Morning report: Corn, wheat continue to face stiff international competition in the export markets. (Comments are updated by 7:30 a.m. Central Time.)
*Prices as of 6:50 am CST.
Corn
Corn prices edged $0.02-$0.03/bushel lower overnight to $6.60-$6.65/bushel on broad weakness in the ag commodity markets and weather forecasts that are likely beneficial to bumper crops in Brazil during the 2022/23 growing season.
Brazil’s near-term forecast points to favorable rainfall volumes in Mato Grosso as well as in Brazil’s Center-South states that struggled with drought last year. Brazil and China penned trade agreements earlier this year that would increase corn volumes traded between the two countries, which is likely to limit U.S. corn volumes exported to China this coming spring.
Late yesterday evening, the U.S. Environmental Protection Agency (EPA) announced that it would be proposing increased biofuel blending volumes for oil refineries over the next three years. The new proposal will add 1.4 billion new renewable fuel credits by 2025 and will give electric vehicle makers the opportunity to create credits.
Blending mandates are expected to be announced at 20.82 billion gallons for 2023, 21.87 billion gallons for 2024, and 22.68 billion gallons in 2025. Those volumes are favorable domestic demand prospects for U.S. corn and soybean producers, especially if any uncertainty is in the air regarding the viability of export markets.
The news helped to limit the losses in the corn market this morning.
Soybeans
Soybean prices fell $0.07-$0.11/bushel overnight to $14.57-$14.77/bushel this morning as Argentina devalued its currency yesterday, triggering a massive surge of new farmer export sales that will directly compete with U.S. supplies during peak soybean export season. Spillover weakness from the edible oils market also played a key factor in soybean price losses this morning.
Easing Chinese COVID restrictions helped offset the losses somewhat, though favorable Brazilian soybean growing weather will likely also keep soybeans trading at a loss for today’s session.
Soyoil prices faced a steep selloff during the overnight session, falling nearly 5% as Russia and Ukraine ramp up sales of competing sunflower oil amid large stocks. In fact, sunflower oil’s discount to soyoil is now at the highest level in over nine months.
That means that top edible oil buyers across the world – like Indian and the European Union – are likely to turn away from soyoil purchases while it remains more expensive and revert to the more affordable sunoil supplies.
“Sunflower oil sales are picking up since prices are competitive. Instead of the usual premium, now it is available at a discount to soyoil,” Sandeep Bajoria, president of the International Sunflower Oil Association, told Reuters.
The hinted new blending mandates could also be less favorable for soyoil demand prospects as the proposed volumes do not likely include expansion construction underway at crush plants across the U.S.
“Soyoil prices went through the roof on the many new renewable diesel projects announced in the past months, with the thinking that the EPA would logically align with increased production capacity,” a European trader told Reuters. “But leaked bits we got yesterday tell a different story.”
USDA will release data on October 2022 soybean crush volumes today. Pre-report analyst estimates are expecting a bullish report as struggling export markets this fall cleared the way for more supplies available to processors.
The trade is expecting the October 2022 crush to range between 194.0 million – 197.1 million bushels with an average guess of 195.9 million bushels. If realized, the monthly volume would be the largest recorded since December 2021’s record high of 198.2 million bushels.
October is historically one of the largest-volume months for soy crush as freshly harvested supplies become readily available to end users. While the October 2022 crush is expected to be massive, it will still trail October 2021 and 2020 as the third largest October crush on record.
Regardless, it will likely be a bullish signal for prices as it solidifies strong domestic demand for soybeans. And that’s a good sign as export markets have struggled this fall as low water volumes in the Mississippi River have hindered export paces during peak soybean shipping season. For farmers, that is great price reassurance that domestic buyers are likely to offer viable pricing alternatives to international counterparts, easing some future concern about the stability of export markets for U.S. farmers.
Wheat
Wheat prices edged $0.04-$0.06/bushel lower this morning. Losses were limited by a weaker dollar, but more affordably priced Russian and European Union wheat supplies continue to price out U.S. stocks in the international marketplace.
Rail Strike
With the support of numerous related trade groups, the U.S. House of Representatives passed a bill yesterday that would grant seven days paid sick leave to rail workers – the contentious sticking point that led to the union’s rejection of an earlier deal and ultimately threatened a potential strike.
The bill will now move to the Senate, where its outcome is less certain. The measure passed in the House along party lines (221-207) and with the Senate split evenly between the two parties, lack of Republican support could not only upend the bill but also trigger a railway shutdown if a strike is enacted.
The rail workers’ union and the railways have until December 9 to agree upon a private labor agreement, which seems increasingly unlikely after late November, when the union rejected a deal brokered by the White House earlier this fall.
Weather
Clear skies and slightly warmer temperatures are on deck for the Heartland today, according to NOAA’s short-term forecasts. A winter storm system building in the Pacific Northwest will likely edge into the Northern Plains by tomorrow afternoon.
NOAA’s 6-10-day forecasts are trending cooler than usual for the Upper Midwest, Eastern Corn Belt, Northern Plains, and Central Plains through late next week. During that time, the Southeast and Southern Plains will likely see warmer than average temperatures. Luckily, the precipitation forecasts are calling for above average chances for precipitation in the Pacific Northwest and southern edges of the Eastern Corn Belt during that time.
The temperature trends in the 8-10-day outlook will remain cooler than average for the Northern half of the continental U.S. Chances for moisture are likely to remain near normal for most of the country late next week, with drier than average chances for the Great Lakes region during that time.
Financials
Federal Reserve Chairman Jerome Powell commented yesterday that the Fed is expecting to raise interest rates at a slower rate at its next Federal Open Market Committee (FOMC) meeting. FOMC meetings are when the Fed decides to change rates.
The FOMC has raised interest rates by a 0.75% margin since March – a practice not seen since the mid-1990s as the Fed scrambles to address soaring inflationary pressures across the economy. The last FOMC hike in early November brought benchmark interest rates to a 3.75%-4% range. The rate neared 0% in March 2022, highlighting the rapid speeds and aggressive stance the Fed has been approaching interest rate hikes after hesitating to address the issue for most of 2021.
The FOMC next meets on December 13 and 14. Powell indicated only a 0.5% increase would be likely after that meeting, though comments from other Fed governors indicate that it might not be a unanimous policy as some governors favor the continuation of more aggressive rate increases.
Regardless, Wall Street was elated at Powell’s comments yesterday and the markets rallied enough to pull the Dow Jones Industrial Average index out of bear market territory, which it has lingered in for the second half of 2022. S&P 500 futures traded 0.01% lower this morning to $4,080.75 as financial markets wobbled following yesterday’s gains.
While yesterday’s rally helped the S&P 500 record a second consecutive month of gains, uncertainty about global economic health in the new year and some questionable earnings signals from third quarter corporate reports ate away at overnight gains.
“Anything that could be taken less hawkishly, you’re seeing outsized market reactions,” Chris Turner, global head of markets at ING, told the Wall Street Journal, noting that inflationary pressures continue to weigh on the greater economy. “I think the market overreacted to [Powell] a little. It’s too early for the Fed to declare the all-clear.”
What else I’m reading this morning on our website, FarmFutures.com:
Executive editor Mike Wilson shares five ways to manage 2023 profit margins.
Here are the details on the Consumer and Fuel Retailer Choice Act introduced into the Senate on Tuesday, which will ensure permanent and full-market access to E15 fuel blends.
A Rabobank research report finds that fertilizer prices in 2023 may finally start to show some signs of easing.
Since 1980, over $1 trillion has been lost to weather damages in the U.S. Senior editor Ben Potter examines if anything can be done to minimize weather losses going forward.
Advance Trading’s Eric Meyer explains how to take control of your farm’s marketing destiny amid unpredictable prices.
It’s time to start planning 2023 goals. Let our Farm Futures Business Summit help you succeed in 2023!
Morning Ag Commodity Prices – 12/1/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.6175
6.5775
6.5975
-0.0225
-0.34%
MAR ’23 CORN
$ / BSH
6.6675
6.62
6.645
-0.025
-0.37%
MAY ’23 CORN
$ / BSH
6.6475
6.605
6.6275
-0.025
-0.38%
JUL ’23 CORN
$ / BSH
6.5925
6.55
6.575
-0.0225
-0.34%
SEP ’23 CORN
$ / BSH
6.175
6.145
6.1675
-0.015
-0.24%
DEC ’23 CORN
$ / BSH
6.06
6.03
6.05
-0.015
-0.25%
AR2 ’24 CORN
$ / BSH
6.135
6.1025
6.1175
-0.0175
-0.29%
AY2 ’24 CORN
$ / BSH
6.15
6.15
6.15
-0.015
-0.24%
JUL ’24 CORN
$ / BSH
6.13
6.13
6.13
-0.02
-0.33%
JAN ’23 SOYBEANS
$ / BSH
14.68
14.55
14.565
-0.13
-0.88%
MAR ’23 SOYBEANS
$ / BSH
14.74
14.6125
14.6275
-0.1275
-0.86%
MAY ’23 SOYBEANS
$ / BSH
14.81
14.69
14.705
-0.1225
-0.83%
JUL ’23 SOYBEANS
$ / BSH
14.84
14.7275
14.7425
-0.1175
-0.79%
AUG ’23 SOYBEANS
$ / BSH
14.6175
14.535
14.5475
-0.11
-0.75%
SEP ’23 SOYBEANS
$ / BSH
14.165
14.105
14.1125
-0.0975
-0.69%
NOV ’23 SOYBEANS
$ / BSH
13.9525
13.8825
13.89
-0.1
-0.71%
AN2 ’24 SOYBEANS
$ / BSH
13.9325
13.905
13.9325
-0.0675
-0.48%
AR2 ’24 SOYBEANS
$ / BSH
13.8575
#N/A
13.8975
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.8175
#N/A
13.8525
0
0.00%
UL2 ’24 SOYBEANS
$ / BSH
13.81
13.7725
13.81
-0.045
-0.32%
DEC ’22 SOYBEAN OIL
$ / LB
74.5
71.21
71.52
-3.71
-4.93%
JAN ’23 SOYBEAN OIL
$ / LB
71.31
68.25
68.66
-3.22
-4.48%
DEC ’22 SOY MEAL
$ / TON
422.7
417
417.9
0.2
0.05%
JAN ’23 SOY MEAL
$ / TON
420.5
417
418.2
0.4
0.10%
MAR ’23 SOY MEAL
$ / TON
418.9
415.5
417
1
0.24%
MAY ’23 SOY MEAL
$ / TON
416.3
412.7
414.4
1.1
0.27%
JUL ’23 SOY MEAL
$ / TON
415
412.6
413.6
1.7
0.41%
DEC ’22 Chicago SRW
$ / BSH
7.5
#N/A
7.715
0
0.00%
MAR ’23 Chicago SRW
$ / BSH
7.9725
7.855
7.9
-0.055
-0.69%
MAY ’23 Chicago SRW
$ / BSH
8.06
7.9625
8.0125
-0.0475
-0.59%
JUL ’23 Chicago SRW
$ / BSH
8.055
7.9975
8.045
-0.0425
-0.53%
SEP ’23 Chicago SRW
$ / BSH
8.11
8.065
8.1025
-0.0475
-0.58%
DEC ’23 Chicago SRW
$ / BSH
8.2125
8.165
8.1925
-0.05
-0.61%
AR2 ’24 Chicago SRW
$ / BSH
8.2375
8.2225
8.2225
-0.06
-0.72%
DEC ’22 Kansas City HRW
$ / BSH
9.0025
#N/A
9.1325
0
0.00%
MAR ’23 Kansas City HRW
$ / BSH
9
8.895
8.94
-0.0575
-0.64%
MAY ’23 Kansas City HRW
$ / BSH
8.9275
8.8325
8.865
-0.065
-0.73%
JUL ’23 Kansas City HRW
$ / BSH
8.835
8.7475
8.7925
-0.045
-0.51%
SEP ’23 Kansas City HRW
$ / BSH
8.7475
8.7475
8.7475
-0.08
-0.91%
DEC ’23 Kansas City HRW
$ / BSH
8.85
8.775
8.775
-0.0775
-0.88%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
8.795
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.4825
#N/A
9.5675
0
0.00%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.42
9.3325
9.3575
-0.0725
-0.77%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.3525
9.325
9.34
-0.05
-0.53%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.3
9.28
9.28
-0.065
-0.70%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.085
9.07
9.07
-0.055
-0.60%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.1025
9.1
9.1
-0.065
-0.71%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.1075
0
0.00%
DEC ’21 ICE Dollar Index
$
105.86
105.265
105.31
-0.587
-0.55%
JA ’21 Light Crude
$ / BBL
81.83
79.93
81.54
0.99
1.23%
FE ’21 Light Crude
$ / BBL
81.89
80.07
81.61
0.95
1.18%
JAN ’23 ULS Diesel
$ /U GAL
3.3769
3.3176
3.3632
-0.0003
-0.01%
FEB ’23 ULS Diesel
$ /U GAL
3.3111
3.2548
3.3075
0.0132
0.40%
JAN ’23 Gasoline
$ /U GAL
2.4037
2.3667
2.397
0.0123
0.52%
FEB ’23 Gasoline
$ /U GAL
2.4014
2.3695
2.3953
0.0128
0.54%
JAN ’23 Feeder Cattle
$ / CWT
0
#N/A
180.475
0
0.00%
MAR ’23 Feeder Cattle
$ / CWT
0
#N/A
183.45
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
153.075
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
155.675
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
82.9
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
85.35
0
0.00%
DEC ’22 Class III Milk
$ / CWT
19.92
19.89
19.92
0.09
0.45%
JAN ’23 Class III Milk
$ / CWT
19.45
19.42
19.45
0.03
0.15%
FEB ’23 Class III Milk
$ / CWT
19.38
#N/A
19.43
0
0.00%
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