Morning report: Plus – a recap of yesterday’s October 2022 export figures. (Comments are updated by 7:30 a.m. Central Time.)
*Prices as of 6:55 am CST.
Good morning! The U.S. Census Bureau, in collaboration with USDA’s Foreign Ag Service (FAS), released updated data for October 2022 export volumes yesterday morning. I’m going to include the results in each commodity section but the key item you need to know is that even with lackluster volumes, high prices helped soybean export revenues to notch a new record high during October 2022. Keep reading for more details!
First – why am I doing this? The Census Bureau figures, though well over a month past the time of which they may have been more relevant, are widely regarded by USDA’s World Ag Outlook Board (WAOB), the organization which publishes the all-important WASDE report, as the most accurate metric of U.S. ag exports.
The big picture of yesterday’s report is that higher commodity prices are keeping U.S. ag exports generating record sales. U.S. ag exporters shipped $17.5 billion worth of goods to international customers in October 2022. That figure was a 1% decrease in nominal terms from year ago revenues (not counting for inflation) – representing some of the supply chain issues faced at the U.S. Gulf this past fall.
But overall, ag exporters are still in good shape. Calendar year to date ag shipments reached $161.5 billion in October 2022, up nearly 14% (again, not counting for inflation) from the same time a year ago. With a $424 million trade surplus for the month, ag exports continue to be a valuable part of our country’s economy.
Corn
Old crop (2022) corn futures contracts traded $0.01/bushel higher this morning while new crop (2023) contracts edged a penny lower during the overnight trading session. 2022 futures contracts hovered between $6.25-$6.40/bushel at last glance.
Corn exports for the month of October 2022 dipped nearly 22 million bushels lower than the previous month to 81.8 million bushels. The fall season is not typically a major exporting month for corn – those volumes are typically reserved for the spring – but October 2022 corn export volumes were the smallest since the same time in 2012 due in large part to shipping issues on the Mississippi River.
Even with higher prices, the lower volumes meant that U.S. corn exporters generated 20% less cash in October 2022 compared to the prior month. Nearly $670.6 million of corn export revenues were recorded in October.
To recap, the shipping issues on the Mississippi River were a key driver of dramatically lower corn export volumes in October 2022. The volumes were so weak that revenues from higher corn prices could not be realized by shippers and farmers alike.
Fall is not the primary season for corn exports, though. U.S. corn exporters will want to ensure that water volumes in shipping lanes on the Mississippi River have returned to passable levels by early springtime to ensure corn volumes can pass freely – and farmers can earn more lucrative profits via cash markets this spring.
Soybeans
Two large export sales totaling 18.5 million bushels to Chinese and unknown buyers were announced by USDA yesterday. Mostly bullish U.S. export data yesterday helped offset bearish sentiments from China during the overnight trading session, lifting soybean prices $0.06-$0.11/bushel this morning. Old crop futures contracts range between $14.64-$14.82/bushel while new crop futures are trading between $13.87-$14.17/bushel.
South American weather patterns also influenced soybean prices this morning. Dryness continues to persist in Argentina and will likely take a bite out of yield prospects in the Pampas grains region. “Without a major shift in the weather pattern in Argentina, buyers are likely to remain active as the market builds a weather premium,” Hightower said in a memo, as reported by Reuters.
China’s customs administration announced overnight that its November 2022 import volumes fell 14% annually on slowed U.S. shipping paces due to low water levels on the Mississippi River. China only imported 270 million bushels of soybeans in November after only taking in 151 million bushels of soybeans in October 2022.
Those figures were China’s smallest soybean import volumes recorded since 2014. Calendar year-to-date soybean import volumes of nearly 3.0 billion bushels are 8.1% lower than the same time a year ago.
It wasn’t all the U.S.’s fault – rising COVID rates and strict measures also slowed customs processing in China in November. Crushing margins in China turned positive in October after lingering in negative territory since April, though in recent weeks the margins have tightened again as soybean prices continued higher.
While China’s import volumes are likely to edge higher in December, don’t expect China to go on a major buying spree until the fate of Brazil’s 2022/23 crop is determined. “Most buyers have covered enough beans before the [Lunar New Year] holiday and are just waiting,” a trader in Beijing told Reuters.
Yesterday’s export data released from October 2022 saw soybean export revenues for the month soar to the largest volume on record – a feat that reflected the power of high prices in current market conditions despite lackluster shipment volumes for the month.
For the month of October 2022, U.S. soybean export revenues soared 4% above the previous record high of $5.5 billion recorded in November 2021 to $5.7 billion. October and November are typically the highest dollar months for U.S. soybeans, so November’s soybean export haul could be even more lucrative than in October.
Nerd warning – inflation plays an important role here. These figures are all in nominal terms (the value of the monthly exports at the month of shipment). But if inflation is factored in (and it really should be based on how quickly prices have risen over the past two years), the value of November 2021 shipments ($5.9 billion) actually exceeds the October 2022 volume, so the new record does not stand.
And digging deeper into the volumes takes even more air out of soybean’s sails. October 2022 soybean shipping volumes came in at 359 million bushels – the 10th largest monthly volume on record. But low water levels on the Mississippi River that slowed barge shipments to the U.S. Gulf meant shipping volumes fell below 8% lower than October 2021.
High prices are the only thing keeping lucrative cash sale options available for U.S. soybean growers this fall. Marketing year-to-date soybean export revenues are 6% higher than a year ago (in nominal terms) even as volumes trail year-ago shipping paces by an equal 6%.
Wheat
Wheat prices rebounded from a 13-month low yesterday, which ushered in some international buyers overnight. Strong E.U. shipping paces and cheap Russian supplies continue to keep U.S. wheat exporters priced out of international markets. But even with that, U.S. wheat prices rose $0.02-$0.11/bushel this morning.
September is typically the last month of peak U.S. wheat export season, so it came as no surprise yesterday when the Census Bureau’s export data showed lackluster findings for wheat.
At 50.8 million bushels of wheat shipped in October 2022, export volumes dipped to a six-month low though still outpaced October 2021’s 52-year low of 44.7 million bushels. High prices helped – $558.5 million was earned in export revenues from wheat shipments, down significantly from September 2022’s marketing year high of nearly $1.2 billion but still notching the highest October wheat export revenue in the past nine years.
U.S. export volumes historically start to inch back up after the new year before taking off in the late spring and early summer months. Currently, U.S. wheat continues to struggle to uphold competitive pricing status against cheaper European Union and Russian supplies which will likely keep wheat export volumes depressed until the next U.S. crop is harvested next summer.
Weather
A flurry of light snow showers are expected today in Northern Wisconsin and Central Minnesota, according to NOAA’s short-term forecasts. Heavy rains are expected to stretch from the Central Plains into the Southeast over the next 24 hours. Drought-stressed Oklahoma will likely see the highest chances of accumulation over that time – some areas of the Southern Plains could see up to two inches in the next 24 hours.
NOAA’s 6-10-day forecasts are trending cooler than usual for the portion of the continental U.S. west of the Rocky Mountains through early next week. During that time, the Plains and Midwest will likely see warmer than average temperatures. Luckily, the precipitation forecasts are calling for above average chances for precipitation across virtually all of the major growing (and skiing!) regions in the U.S. with the highest chances centered over the Great Lakes region.
The temperature trends in the 8-10-day outlook will cool across the Plains by later next week, while the Great Lakes region is likely to see warmer than average temperatures. Chances for moisture are likely to remain slightly above to near normal for most of the Midwest and Plains during that time.
Financials
China’s government announced overnight that it would be eliminating many testing and quarantine requirements and limiting local officials’ powers to enforce lockdown restrictions going forward, bringing a sudden end to China’s draconian pandemic policies originally enacted to curb virus transmission.
This is a rare case of citizen protest in China that actually spurred the government to acquiesce to the public’s demands. COVID rates are surging at record levels across China and the virus will likely continue to pose a real threat to China’s older population. The sudden lifting of restrictions also begs the question – is China’s health system and broader economy prepared for what is likely to be a sudden flood of infections and demand?
We will see.
S&P 500 futures edged 0.67% lower this morning to $3,918.75 on continued worries that the Federal Reserve will keep interest rates high for a longer period (than investors would like) to help cool inflationary pressures.
What else I’m reading this morning on our website, FarmFutures.com:
Advance Trading’s Brian Basting reviews futures levels, marketing strategies, and crop insurance periods to help farmers define their marketing plans headed into the new year.
Purdue University’s Ag Barometer finds that input costs and interest rates are at the top of farmers’ lists of concerns.
Bryce Knorr advises farmers to employ smart tax management strategies by locking in fuel expenses for next year.
It is almost peak tax season – and CPA Bob Krogmeier has several tips to prevent a massive spike in your 2022 tax bill.
My latest E-corn-omics column features analysis from USDA’s updated 2022 net farm income figures which are on pace to notch the highest level since the Great Grain Robbery in 1973.
Morning Ag Commodity Prices – 12/7/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.265
6.24
6.25
-0.005
-0.08%
MAR ’23 CORN
$ / BSH
6.385
6.35
6.365
-0.0075
-0.12%
MAY ’23 CORN
$ / BSH
6.3975
6.3675
6.3825
-0.0075
-0.12%
JUL ’23 CORN
$ / BSH
6.37
6.34
6.355
-0.005
-0.08%
SEP ’23 CORN
$ / BSH
6.0475
6.0225
6.0325
-0.0075
-0.12%
DEC ’23 CORN
$ / BSH
5.94
5.915
5.925
-0.0075
-0.13%
AR2 ’24 CORN
$ / BSH
6.0125
6
6.005
-0.005
-0.08%
AY2 ’24 CORN
$ / BSH
6.0375
6.0325
6.0375
-0.005
-0.08%
JUL ’24 CORN
$ / BSH
6.0375
#N/A
6.035
0
0.00%
JAN ’23 SOYBEANS
$ / BSH
14.635
14.5575
14.625
0.075
0.52%
MAR ’23 SOYBEANS
$ / BSH
14.6925
14.6175
14.6875
0.0725
0.50%
MAY ’23 SOYBEANS
$ / BSH
14.7625
14.69
14.7625
0.0725
0.49%
JUL ’23 SOYBEANS
$ / BSH
14.805
14.7325
14.8025
0.0675
0.46%
AUG ’23 SOYBEANS
$ / BSH
14.605
14.545
14.6025
0.05
0.34%
SEP ’23 SOYBEANS
$ / BSH
14.15
14.105
14.15
0.0475
0.34%
NOV ’23 SOYBEANS
$ / BSH
13.9225
13.8575
13.9075
0.04
0.29%
AN2 ’24 SOYBEANS
$ / BSH
13.935
13.8975
13.925
0.035
0.25%
AR2 ’24 SOYBEANS
$ / BSH
13.865
13.845
13.855
0.0425
0.31%
AY2 ’24 SOYBEANS
$ / BSH
13.84
#N/A
13.785
0
0.00%
UL2 ’24 SOYBEANS
$ / BSH
13.8575
#N/A
13.8
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
64.2
63.95
63.95
0.08
0.13%
JAN ’23 SOYBEAN OIL
$ / LB
62.24
61.43
62.15
0.53
0.86%
DEC ’22 SOY MEAL
$ / TON
452.1
#N/A
449.2
0
0.00%
JAN ’23 SOY MEAL
$ / TON
454.4
447.6
452.2
3.6
0.80%
MAR ’23 SOY MEAL
$ / TON
451.1
445.1
448.9
3
0.67%
MAY ’23 SOY MEAL
$ / TON
448.1
442.3
445.7
2.2
0.50%
JUL ’23 SOY MEAL
$ / TON
445.7
440.8
443.3
1.5
0.34%
DEC ’22 Chicago SRW
$ / BSH
0
#N/A
7.055
0
0.00%
MAR ’23 Chicago SRW
$ / BSH
7.41
7.2625
7.375
0.085
1.17%
MAY ’23 Chicago SRW
$ / BSH
7.5125
7.375
7.4825
0.085
1.15%
JUL ’23 Chicago SRW
$ / BSH
7.565
7.435
7.535
0.08
1.07%
SEP ’23 Chicago SRW
$ / BSH
7.6475
7.525
7.6225
0.08
1.06%
DEC ’23 Chicago SRW
$ / BSH
7.745
7.6325
7.73
0.0775
1.01%
AR2 ’24 Chicago SRW
$ / BSH
7.81
7.7
7.7875
0.0775
1.01%
DEC ’22 Kansas City HRW
$ / BSH
8.16
#N/A
8.4575
0
0.00%
MAR ’23 Kansas City HRW
$ / BSH
8.3825
8.2875
8.3525
0.0525
0.63%
MAY ’23 Kansas City HRW
$ / BSH
8.3425
8.25
8.315
0.055
0.67%
JUL ’23 Kansas City HRW
$ / BSH
8.305
8.225
8.2675
0.0475
0.58%
SEP ’23 Kansas City HRW
$ / BSH
8.3275
8.2475
8.3
0.055
0.67%
DEC ’23 Kansas City HRW
$ / BSH
8.335
8.2975
8.3175
0.025
0.30%
AR2 ’24 Kansas City HRW
$ / BSH
8.29
8.27
8.27
-0.0025
-0.03%
DEC ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
9.065
0
0.00%
MAR ’23 MLPS Spring Wheat
$ / BSH
8.9925
8.94
8.975
0.015
0.17%
MAY ’23 MLPS Spring Wheat
$ / BSH
8.995
8.965
8.97
0
0.00%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.0125
8.9875
9.0125
0.02
0.22%
SEP ’23 MLPS Spring Wheat
$ / BSH
8.91
8.9025
8.91
0
0.00%
DEC ’23 MLPS Spring Wheat
$ / BSH
8.9825
8.9825
8.9825
0.0225
0.25%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
8.945
0
0.00%
DEC ’21 ICE Dollar Index
$
105.8
105.195
105.215
-0.327
-0.31%
JA ’21 Light Crude
$ / BBL
74.82
72.75
74.32
0.07
0.09%
FE ’21 Light Crude
$ / BBL
75.01
73
74.53
0.07
0.09%
JAN ’23 ULS Diesel
$ /U GAL
2.9375
2.8719
2.9171
0.0016
0.05%
FEB ’23 ULS Diesel
$ /U GAL
2.9102
2.8499
2.8976
0.0107
0.37%
JAN ’23 Gasoline
$ /U GAL
2.1677
2.1113
2.1457
-0.0034
-0.16%
FEB ’23 Gasoline
$ /U GAL
2.1791
2.1237
2.1574
-0.0032
-0.15%
JAN ’23 Feeder Cattle
$ / CWT
0
#N/A
181.8
0
0.00%
MAR ’23 Feeder Cattle
$ / CWT
0
#N/A
184.15
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
151.55
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
153.625
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
82.275
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
86.925
0
0.00%
DEC ’22 Class III Milk
$ / CWT
20.5
20.5
20.5
0.03
0.15%
JAN ’23 Class III Milk
$ / CWT
19.91
#N/A
20.04
0
0.00%
FEB ’23 Class III Milk
$ / CWT
19.69
19.69
19.69
-0.05
-0.25%
