ column.
Naomi Blohm explains how increased seasonal demand both at home and abroad is keeping milk prices firm.
Morning Ag Commodity Prices – 9/21/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.985
6.88
6.9525
0.0325
0.47%
MAR ’23 CORN
$ / BSH
7.0275
6.9275
6.9975
0.03
0.43%
MAY ’23 CORN
$ / BSH
7.025
6.9325
6.995
0.025
0.36%
JUL ’23 CORN
$ / BSH
6.96
6.87
6.93
0.0225
0.33%
SEP ’23 CORN
$ / BSH
6.4925
6.445
6.475
0.02
0.31%
DEC ’23 CORN
$ / BSH
6.34
6.28
6.3275
0.0175
0.28%
AR2 ’24 CORN
$ / BSH
6.385
6.385
6.385
0.0075
0.12%
AY2 ’24 CORN
$ / BSH
6.385
6.385
6.385
-0.02
-0.31%
JUL ’24 CORN
$ / BSH
6.38
6.38
6.38
0.005
0.08%
NOV ’22 SOYBEANS
$ / BSH
14.8875
14.71
14.8425
0.055
0.37%
JAN ’23 SOYBEANS
$ / BSH
14.935
14.77
14.895
0.05
0.34%
MAR ’23 SOYBEANS
$ / BSH
14.935
14.78
14.9025
0.0475
0.32%
MAY ’23 SOYBEANS
$ / BSH
14.9425
14.8
14.905
0.035
0.24%
JUL ’23 SOYBEANS
$ / BSH
14.92
14.7825
14.8925
0.0425
0.29%
AUG ’23 SOYBEANS
$ / BSH
14.66
14.5575
14.605
-0.005
-0.03%
SEP ’23 SOYBEANS
$ / BSH
14.19
14.125
14.155
0.0175
0.12%
NOV ’23 SOYBEANS
$ / BSH
13.96
13.86
13.92
0.0025
0.02%
AN2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.9425
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
13.8725
#N/A
13.8575
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.82
#N/A
13.8175
0
0.00%
OCT ’22 SOYBEAN OIL
$ / LB
69.5
68.05
69.34
0.75
1.09%
DEC ’22 SOYBEAN OIL
$ / LB
66.82
65.38
66.71
0.8
1.21%
OCT ’22 SOY MEAL
$ / TON
450.3
445.3
449.2
-1.6
-0.35%
DEC ’22 SOY MEAL
$ / TON
438.8
434.1
437.2
-2.2
-0.50%
JAN ’23 SOY MEAL
$ / TON
433.5
429.1
431.8
-2.3
-0.53%
MAR ’23 SOY MEAL
$ / TON
425
420.7
423.3
-2.2
-0.52%
MAY ’23 SOY MEAL
$ / TON
420.6
416.8
418.5
-2.2
-0.52%
DEC ’22 Chicago SRW
$ / BSH
9.195
8.8175
9.09
0.1525
1.71%
MAR ’23 Chicago SRW
$ / BSH
9.32
8.9575
9.1925
0.12
1.32%
MAY ’23 Chicago SRW
$ / BSH
9.385
9.02
9.2525
0.105
1.15%
JUL ’23 Chicago SRW
$ / BSH
9.225
8.925
9.0925
0.0425
0.47%
SEP ’23 Chicago SRW
$ / BSH
9.1625
8.9025
9.0375
0
0.00%
DEC ’23 Chicago SRW
$ / BSH
9.1625
8.9225
9.025
-0.045
-0.50%
AR2 ’24 Chicago SRW
$ / BSH
9.0875
8.925
8.9725
-0.0575
-0.64%
DEC ’22 Kansas City HRW
$ / BSH
9.82
9.515
9.7525
0.1225
1.27%
MAR ’23 Kansas City HRW
$ / BSH
9.77
9.48
9.7075
0.1125
1.17%
MAY ’23 Kansas City HRW
$ / BSH
9.75
9.47
9.685
0.1075
1.12%
JUL ’23 Kansas City HRW
$ / BSH
9.5625
9.2925
9.505
0.06
0.64%
SEP ’23 Kansas City HRW
$ / BSH
9.4675
9.35
9.355
-0.0375
-0.40%
DEC ’23 Kansas City HRW
$ / BSH
9.425
9.3425
9.425
-0.0025
-0.03%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.3825
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.75
9.48
9.715
0.1225
1.28%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.755
9.525
9.735
0.1125
1.17%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.75
9.545
9.75
0.1125
1.17%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.66
9.57
9.66
0.07
0.73%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.35
9.25
9.35
0.07
0.75%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.25
9.25
9.25
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
0
0
0.00%
DEC ’21 ICE Dollar Index
$
110.63
109.86
110.45
0.508
0.46%
NO ’21 Light Crude
$ / BBL
86.68
83.48
86.19
2.25
2.68%
DE ’21 Light Crude
$ / BBL
85.99
82.89
85.49
2.21
2.65%
OCT ’22 ULS Diesel
$ /U GAL
3.499
3.3492
3.3898
0.0176
0.52%
NOV ’22 ULS Diesel
$ /U GAL
3.428
3.2816
3.3178
0.0138
0.42%
OCT ’22 Gasoline
$ /U GAL
2.5224
2.4335
2.4964
0.0486
1.99%
NOV ’22 Gasoline
$ /U GAL
2.4661
2.3774
2.4411
0.0486
2.03%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
178.8
0
0.00%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
180.025
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
146.3
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
151.075
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
95.975
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
88.175
0
0.00%
SEP ’22 Class III Milk
$ / CWT
19.85
#N/A
19.89
0
0.00%
OCT ’22 Class III Milk
$ / CWT
21.98
21.94
21.97
0.03
0.14%
NOV ’22 Class III Milk
$ / CWT
21.32
#N/A
21.79
0
0.00%
