Afternoon report: Corn, soybeans and wheat all make significant inroads Monday.
Monday was yet another session that saw significant volatility – this time swinging back into farmers’ favor after a wave of technical buying today. Worries over Ukraine’s export capacity and doubts about the country’s ability to plant crops this spring returned to the forefront, causing double-digit gains for corn, soybeans and wheat. Corn firmed 2% higher, with soybeans up around 1.5%. Wheat contracts were variable, ranging between 2.25% and 5%.
The first day of Spring was yesterday, and the season may indeed come in like the proverbial lion – a storm raking through the southern U.S. this week could deliver tornadoes, damaging winds, hail and floods. Further out, NOAA’s 8-to-14-day outlook predicts more seasonally wet weather for most of the Midwest and Plains between March 28 and April 3, with warmer-than-normal conditions prevalent across the Great Plains next week.
On Wall St., the Dow started Monday’s session with moderate gains, only to tumble 271 points lower in afternoon trading to 34,483 after Federal Reserve Chairman Jerome Powell sounding the alarm about inflation and indicated they may make more aggressive interest rate hikes in response. Energy prices trended significantly higher as traders continue to assess the situation in Ukraine. Crude oil rose more than 6% to $111 per barrel. Diesel climbed 5% higher, while gasoline tracked around 3.75% higher. The U.S. Dollar firmed moderately.
Last Friday, commodity funds were net buyers of soymeal (+2,000) contracts but were net sellers of corn (-7,500), soybeans (-5,000), soyoil (-5,500) and CBOT wheat (-12,000).
Corn
Corn prices trended 2% higher as geopolitical risk in the Black Sea Region opened up more opportunities for technical buying. A solid round of export inspection data from USDA lent additional support. May futures rose 15 cents to $7.5675, with July futures up 15.5 cents to $7.28.
Corn basis bids were steady to mixed after tilting 2 to 5 cents higher at four Midwestern locations while firming 5 to 6 cents higher at three other locations on Monday.
Corn export inspections reached 57.7 million bushels for the week ending March 17, which was a 28% improvement from a week ago. It was also toward the higher end of trade guesses, which came in between 44.9 million and 63.0 million bushels. China was the No. 1 destination, with 18.8 million bushels. Cumulative totals for the 2021/22 marketing year are still running moderately behind last year’s pace, with 1.078 billion bushels.
Matthew Kruse, president of Commstock Investments, notes that Brazil’s second corn crop will need “perfect weather” – meaning additional rainfall, at minimum – through at least April to stay on track for enough production to adequately resupply the country’s dwindling stocks. Kruse offers additional analysis on our key South American neighbor in a recent Ag Marketing IQ blog – click here to learn more.
Meantime, in Canada, the country’s second largest railroad has shut down operations over a labor strike. The Canadian Pacific Railway “provides significant service into and throughout the United States,” according to Farm Futures policy editor Jacqui Fatka. “In 2021, Canadian Pacific transported 428,568 carloads of grain and 151,789 carloads of potash, according to Canadian Pacific – much of which originates from or is delivered to the 175 U.S. grain elevators served by the railroad,” Fatka reports. “The railroad is a significant component of the U.S. agricultural supply chain.” Click here to learn more.
South Korea purchased 2.4 million bushels of corn, likely sourced from the United States, in a private deal that closed late last week. The grain is for arrival by June 15.
Preliminary volume estimates were for 215,353 contracts, shifting moderately above Friday’s final count of 157,085.
Soybeans
Soybean prices firmed 1.5% on a round of technical buying as South American harvest progress isn’t reveling a bullish picture of its production potential. Spillover support from a broad range of other commodities lent plenty of support as well. May futures rose 24.75 cents to $16.9275, with July futures up 27.25 cents to $16.73.
Soybean basis bids held steady across most Midwestern locations on Monday but did rise 7 cents at an Ohio elevator and 3 cents at an Iowa river terminal today.
Soybean export inspections eroded 32% lower from the prior week, falling to 20.0 million bushels. That was also toward the lower end of analyst estimates, which ranged between 18.4 million and 31.2 million bushels. China led all destinations, with 6.1 million bushels. Cumulative totals for the 2021/22 marketing year gained a sliver of ground against last year’s pace but re-main significantly behind with 1.570 billion bushels.
The Brazilian consultancy Patria AgroNegocios reported that nearly 72% of the country’s 2021/22 soybean crop has been harvested. The results so far “show a lot of variability,” the consultancy noted, with some areas “bringing disappointing numbers in relation to initial expectations.” Most entities are expecting that total production will fall well below 5 billion bushels this season.
In a move to combat inflation, Argentina announced it will raise its export tax rate on soyoil and soymeal to 33% until the end of 2022. Inflation is out of control in Argentina at the moment, running around an annual rate of 50%. Argentina is a top exporter of both soymeal and soyoil.
China’s state planner announced earlier today that it plans to release 1 million metric tons of its state potash reserves. It is also taking measures to improve domestic production and increase imports to ensure there will be adequate fertilizer supplies this season.
Preliminary volume estimates were for 120,710 contracts, inching slightly above Friday’s final count of 114,033.
Wheat
Wheat prices jumped substantially higher on mounting concerns for planting and export potential for both Ukraine and Russia as heavy fighting persists between the two countries. May Chicago SRW futures jumped 53 cents to $11.1675, May Kansas City HRW futures climbed 42.5 cents to $11.13, and May MGEX spring wheat futures rose 24 cents to $10.8425.
Wheat export inspections saw modest week-over-week improvements to reach 12.1 million bushels. That was on the lower end of trade guesses, which ranged between 10.1 million and 18.4 million bushels. South Korea was the No. 1 destination, with 2.3 million bushels. Cumulative totals for the 2021/22 marketing year are still trending moderately below last year’s pace, with 608.1 million bushels.
Ukraine stands to lose revenues of around $6 billion as grain is unable to be shipped dur to a Russian blockade of the Black Sea, according to a senior industry official. That includes some 20 million metric tons of corn and wheat (around 750 million bushels) the country still wants to export during the current marketing year. But analyst APK-Inform estimates that Ukraine’s wheat exports may only total 7.3 million bushels between March and June.
India is not a significant wheat exporter, despite being the No. 2 producer in the world. It accounts for 14% of total global productions but less than 1% of world exports. However, the country is sitting on an ample stockpile after several consecutive bin-busting harvests and is reportedly in talks with Egypt, Israel, Oman, Nigeria and South Africa about potential sales. Some estimates predict total wheat exports from India will top 150 million bushels this year.
Russian consultancy Sovecon estimates that the country’s wheat exports in March will reach 80.8 million bushels. That would be the lowest monthly tally since last July but still significantly higher year-over-year, if realized.
Late last week, China sold 19.2 million bushels of its state wheat reserves on auction to boost domestic stocks and ease high prices. The sale accounted for nearly all (99.6%) of the total amount offered.
South Korea purchased 1.7 million bushels of milling wheat, likely sourced from the United States, in a purchase late last week. The grain is for shipment between mid-May and mid-June. This was the ninth state wheat auction held so far this year.
Preliminary volume estimates were for 73,553 CBOT contracts, tracking moderately above Friday’s final count of 47,622.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-May
765
743
756.25
15
22-Jul
736
714
728.25
15.5
Soybeans
22-May
1710
1666.75
1691
24.75
22-Jul
1689.75
1645.75
1672.25
27.25
Soymeal $/ton
22-Jul
475.5
466.3
473.2
4.5
Soyoil cents/lb
22-Jul
71.5
69.96
71.07
1.37
Wheat $/bushel
22-May
1148.75
1061.75
1119.25
53
22-Jul
1124.75
1041
1093
47.25
KC Wheat
22-May
1148.5
1070.25
1113.25
42.5
22-Jul
1138
1062.25
1103.25
39.75
MPLS Wheat
22-May
1119.5
1058
1088.75
24
22-Jul
1112.25
1052
1082.5
23.75
Live Cattle cents/lb
22-Apr
141
139.775
139.975
-0.525
Feeder Cattle cents/lb
22-Apr
162.325
160.275
161.025
-1.3
Lean Hogs cents/lb
22-May
111.55
107.725
111.25
4.15
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Apr
112.24
104.08
111.9
7.2
Diesel
22-Apr
3.8695
3.592
3.8062
0.2081
Unleaded Gasoline $/gallon
22-Apr
3.4017
3.2222
3.3755
0.1367
Natural Gas
22-May
5.008
4.791
4.953
0.051
U.S. Dollar Index
22-Jun
98.495
98.16
98.435
0.208
Gold $/ounce
22-Jun
1941.8
1917.2
1925
-3.2
Copper
22-Mar
4.7065
4.6495
4.6995
-0.031
Fertilizer Swaps
(as of 03/18)
DAP Tampa-index
1,017.5
122
DAP-New Orleans
1,083.0
35.83
Urea-New Orleans
983.3
82.12
Urea-Middle East
1,120.0
117
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
661.4
0
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