Morning report: Corn, wheat waver on economic prospects, stronger dollar. Plus – new 2022 USDA farm income forecasts. (Comments are updated by 7:30 a.m. Central Time.)
Corn mixed
Soybeans down 13-17 cents; Soymeal down $9.00/ton; Soyoil down $1.45/lb
Wheat mixed
*Prices as of 6:55am CDT.
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Farm Income
I missed this report last week while I was at the Farm Progress Show, but it is a very important one. USDA’s Economic Research Service released its updated outlook for 2022 farm income forecasts last Thursday. And despite rising input costs, at $147.7 billion 2022 nominal net farm income is still forecast to be 5.2% ($7.3B) higher than in 2021.
But the effects of inflation are skewing this statistic. When you factor in inflation, 2022 net farm income actually is 0.6% lower than year-ago values. Budgets aren’t shrinking that much though – inflation-adjusted 2022 net farm incomes are still 42.1% higher than the 20-year inflation-adjusted average of $104 billion.
ERS expects that higher commodity prices in 2022 will generate much of the revenue to help offset soaring costs, though the loss of ad hoc government payment programs to farmers will help make margins increasingly tight for growers this year.
Nominal production expenses are forecast 17.8% higher in 2022 compared to the previous year at $437.3 billion.
If inflation does start to begin easing across the global economy, it will likely represent the beginning of a rocky road for growers. Commodity prices remain elevated but are susceptible to weakness as outside money is diverted back to assets with odds for higher returns – especially in the event of a global recession. Decreases in production costs typically lag behind revenue downturns.
Your best way to weather this storm? Start planning for 2023 now. Nitrogen prices are probably about as slow as they are going to get for the next six to nine months, so don’t hesitate to pull the trigger on booking advance purchases, especially if your dealer is still offering reasonable pricing that far out. Spoiler alert – some are no longer doing that.
But also, make sure you know your costs going into 2023 and are actively executing market sales to cover those expenses. High commodity prices seemed like a safe bet six months ago, but that tide may soon be turning.
Corn
Corn prices came back from the three-day weekend trading $0.01-$0.06/bushel higher this morning, though the complex wavered between gains and losses as lower energy prices, a stronger dollar, and looming harvest activity kept the bears waiting on the sidelines for yet another trading session.
Soybeans
The Argentine government decided yesterday to alter its foreign currency exchange rate yesterday to increase farmer sales into export markets and subsequently generate more government revenue.
The move is likely to be temporary – lasting only through September – but is sending U.S. soybean prices $0.13-$0.17/bushel lower this morning. That sentiment, combined with hopes for a better-than-expected U.S. soybean harvest this fall, a large Brazilian soybean crop, and lower prices in the crude oil market, kept prices lower across the soy complex this morning.
Palm oil also hit a six-month low, which thwarted any potential gains from the edible oils market, which has been a fundamental piece of strong soybean prices over the past year.
“A surge in Argentina producer soybean sales over the coming days could be negative for CBOT soybean futures, but we will have to see how producers react to the ‘soybean dollar’ in coming days,” Terry Reilly, senior commodity analyst with Futures International in Chicago, told Reuters this morning.
Wheat
Wheat prices also wavered between gains and losses this morning, rising $0.01-$0.07/bushel at last glance with upward price mobility limited by a weaker dollar and increasing export paces from Russia and Ukraine. Some weekend showers across the Plains also helped strengthen winter wheat planting prospects.
Australian wheat exports are posed to break new record this year, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). ABARES increased its June 2022 export earnings forecast by 8% overnight to a record-breaking $48 million (A$70.3 billion).
La Ni?a weather patterns have brought bountiful rains to Australia’s eastern wheat-producing regions over the past two years, which have resulted in bumper crops. And demand hasn’t slouched either, as the large harvests have been eagerly snapped up by international buyers formerly reliant on Black Sea wheat supplies.
ABARES expects a 70% chance of La Ni?a continuing through the next few months in Australia, which is the country’s peak spring season, which bodes well for production. “Winter crop prospects in Australia are looking very promising at the beginning of spring – we’re forecasting a 55.5 million tonne harvest,” ABARES Executive Director Jared Greenville said in a statement.
The Australian wheat crop will be just shy of last year’s record harvest, according to USDA estimates, but it will still likely fetch a pretty penny on the global market. Australia is poised to be the world’s third largest wheat exporter in 2021/22 and the fourth largest in 2022/23.
Weather
It’s going to be another blistering day on the Plains, according to NOAA’s short-range forecasts, though the Great Lakes region could see more moderate mercury readings today. After some holiday weekend showers in the Eastern Corn Belt, this week should see mostly clear skies across the country, which will favor corn silage harvest progress across the country, but also at the Holland Dairy Farm in Northern Illinois!
The 6-10-day NOAA outlook is forecasting above average chances for excessive heat for most of the country, except the lower half of the Mississippi River Valley and most of the Southeast, over the next 10 days. The mid-portion of the country will remain dry during that time, while both coasts could see above average chances for rain.
Above average heat will continue to persist across nearly all of the country except the West Coast in the 8-14 day NOAA outlook, Dry weather will continue to plague the Central Plains and Eastern Corn Belt during that time, though spring wheat growers in the Pacific Northwest with late planted crops could face an above average chance for showers as the end of September creeps up.
Financials
Last Friday’s jobs report saw the monthly unemployment rate tick up 0.2% from historic lows to 3.7% during August 2022. That’s a great sign for inflation metrics, as it means that higher interest rates are likely doing their part to help ease inflationary pressures.
S&P 500 futures rose 0.58% this morning to $3,946.25 on the post-holiday optimism. Energy markets tumbled as worries about lackluster economic data from Europe and recurring fears that another COVID lockdown is ahead for China left traders uncertain about future global economic growth.
What else I’m reading this morning on our website, FarmFutures.com:
Bryce Knorr points out that corn shows better odds for rallies over the coming month.
Farm Futures’ 2023 Acreage Projections are live on our website. Spoiler alert: corn and winter wheat are poised to reign supreme next year.
Another day, another supply chain issue, writes executive editor Mike Wilson. Farmers who want to upgrade equipment may need to pay now – and wait.
Naomi Blohm examines if global recession fears are warranted and what the implications mean for commodity demand.
AgCareers.com’s Bonnie Johnson identifies five key trends at play in the ag workforce right now.
Tired of market volatility? AgMarket.Net’s Jim McCormick advises growers to brace for more of it as inflation, yield reductions and fertilizer shortages weight on the market.
Morning Ag Commodity Prices – 9/6/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
6.76
6.7075
6.745
0.055
0.82%
DEC ’22 CORN
$ / BSH
6.7325
6.6475
6.6725
0.015
0.23%
MAR ’23 CORN
$ / BSH
6.7875
6.705
6.73
0.0175
0.26%
MAY ’23 CORN
$ / BSH
6.7925
6.715
6.74
0.015
0.22%
JUL ’23 CORN
$ / BSH
6.74
6.665
6.685
0.0125
0.19%
SEP ’23 CORN
$ / BSH
6.325
6.2925
6.2925
0.015
0.24%
DEC ’23 CORN
$ / BSH
6.1875
6.1225
6.1425
-0.0075
-0.12%
AR2 ’24 CORN
$ / BSH
6.235
6.225
6.225
0.005
0.08%
MAY ’24 CORN
$ / BSH
0
#N/A
6.2475
0
0.00%
SEP ’22 SOYBEANS
$ / BSH
14.98
#N/A
15.105
0
0.00%
NOV ’22 SOYBEANS
$ / BSH
14.23
14.04
14.06
-0.145
-1.02%
JAN ’23 SOYBEANS
$ / BSH
14.2725
14.0875
14.1025
-0.15
-1.05%
MAR ’23 SOYBEANS
$ / BSH
14.2975
14.11
14.1275
-0.1525
-1.07%
MAY ’23 SOYBEANS
$ / BSH
14.3
14.1225
14.1425
-0.1525
-1.07%
JUL ’23 SOYBEANS
$ / BSH
14.285
14.1
14.1
-0.17
-1.19%
AUG ’23 SOYBEANS
$ / BSH
14.09
#N/A
14.085
0
0.00%
SEP ’23 SOYBEANS
$ / BSH
13.605
13.5975
13.5975
-0.0775
-0.57%
NOV ’23 SOYBEANS
$ / BSH
13.51
13.36
13.36
-0.14
-1.04%
AN2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.53
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.465
0
0.00%
SEP ’22 SOYBEAN OIL
$ / LB
71.22
70.5
70.5
-1
-1.40%
OCT ’22 SOYBEAN OIL
$ / LB
67.93
66
66.27
-1.67
-2.46%
SEP ’22 SOY MEAL
$ / TON
448.2
444
444.3
0.2
0.05%
OCT ’22 SOY MEAL
$ / TON
419
415.2
415.6
-8.4
-1.98%
DEC ’22 SOY MEAL
$ / TON
413
410.1
410.2
-7.5
-1.80%
JAN ’23 SOY MEAL
$ / TON
408.1
405.8
405.9
-7.1
-1.72%
MAR ’23 SOY MEAL
$ / TON
400.4
398
398.3
-6.5
-1.61%
SEP ’22 Chicago SRW
$ / BSH
0
#N/A
7.93
0
0.00%
DEC ’22 Chicago SRW
$ / BSH
8.25
8.0125
8.115
0.005
0.06%
MAR ’23 Chicago SRW
$ / BSH
8.4075
8.1775
8.2775
0.005
0.06%
MAY ’23 Chicago SRW
$ / BSH
8.495
8.305
8.37
-0.0025
-0.03%
JUL ’23 Chicago SRW
$ / BSH
8.5075
8.32
8.4025
0.0175
0.21%
SEP ’23 Chicago SRW
$ / BSH
8.5725
8.3775
8.44
-0.0125
-0.15%
DEC ’23 Chicago SRW
$ / BSH
8.675
8.4775
8.5525
-0.0025
-0.03%
SEP ’22 Kansas City HRW
$ / BSH
0
#N/A
8.715
0
0.00%
DEC ’22 Kansas City HRW
$ / BSH
8.94
8.72
8.84
0.0625
0.71%
MAR ’23 Kansas City HRW
$ / BSH
8.955
8.8075
8.8625
0.0725
0.82%
MAY ’23 Kansas City HRW
$ / BSH
8.9525
8.805
8.825
0.035
0.40%
JUL ’23 Kansas City HRW
$ / BSH
8.82
8.815
8.82
0.1325
1.53%
SEP ’23 Kansas City HRW
$ / BSH
8.825
#N/A
8.6725
0
0.00%
DEC ’23 Kansas City HRW
$ / BSH
8.85
8.85
8.85
0.1225
1.40%
SEP ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
8.7225
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.07
8.8775
8.9675
0.0675
0.76%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.19
9
9
-0.025
-0.28%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.1875
9.085
9.1275
0.0225
0.25%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.2525
#N/A
9.11
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
8.99
8.99
8.99
0.145
1.64%
DEC ’23 MLPS Spring Wheat
$ / BSH
8.9
8.9
8.9
0.0525
0.59%
SEP ’21 ICE Dollar Index
$
109.95
109.37
109.94
0.43
0.39%
OC ’21 Light Crude
$ / BBL
90.39
86.18
86.7
-0.17
-0.20%
NO ’21 Light Crude
$ / BBL
89.99
85.88
86.37
-0.11
-0.13%
OCT ’22 ULS Diesel
$ /U GAL
3.7771
3.5825
3.6232
0.0452
1.26%
NOV ’22 ULS Diesel
$ /U GAL
3.6996
3.5275
3.5474
0.0362
1.03%
OCT ’22 Gasoline
$ /U GAL
2.5299
2.4381
2.4643
0.0007
0.03%
NOV ’22 Gasoline
$ /U GAL
2.4715
2.3847
2.4046
-0.0013
-0.05%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
183.875
0
0.00%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
184.95
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
144.55
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
150.25
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
90.025
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
82.7
0
0.00%
SEP ’22 Class III Milk
$ / CWT
19.75
19.7
19.75
0
0.00%
OCT ’22 Class III Milk
$ / CWT
20.19
20
20.1
0.16
0.80%
NOV ’22 Class III Milk
$ / CWT
20.94
20.79
20.79
0.1
0.48%
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