Morning report: Plus – we are drilling down on fertilizer markets this morning. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 2-5 cents
Soybeans up 11-16 cents; Soymeal up $5.90/ton; Soyoil up $1.18/lb
Chicago wheat up 12-13 cents; Kansas City wheat up 13-15 cents; Minneapolis wheat up 10-12 cents
*Prices as of 6:55am CDT.
Feedback from the Field updates – last weeks of the season! How is harvest progressing on your farm this fall?! Click this link to take the survey and share updates about your farm’s harvest progress. I review and upload results daily to the FFTF Google MyMap, so farmers can see others’ responses from across the country – or even across the county!
My latest FFTF column is live on our site! Soybean harvest is rapidly coming to a close across the country and more and more FFTF respondents are reporting corn harvest as complete.
Responses are starting to slow as many growers are wrapping up for the year, so our time together in FFTF this growing season will also come to an end in the upcoming weeks. So be sure to drop any insights you’d like to share with us from the 2022 season at this link and I will share them on our map as well as in my columns as harvest season winds down. Thanks! -JH
Good morning! There was a lot of data released yesterday between ag companies’ third quarter 2022 (Q3) earnings results, plus weekly and monthly export data figures from USDA-FAS and the U.S. Census Bureau. I’ll confess – I spent more time yesterday looking at Wall Street earnings for outlook indicators than I did looking at the export data, so that’s what you’ll be seeing this morning. I’ll work on getting more export insights out to you all next week. Have a great weekend!
Corn
Corn prices traded up $0.02-$0.05/bushel this morning on spillover strength from the wheat market and a fresh bout of uncertainty regarding access to the Black Sea corridor.
Yesterday’s trade featured a fresh look at updated analyst estimates for 2022 yields. StoneX and IHS Markit Agribusiness both raised their corn estimates following farmer harvest reports. StoneX’s estimate of 173.9 bpa was adjusted up to 174.5 bpa while IHS Markit lifted its estimate from 171.2 bpa to 173.9 bpa. That should make for a bearish November WASDE report next week.
Soybeans
Expectations of strong Chinese demand overnight bucked lackluster export sales figures reported in yesterday’s USDA Weekly Export Sales report, lifting soybean prices $0.10-$0.16/bushel this morning. The morning’s rally is set to put soybean prices in a position to end the week higher than it started.
Wheat
Wheat prices rallied $0.10-$0.15/bushel on Black Sea worries. But worries about damage to Australia’s wheat crop amid flooding during prime harvest season could tighten the global exportable supplies market.
Inputs
The Illinois USDA released its bi-weekly production costs report yesterday. While phosphate prices were unchanged from the previous week’s report (currently being quoted between $953.75-$954.17/ton, on average), nitrogen prices inched slightly higher as peak fall applications near.
Anhydrous ammonia prices edged $6.04/ton higher (0.4%) over the past two weeks to $1,429.38/ton. Urea prices have remained unchanged over the past month at $829.33/ton on average. UAN prices also creeped up $7.50/ton (1.2%) from the last report to $641.67/ton in yesterday’s report.
Diesel prices have been on the rise for the past month, with the latest retail report finding an average quote of $4.85/gallon for a 1,000-gallon delivery. That figure is up $0.03/gallon over the past 2 weeks and $0.51/gallon higher since the beginning of October.
To be sure, anhydrous ammonia applications haven’t picked up a lot of momentum yet in the Corn Belt. The Syngenta Greencast soil temperature map below shows that outside of the Northern Plains, soil temperatures are still a little on the too warm side (55 degrees and up) to keep anhydrous ammonia applications sealed into the soil.
Regardless, much the anhydrous ammonia supplies have likely already been delivered to retailers by this point so it should come as little surprise that anhydrous prices slowed their dizzying ascent in yesterday’s report.
The University of Illinois Farmdoc team hosted a brilliant webinar yesterday about nitrogen fertilizer decisions for 2023 (I cannot recommend watching it enough to you readers – it’s incredibly insightful). One of the participants reminded growers to focus on per unit measurements when it comes to making fertilizer decisions to help reduce some of the sticker shock associated with $1,400/ton ammonia prices.
Here’s the quick math for you – to produce 200 bpa corn in Illinois given yesterday’s prices, farmers will need to pay between $206.02 – $247.63/acre for NPK costs. Not counting urea costs – because urea prices are currently lower than this time last year – it is $15-$28/acre more expensive to apply NPK now than it was last year.
Assuming no nitrogen is needed, it costs $82-$97/acre to purchase the P and K fertilizers needed to harvest 60 bpa soybeans in Illinois based on yesterday’s Illinois price quotes. That is an $8-$12/acre increase from a year ago.
Dr. Gary Schnitkey urged growers in yesterday’s webinar to hedge some of the higher input cost burden by taking advantage of lucrative commodity prices this fall. Booking sales at these current price levels more than justifies the higher per acre input costs to harvest corn and soybeans in 2023.
Even with the minor nitrogen increases in Illinois reported over the past two weeks, the current price for December 2023 corn futures ($6.245/bushel as of market close yesterday) still offers a 17%-21% return to land costs for growers, based on my redneck math and using U of I and Purdue crop budgets.
My redneck math shows that for 2023 corn production, the net breakeven futures price will probably hover around the $5.94-$6.00/bushel benchmark. Weaker prices this week should serve as a good reminder for growers to start making proactive moves on 2023 marketing plans, if they haven’t already (PS – Naomi Blohm agrees!)
More inputs
Nutrien, one of the world’s largest fertilizer producers, released its third quarter earnings report yesterday. The company made a “non-cash impairment reversal of $330 million” in its Phosphate division that caused it to miss its earnings target by a couple cents.
But year-to-date Q3 earnings were still recorded at a record-high $6.6 billion on high volume sales and a strong price environment. Translation – Nutrien made a lot of money this year not just on more farmer purchases, but also on high commodity prices.
A few highlights from the earnings reports that I found relevant to farmers/market watchers:
“Weather has been favorable in North America, and we anticipate that the rapid pace of harvest will support strong fall ammonia demand and normal application rates of potash, phosphate and crop protection products.”
“South American spring crop planting is proceeding with a mix of planting conditions. Argentina continues to be impacted by La Nina-related drought, while planting conditions in much of Brazil have generally been favorable. We expect that Brazilian soybean acreage will increase by 3 to 4 percent, which is also expected to support a proportional increase in safrinha corn acreage.”
“Potash shipments from Belarus are projected to be down 50 to 60 percent and Russia down 20 to 25 percent in 2022 compared to the prior year, in line with our previous expectations. We have lowered our global potash shipment forecast to between 60 and 62 million tonnes in 2022, largely due to the impact of higher-than-expected inventory and cautious buying in North America and Brazil during the second half of 2022.”
“Nitrogen prices continue to be supported by historically high European natural gas prices that have led to significant curtailments of ammonia and downstream nitrogen products. Shifts in global nitrogen trade flows have led to higher US exports and lower import volumes, which we expect will result in a tight North American supply and demand balance entering 2023.”
My key takeaways? Fertilizer inventory in North America is stable – for now. But the E.U./Russia natural gas issues are likely to have the most significant impact on nitrogen supply availably by next spring.
Keep an eye on U.S. fertilizer imports and exports over the next six months. The U.S. produces most of its own fertilizer, but in a tight supply environment, we can’t really afford to be shipping out products that we will need to eventually use.
Even more inputs
Corteva was expected to post a Q3 loss during yesterday’s earnings report, but the chemical and seed company’s losses were offset by higher-than-expected farmer sales.
“While the outlook for ag fundamentals is strong, macroeconomic pressures are expected to continue, including currency and inflation headwinds,” Corteva Chief Executive Officer Chuck Magro said in a statement, as reported by Reuters.
The company’s Q3 net sales were reported at $2.78 billion, a 17% annual increase. Pre-report market estimates had expected Corteva to post a $2.60 billion net sales figure. While the company reported an operating loss from its seeds division, earnings from its crop protection line more than offset the losses thanks to a 71% annual increase in pesticide sales.
Weather
There is snow on the ground on the Colorado Front Range this morning! Looking out my window, I’d say only a quarter inch or so of snow accumulated overnight.
The snow system that hit here overnight is moving east across the Upper Midwest, Central Plains, and Southern Plains today, according to NOAA’s short-term forecasts. While most of the precipitation is likely to be in the form of rain, Eastern Colorado, Western Kansas, and Eastern Nebraska could see some snow accumulation as well.
The system will also pick up more moisture as it travels east. I may have only received a quarter inch of snow, but Eastern Kansas and Oklahoma to Wisconsin could see over two inches of accumulation in the next 24 hours.
I’m not jealous of y’all…but maybe I am just a little. Luckily, I winterized my yard yesterday before the snow started, so there is a healthy layer of 32-0-10 soaking in underneath the snow so that my lawn will stay healthy over the winter and will be in golf course shape by spring – as long as we get enough snow!!!
NOAA’s 6-10-day forecasts are now trending warmer for the Upper Midwest and Central/Southern Plains and wetter for the western half of the country (plus Illinois and Wisconsin). Chances for rain are highest in the Pacific Northwest and Upper Midwest, though the Southern Plains are seeing a higher chance for moisture relief as well.
Those trends will begin to shift slightly in the 8-10-day outlook. Forecasts during that time are now trending cooler for the Midwest and Plains and drier for the western half of the country, though the Upper Midwest and Plains still have an above average chance of precipitation accumulation during that time.
That is good news for the Mississippi River basin – meaningful showers over the next couple days and (hopefully) weeks could help restore river levels to keep barge traffic moving up and down the river so that farmers can keep shipping grain and sourcing next year’s fertilizer supplies at profitable prices.
Updated drought monitor info released by the University of Nebraska yesterday found dry conditions become even drier across the U.S. over the past week. As of November 1, 85.28% of U.S. land was reported to be in some sort of abnormally dry to exceptional drought condition, up 0.82% from the prior week.
The 85.3% figure set a new record high for dryness in the U.S., surpassing the last three week’s new highs as well as the past high of 80.2% set in July 2012.
This might sound like a glib thought, but I had it and I still can’t get over how incredible it is – it is unusually dry everywhere in the U.S. where major food production takes place. It is phenomenal and frightening, especially if this trend persists into next spring.
If you want to be awed – or shocked – even more, check out USDA’s Crop and Livestock Areas in Drought report. Around 74% of next year’s winter wheat crop is currently in drought – the most severe drought regions to be specific – and it is likely going to have negative implications for yields next summer.
More specifically, virtually 100% of Colorado, Nebraska, Kentucky, Arkansas, and California’s winter wheat crops are in the D1-D4 drought range. Woof.
Hopefully these weekend showers will help reverse the record-breaking dry trend we’ve been experiencing across the country over the past month. But based on the data alone, we’ll need more than just a nice weekend soaking to pull ourselves out of this drought before next spring.
Financials
Stock futures inched up this morning ahead of the monthly jobs report, suggesting markets are optimistic that this month the employment rate will finally show some responsiveness to higher interest rates. S&P 500 futures traded 0.73% higher to $3,755.00 on the optimism.
Asian stock markets traded up this morning on hopes that China will soon consider easing its Zero Covid policies. Oil prices also moved higher on the optimism that China’s demand will come back online at full force.
What else I’m reading this morning on our website, FarmFutures.com:
Naomi Blohm knows that the best marketing plans have started scenario planning not just for 2022 grain, but also the 2023 and 2024 crops.
For those of you who may have missed my Wednesday morning newsletter, my latest E-corn-omics column is about the implications of the recent Brazilian election to U.S. farmers.
USDA’s Risk Management Agency aims to broaden participation in crop insurance for underserved farmers through $3.3 million investment.
Our latest special edition Farm Futures print issue features a series on farmer mental health. It is one of the pieces I am most proud of during my time here, so I cannot recommend checking it out enough!
Morning Ag Commodity Prices – 11/4/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.8525
6.785
6.83
0.0375
0.55%
MAR ’23 CORN
$ / BSH
6.9075
6.84
6.8825
0.035
0.51%
MAY ’23 CORN
$ / BSH
6.905
6.8425
6.88
0.0325
0.47%
JUL ’23 CORN
$ / BSH
6.85
6.7875
6.8225
0.0275
0.40%
SEP ’23 CORN
$ / BSH
6.415
6.36
6.4075
0.045
0.71%
DEC ’23 CORN
$ / BSH
6.2825
6.235
6.2575
0.02
0.32%
AR2 ’24 CORN
$ / BSH
6.3375
6.3025
6.3375
0.03
0.48%
AY2 ’24 CORN
$ / BSH
6.35
6.35
6.35
0.02
0.32%
JUL ’24 CORN
$ / BSH
6.325
6.325
6.325
0.0275
0.44%
NOV ’22 SOYBEANS
$ / BSH
14.4225
14.2425
14.4225
0.155
1.09%
JAN ’23 SOYBEANS
$ / BSH
14.5475
14.315
14.5225
0.1525
1.06%
MAR ’23 SOYBEANS
$ / BSH
14.62
14.3875
14.5925
0.1525
1.06%
MAY ’23 SOYBEANS
$ / BSH
14.69
14.465
14.66
0.1475
1.02%
JUL ’23 SOYBEANS
$ / BSH
14.7175
14.4975
14.69
0.15
1.03%
AUG ’23 SOYBEANS
$ / BSH
14.5375
14.3925
14.515
0.1475
1.03%
SEP ’23 SOYBEANS
$ / BSH
14.1725
14.06
14.15
0.115
0.82%
NOV ’23 SOYBEANS
$ / BSH
14.0125
13.8425
13.9775
0.1025
0.74%
AN2 ’24 SOYBEANS
$ / BSH
14.0225
13.9925
14.0225
0.12
0.86%
AR2 ’24 SOYBEANS
$ / BSH
13.9425
#N/A
13.825
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.9
#N/A
13.7925
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
76.49
75.18
76.3
1.01
1.34%
JAN ’23 SOYBEAN OIL
$ / LB
74.27
73.1
74.06
0.88
1.20%
DEC ’22 SOY MEAL
$ / TON
420.3
414.9
419.9
5.6
1.35%
JAN ’23 SOY MEAL
$ / TON
413.2
407.7
412.8
5.3
1.30%
MAR ’23 SOY MEAL
$ / TON
404.3
399.4
404
4.7
1.18%
MAY ’23 SOY MEAL
$ / TON
400.3
395.5
399.7
4
1.01%
JUL ’23 SOY MEAL
$ / TON
399.3
395.2
398.9
3.7
0.94%
DEC ’22 Chicago SRW
$ / BSH
8.54
8.3875
8.52
0.115
1.37%
MAR ’23 Chicago SRW
$ / BSH
8.725
8.5825
8.705
0.1075
1.25%
MAY ’23 Chicago SRW
$ / BSH
8.8225
8.69
8.8
0.1025
1.18%
JUL ’23 Chicago SRW
$ / BSH
8.825
8.7
8.815
0.1025
1.18%
SEP ’23 Chicago SRW
$ / BSH
8.865
8.785
8.86
0.0975
1.11%
DEC ’23 Chicago SRW
$ / BSH
8.935
8.8825
8.9275
0.1
1.13%
AR2 ’24 Chicago SRW
$ / BSH
8.91
8.91
8.91
0.0775
0.88%
DEC ’22 Kansas City HRW
$ / BSH
9.5625
9.4025
9.5425
0.13
1.38%
MAR ’23 Kansas City HRW
$ / BSH
9.535
9.38
9.5075
0.12
1.28%
MAY ’23 Kansas City HRW
$ / BSH
9.4975
9.3475
9.4875
0.13
1.39%
JUL ’23 Kansas City HRW
$ / BSH
9.42
9.275
9.3925
0.1025
1.10%
SEP ’23 Kansas City HRW
$ / BSH
9.3825
9.305
9.3825
0.1125
1.21%
DEC ’23 Kansas City HRW
$ / BSH
9.4125
#N/A
9.2975
0
0.00%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.2375
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.57
9.43
9.5575
0.1275
1.35%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.675
9.5425
9.665
0.115
1.20%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.725
9.705
9.71
0.1025
1.07%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.7
#N/A
9.5875
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.4975
9.4975
9.4975
0.1225
1.31%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.445
#N/A
9.3725
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.3775
0
0.00%
DEC ’21 ICE Dollar Index
$
112.875
112.155
112.28
-0.524
-0.46%
DE ’21 Light Crude
$ / BBL
91.53
87.82
91.22
3.05
3.46%
JA ’21 Light Crude
$ / BBL
90.44
86.84
90.2
3.02
3.46%
DEC ’22 ULS Diesel
$ /U GAL
3.9565
3.8491
3.8986
0.0333
0.86%
JAN ’23 ULS Diesel
$ /U GAL
3.7123
3.637
3.6839
0.0349
0.96%
DEC ’22 Gasoline
$ /U GAL
2.7875
2.6842
2.7833
0.0894
3.32%
JAN ’23 Gasoline
$ /U GAL
2.67
2.5767
2.6648
0.082
3.17%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
178
0
0.00%
JAN ’23 Feeder Cattle
$ / CWT
0
#N/A
179.425
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
151.95
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
154.875
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
83.375
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
87.175
0
0.00%
NOV ’22 Class III Milk
$ / CWT
20.9
20.9
20.9
0.03
0.14%
DEC ’22 Class III Milk
$ / CWT
20.04
19.98
19.99
0.12
0.60%
JAN ’23 Class III Milk
$ / CWT
19.68
19.55
19.68
0.23
1.18%
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