Morning report: Milder and wetter mid-August forecasts ease yield worries. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 7-17 cents
Soybeans down 36-48 cents; Soymeal down $6.60/ton; Soyoil down $1.24/lb
Chicago wheat down 16-19 cents; Kansas City wheat down 19-21 cents; Minneapolis wheat down 18-20 cents
*Prices as of 7:05am CDT.
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Good morning! Friday’s USDA reports were nothing short of exciting. Here is a quick list of my top insights from Friday’s reports, starting with some of the day’s most eagerly anticipated figures.
Eagerly anticipated prevent plant acreage data from USDA’s Farm Service Agency was not released the hour following the release of the WASDE and Crop Production reports due to “additional time necessary for processing the data,” according to the FSA Crop Acreage Data website.
Yield discussion
Friday’s yield results should take timing into more careful consideration than has previously been discussed. The results from our August 2022 Farm Futures reader survey found that growers are more optimistic about soybean yields than corn at this point in the growing season, estimating 52.5 bpa for prior to Friday’s soybean reading and 174.8 bpa for corn.
However, several growers admitted to struggling to answer the yield question in the Farm Futures August 2022 survey. They confessed that because of late planted crops, it was still too early to make a guess on yields with any degree of certainty.
I agree with this sentiment – considering this year’s planting delays, it is still too early to fully know how 2022 yields will shake out, especially relative to last year’s crop size and growing season. The upcoming October WASDE is likely to provide more reliable yield estimates relative to Friday’s findings, though it seems increasingly possible that the volatility could continue until USDA finalizes 2022 yields in January 2023.
Production discussion
It will be another record year for U.S. soybean output, while corn production is slated to sink to the fourth largest U.S. corn crop on record.
Soybean growers should take some comfort in the fact that USDA expects than the extra 26 million bushels of 2022 production, as well as the 10 million extra bushels expected from 2021/22 ending stocks, are going to be quickly snapped up by export buyers.
The larger yields mean that 2022/23 soybean ending stocks will have a little more breathing room, dropping from last month’s ranking of 11th tightest on record to the 13th tightest ending supplies on record.
Ending stocks discussion – U.S. supplies
USDA cut usage rates for old crop corn and soybeans, which introduced some bearish prospects to the ag commodity markets on Friday. Soybeans suffered more bearish risk due to the larger 2022 crop estimates.
The smaller corn crop (146M bushels cut from ’22 production forecasts) led USDA to cut usage rates for feed and residual and export categories for corn. This could lead to deeper culling of the country’s livestock herd as corn supplies tighten.
But if global buyers increase demand for U.S. corn or ethanol production ramps up, the corn market could see a reversion to bullish price trends.
Soybean supplies will have a little more breathing room next year than previously thought, especially if demand forces (China) stutter or if a global economic recession takes hold. The 2022/23 U.S. soybeans’ stocks-to-use ratio swelled to 5.4% in Friday’s report, up 0.3% from the previous month’s estimates.
That puts 2022/23 supply volumes closer to 2020/21 levels than those of 2021/22. It could signal the beginning of more bearish risks at play for the U.S. soybean market and could leave more susceptible to downward price potential if diplomatic relations with top U.S. soybean buyer China are not maintained.
U.S. wheat sellers saw some bearish hopes revived in USDA’s adjustments to 2021 and 2022 usage estimates. Even though NASS raised the 2022 yield forecast by 0.2 bpa to 47.5 bpa, upward revisions for both old and new crop wheat consumption for food estimates offered some optimism for what had previously been believed to be stagnant wheat demand.
Cooling inflationary pressures in the U.S. over the past month prompted weakening price dynamics for the U.S. dollar over the past week, which has also triggered an uptick in global demand. USDA’s WAOB increased 2022/23 U.S. wheat export prospects by 25 million bushels to 825 million bushels on the sentiment.
But even with the larger wheat crop for the 2022/23 marketing campaign, U.S. wheat supplies are going to tighten by the end of the marketing year when it will record a stocks-to-use ratio of 32.1%. The demand influxes will result in the tightest U.S. wheat ending stocks since 2013/14’s 24.2%.
Global stocks
Global soybean stocks were pushed higher by the larger U.S. new crop. With South America’s 2021/22 crop completed and planting season still several weeks away for the new crop, there was little new news to report for global soybean stocks following Friday’s report release.
Wheat harvest revisions for top Northern Hemisphere wheat producers were dominant in Friday’s list of USDA adjustments. Ultimately, production increases in Russia, China, Canada, and the U.S., as well as increases expected for Southern Hemisphere crops expected for Brazil and Australia early next year, offset losses to the European Union and Argentina’s 2022/23 wheat crops.
Demand remains steady for global wheat, as evidenced by a flurry of recent tenders as wheat prices have declined following harvest in the Northern Hemisphere. USDA upped import volumes for North African countries in Friday’s report, which represents the world’s largest wheat buying bloc by volume.
USDA also increased its outlook for Ukrainian corn production, adding nearly 197 million bushels of 2022/23 production volumes to bring this year’s harvest estimate to 1.18 billion bushels. That volume is still considerably less than last year’s volume of 1.66 billion bushels and will continue to present the country with considerable storage and logistics challenges in the coming months if the current “Grain Initiative” agreement with Russian military forces does not permit more grain volumes to pass through Black Sea shipping terminals.
With the “Grain Initiative” in mind, USDA upped Ukraine’s 2022/23 corn exporting forecast by 138 million bushels to 492 million bushels. That’s still nearly half of last year’s volumes but is more significant than USDA’s expectations for Ukrainian wheat shipments for the 2022/23 marketing year, which are only expected to reach 404 million bushels.
Corn
Rains expected over the Midwest today are taking a toll on corn prices this morning, dropping nearby futures $0.07-$0.16/bushel at last glance as worries about heat damage previously expected for the middle of August begin to evaporate (pun intended).
There was still some residual effects of Friday’s USDA reports at play in the overnight trading session, especially after USDA raised export volume forecasts for Ukrainian corn. “There is still plenty of uncertainty over how Ukrainian export volumes will evolve, despite the Ukraine/Russia grain deal,” ING said in a note.
So far, 16 vessels have departed from the Black Sea carrying grain and oilseed products since the “Grain Initiative” began two weeks ago.
Soybeans
Soybean prices were especially susceptible to improving weather forecasts for the Upper Midwest, as prices fell $0.36-$0.45/bushel on the updated rainy forecasts and milder temperatures. Markets were still grappling with the effects of Friday’s USDA reports, which pointed to a higher-than-expected 2022 U.S. soybean yield.
“Traders were expecting a cut in soybean production but the USDA (U.S. Department of Agriculture) raised production and yield to record highs,” according to a Hightower report, as reported by Reuters. “The report news was bearish, especially the jump in yield as acreage was adjusted lower. Traders also see the cooler and wetter weather expected this week as a bearish factor.”
Wheat
A stronger dollar, hopes for Ukrainian wheat export volumes, and upward production revisions for both the Southern and Northern Hemisphere in last Friday’s USDA reports sent wheat prices $0.16-$0.20/bushel lower overnight.
Weather
Temperatures will moderate in the 60s to low 80s across much of the Upper Midwest today, according to NOAA’s short-range forecasts. Rains are expected for the Upper Midwest and Central Mississippi River Valley over the next 24 hour that could result in well over an inch of accumulation over the next 24 hours. That bodes extremely well for U.S. soybean yield prospects, which were previously believed to be under threat of severe heat stress and drought during this mid-August time frame.
Plus, NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending cooler for most of the Heartland by early next week. The Upper Midwest is trending drier and warmer during that time, but it could be just outside the narrow window for peak soybean reproductive activity.
What else I’m reading this morning on our website, FarmFutures.com:
Our team’s coverage of Friday’s August 2022 WASDE reports.
Roger Wright cautions farmers that old crop to new crop basis loss happens every year and should be regarded as farmer marketing enemy number one.
Commstock’s Matthew Kruse recommends considering adjusting grain marketing strategies to accommodate for historically high basis levels.
AgMarket.Net’s Matt Bennett forecasts where the market will place its focus after Friday’s USDA reports.
Morning Ag Commodity Prices – 8/15/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
6.3525
6.21
6.235
-0.1625
-2.54%
DEC ’22 CORN
$ / BSH
6.3825
6.2325
6.2575
-0.165
-2.57%
MAR ’23 CORN
$ / BSH
6.4475
6.3025
6.3225
-0.1675
-2.58%
MAY ’23 CORN
$ / BSH
6.475
6.335
6.37
-0.145
-2.23%
JUL ’23 CORN
$ / BSH
6.455
6.315
6.34
-0.15
-2.31%
SEP ’23 CORN
$ / BSH
6.0775
6
6.02
-0.09
-1.47%
DEC ’23 CORN
$ / BSH
5.9725
5.89
5.9275
-0.0675
-1.13%
AR2 ’24 CORN
$ / BSH
6.0325
5.9725
6.0025
-0.065
-1.07%
MAY ’24 CORN
$ / BSH
0
#N/A
6.1025
0
0.00%
SEP ’22 SOYBEANS
$ / BSH
15.3075
14.9725
14.9825
-0.3675
-2.39%
NOV ’22 SOYBEANS
$ / BSH
14.4375
14.0925
14.1175
-0.425
-2.92%
JAN ’23 SOYBEANS
$ / BSH
14.4975
14.16
14.1825
-0.42
-2.88%
MAR ’23 SOYBEANS
$ / BSH
14.4875
14.1675
14.19
-0.4
-2.74%
MAY ’23 SOYBEANS
$ / BSH
14.4775
14.17
14.1925
-0.3875
-2.66%
JUL ’23 SOYBEANS
$ / BSH
14.455
14.155
14.17
-0.38
-2.61%
AUG ’23 SOYBEANS
$ / BSH
13.93
13.93
13.93
-0.3625
-2.54%
SEP ’23 SOYBEANS
$ / BSH
12
#N/A
13.8225
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
13.565
13.3225
13.38
-0.275
-2.01%
AN2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.6825
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.5975
0
0.00%
SEP ’22 SOYBEAN OIL
$ / LB
69.62
67.1
67.34
-2.19
-3.15%
OCT ’22 SOYBEAN OIL
$ / LB
68.25
65.67
65.91
-2.39
-3.50%
SEP ’22 SOY MEAL
$ / TON
466.3
455.8
458.3
-6.4
-1.38%
OCT ’22 SOY MEAL
$ / TON
421.9
412.8
416.2
-7.1
-1.68%
DEC ’22 SOY MEAL
$ / TON
416.2
406.8
410.5
-7.4
-1.77%
JAN ’23 SOY MEAL
$ / TON
410.3
402
405.3
-7.6
-1.84%
MAR ’23 SOY MEAL
$ / TON
400.3
392.1
395.3
-7.8
-1.94%
SEP ’22 Chicago SRW
$ / BSH
8.04
7.835
7.8925
-0.1675
-2.08%
DEC ’22 Chicago SRW
$ / BSH
8.21
8.01
8.065
-0.16
-1.95%
MAR ’23 Chicago SRW
$ / BSH
8.3325
8.155
8.2025
-0.1525
-1.83%
MAY ’23 Chicago SRW
$ / BSH
8.44
8.25
8.3
-0.145
-1.72%
JUL ’23 Chicago SRW
$ / BSH
8.42
8.2325
8.2975
-0.13
-1.54%
SEP ’23 Chicago SRW
$ / BSH
8.4275
8.2625
8.2975
-0.1575
-1.86%
DEC ’23 Chicago SRW
$ / BSH
8.3875
8.3225
8.3475
-0.1525
-1.79%
SEP ’22 Kansas City HRW
$ / BSH
8.8525
8.65
8.7025
-0.19
-2.14%
DEC ’22 Kansas City HRW
$ / BSH
8.885
8.6725
8.7325
-0.1925
-2.16%
MAR ’23 Kansas City HRW
$ / BSH
8.905
8.7
8.765
-0.195
-2.18%
MAY ’23 Kansas City HRW
$ / BSH
8.9025
8.7325
8.7875
-0.19
-2.12%
JUL ’23 Kansas City HRW
$ / BSH
8.8525
8.6625
8.7225
-0.1775
-1.99%
SEP ’23 Kansas City HRW
$ / BSH
0
#N/A
8.8675
0
0.00%
DEC ’23 Kansas City HRW
$ / BSH
8.7675
#N/A
8.8725
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.125
8.9375
8.9975
-0.1975
-2.15%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.2575
9.0575
9.13
-0.19
-2.04%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.3225
9.1875
9.2575
-0.1775
-1.88%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.3375
9.265
9.3275
-0.1825
-1.92%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.2925
9.2925
9.2925
-0.24
-2.52%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.135
#N/A
9.32
0
0.00%
DEC ’23 MLPS Spring Wheat
$ / BSH
0
#N/A
9.39
0
0.00%
SEP ’21 ICE Dollar Index
$
106.235
105.435
106.145
0.635
0.60%
SE ’21 Light Crude
$ / BBL
92.1
87.12
87.53
-4.56
-4.95%
OC ’21 Light Crude
$ / BBL
91.47
86.56
87
-4.46
-4.88%
SEP ’22 ULS Diesel
$ /U GAL
3.5337
3.3752
3.4089
-0.1089
-3.10%
OCT ’22 ULS Diesel
$ /U GAL
3.4989
3.3491
3.379
-0.1072
-3.07%
SEP ’22 Gasoline
$ /U GAL
3.0631
2.9108
2.925
-0.121
-3.97%
OCT ’22 Gasoline
$ /U GAL
2.793
2.6488
2.6603
-0.1214
-4.36%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
179.625
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
183.375
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
140.225
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
144.5
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
100.025
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
90.375
0
0.00%
AUG ’22 Class III Milk
$ / CWT
20.1
#N/A
20.15
0
0.00%
SEP ’22 Class III Milk
$ / CWT
20.08
19.9
20.05
0.25
1.26%
OCT ’22 Class III Milk
$ / CWT
20.47
20.46
20.47
0.11
0.54%
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