Morning report: Russian drama continues to breed uncertainty for the corn, wheat markets. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 1-4 cents
Soybeans up 4-11 cents; Soymeal down $3.10/ton; Soyoil up $0.93/lb
Chicago wheat up 1-2 cents; Kansas City wheat up 1 cent; Minneapolis wheat up 1-3 cents
*Prices as of 7:00am CDT.
Feedback from the Field updates! How is harvest progress going 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!
I published an updated Feedback from the Field column to our site yesterday. Check it out for the best farmer insights from across the country. More harvesting progress has been made over the past week, but it is still slow going as many farmers continue to wait for crops to mature.
Russia
Oof. Where to start?
Russian president Vladimir Putin is expected to sign a decree tomorrow that will annex four regions of occupied Ukraine as Russian territory after sham referendums were conducted earlier this week under the guise of increasing Russia’s legitimacy for invading Ukraine.
“The votes involved coercion, threats and, in some places, soldiers going door to door and forcing people to vote at gunpoint,” Yaroslav Trofimov reported for the Wall Street Journal this morning.
Russia has installed leaders in all four territories in Eastern Ukraine (Kherson, Zaporizhzhia, Donetsk, and Luhansk), none of which are fully controlled by Russian forces. Meanwhile, the Russian military continues to target missile strikes at Ukraine’s civilian infrastructures.
Even Russia’s ally China has not voiced support for this annexation, with the Chinese Foreign Ministry expressing its respect for “the sovereign and territorial integrity of all countries” in response to Russia’s referendums.
Putin called up 300,000 reservist forces last week to revive the Russian army’s efforts in Ukraine following a series of losses in the Kharkiv region in which it lost approximately 10% of the Ukrainian territory it had previously occupied. Those reservists include farmers, who are currently engaged in peak harvest activity across Russia, during a year in which Russia is supposed to produce its largest wheat crop on record.
Plus, overnight the military alliance NATO formally cited sabotage as the cause of recent damage to the Nord Stream and Nord Stream 2 natural gas pipelines that flow from Russia to Europe. There are now four documented leaks across the system.
“All currently available information indicates that this is the result of deliberate, reckless, and irresponsible acts of sabotage,” the council said. “We, as Allies, have committed to prepare for, deter and defend against the coercive use of energy and other hybrid tactics by state and non-state actors. Any deliberate attack against Allies’ critical infrastructure would be met with a united and determined response.”
NATO issued a statement early this morning warning of an official military response to the vandalism. “NATO is committed to deter and defend against hybrid attacks,” NATO Secretary-General Jens Stoltenberg wrote separately on Twitter. “Any deliberate attack against Allies’ critical infrastructure would be met with a united and determined response.”
It marks the first time since Russia invaded Ukraine that NATO has issued any sort of formal military warning against Russia’s advances and further escalates tensions between Putin and the West.
These tensions increased future uncertainty about viable grain flow speeds out of the Black Sea, which sent corn, soybean, and wheat prices all higher this morning.
“Ukraine’s president worrying aloud that Russia will impede grain flows from his nation after November amplified the price gains (on Wednesday),” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters overnight.
“The market’s ongoing worries about Ukraine’s export corridor moved from nascence to reality with those comments.”
Ukraine’s grain shipments have fallen nearly 42% lower than year ago paces due to the war. However, the “Black Sea Grain Initiative” has allowed for safe passage of nearly 8 million metric tonnes of grain and oilseed products since it began in August.
Corn
Corn prices rose $0.01-$0.04/bushel on concerns about the Black Sea, but gains were sharply capped by bearish ethanol production data released yesterday and lingering macroeconomic concerns across the world.
Ethanol production fell to a 19-month low of 855,000 barrels/day through the week ending September 23 as consumers continue to scale back gasoline purchases amid high prices, according to updated data released by the U.S. Energy Information Administration yesterday.
That is a bearish omen for corn usage rates, which have been heavily dependent upon the ethanol sector to drive demand as the U.S. cattle herd shrinks amid persistent drought conditions on the Plains and astronomical feed costs.
Soybeans
Soybean supplies rose $0.08-$0.14/bushel overnight as headwinds for Brazilian processing increased the odds of a robust export season for U.S. soybean producers. Even with competition against increasing Argentine soybean acres, slowing Brazilian processing speeds propped up soybean prices.
Additionally, low river levels in the U.S. – specifically at varying points on the Mississippi River – are causing concerns that freshly harvested soybean supplies are not likely to make it to the Gulf of Mexico in the appropriately scheduled timeframe for international buyers.
“The U.S. soybean harvest is likely picking up this week, so any logistical interruptions are poorly timed,” Karen Braun, a global ag columnist for Reuters, wrote yesterday. “Export inspections during harvest should drastically increase each week, so that data must be watched closely to flag any potential transportation issues.”
Soymeal prices in China hit new record highs this week as supplies remain scarce amid slow import paces and the hog sector attempts to stage an expansion. That could pose some lucrative cash opportunities for U.S. soybean producers in the coming weeks, though bullish sentiments are likely to be limited by Argentina’s recent rapid soybean shipping paces.
Scarce supplies and strong demand have pushed soybean prices high enough in Brazil that soybean crushing margins are now trading at a loss. Brazil’s domestic usage rates of soy-based biodiesel have slumped as prices remain high and vegetable oil stockpiles rise.
As a result, 10 of Brazil’s 99 soybean crush facilities have temporarily stopped processing soybeans. “Crushers have been caught off guard with a sudden soybean oil and soybean meal oversupply in the market, pressuring crushing margins to its lowest levels since July 2021,” Victor Martins, risk manager at HedgePoint Global, told Reuters.
Eduardo Vanin, an analyst at Agrinvest, expects that the plants are likely to be idled for 30 days unless there is a global revival in soy oil demand before that time or if stockpiles are adequately depleted.
Wheat
Wheat prices continued to build on its 3% gains during yesterday’s trading session amid ongoing fears about Russia’s willingness to allow free passage of Ukrainian grains in the Black Sea, slow harvest paces in Canada, and delayed planting progress in the U.S. Southern Plains, where much of the U.S.’s hard red winter wheat is grown. Prices traded $0.01-$0.06/bushel higher on the overarching sentiments.
Spring wheat harvest paces in Canada continue to lag behind five-year averages after a slow start to the growing season. Manitoba’s harvest is only 47% complete, down from the five-year benchmark of 79% for the same reporting period. The delays helped fuel overnight price gains on the Minneapolis Grains Exchange, where U.S. spring wheat futures are traded.
And Canada isn’t the only country in North America whose wheat crops are facing weather woes. Dry weather continues to delay planting progress in the Southern Plains as growers wait for more soil moisture to plant crops.
Sowing progress stood at 30% complete as of September 25 in USDA’s latest Crop Progress report released on Monday. While that figured trending 1% higher than the five-year average, it likely is not an accurate reflection of the challenges wheat growers are facing in the Southern Plains amid abnormally dry planting conditions.
The Buenos Aires Grains Exchange expects that Argentina’s 2022/23 wheat harvest will fall 22% lower than last year’s haul as dry weather has already limited sowings and yield potential. The Exchange now projects the upcoming harvest at 643 million bushels. USDA’s current forecast for the crop stands at 698 million bushels.
Argentina is the world’s seventh largest wheat exporter and has been a critical source of wheat amid Black Sea market disruptions earlier this year.
Weather
Clear skies are slated to dominate the forecast through the rest of the week across the Heartland, which should help boost next week’s harvest rates in a more favorable manner than Monday’s Crop Progress report.
The favorable weather conditions will likely continue into the first week of October as well. NOAA’s 6-10-day outlook is showing above average probabilities for warm and dry weather through the middle of next week. The 8-14-day outlook is trending warmer and continues to show below average chances for precipitation through the end of next week.
That’s good news for corn, soybean, and spring wheat growers eager to make significant strides on harvest progress over the next two weeks. But for growers in the Plains who are eager to receive moisture for newly planted winter wheat crops, the next couple weeks could be a little more anxiety-producing if no rains move into the Plains.
Of course, these trends could be easily disrupted if Hurricane Ian continues to gain momentum. The storm made landfall in Southwestern Florida yesterday as a Category 4 hurricane. It has been scaled back to a Tropical Storm as of 5am EDT this morning.
The storm is currently hovering over Northeastern Florida, though it is likely to shift out into the Atlantic later this morning and make landfall again in South Carolina by tomorrow afternoon. As of last night, 1.8 million people in Florida did not have power following the storm’s arrival in the Sunshine State.
While the storm is not likely to encroach too severely on areas of the Eastern Corn Belt, it could slow harvest paces in Eastern Indiana and Ohio late this weekend if the rain volumes increase past one to two inches as the storm moves north.
Financials
After yesterday’s rally from the Bank of England’s emergency economic salvage measures to stabilize bond markets, U.S. stocks continued their bearish decline amid ongoing recession fears across the globe. S&P 500 futures fell 0.78% at last glance to $3,703.00 on the sentiments.
The dollar strengthened on the sentiments, though it is still trading below Tuesday’s 20-year high.
Fun facts – armadillos have been moving north out of Texas and are now taking residence in Southern Illinois, with some armadillo spottings reported as far north as the Southwestern Chicago suburbs. Wild times – and they are getting wilder!
What else I’m reading this morning on our website, FarmFutures.com:
My latest E-corn-omics column examines the fast start to Brazil’s soybean planting season and explains why the Brazilian crop is so important this year.
Management coach Tim Schaefer offers insights for farmers who view farm transition planning as “something to think about” to move into a “Let’s roll!” mindset.
USDA announced the Fertilizer Production Expansion Program on Tuesday, which will invest $1 million to $100 million to increase domestic fertilizer production capacity.
Bryce Knorr explains how rising interest rates increase storage costs and market risks.
Morning Ag Commodity Prices – 9/29/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.7675
6.68
6.715
0.01
0.15%
MAR ’23 CORN
$ / BSH
6.83
6.7525
6.785
0.02
0.30%
MAY ’23 CORN
$ / BSH
6.8375
6.76
6.7875
0.015
0.22%
JUL ’23 CORN
$ / BSH
6.7725
6.7
6.7425
0.025
0.37%
SEP ’23 CORN
$ / BSH
6.28
6.25
6.265
0.02
0.32%
DEC ’23 CORN
$ / BSH
6.1825
6.115
6.15
0.0125
0.20%
AR2 ’24 CORN
$ / BSH
6.2425
6.2425
6.2425
0.04
0.64%
AY2 ’24 CORN
$ / BSH
6.2025
6.2
6.2
-0.0225
-0.36%
JUL ’24 CORN
$ / BSH
6.21
6.1975
6.21
0.02
0.32%
NOV ’22 SOYBEANS
$ / BSH
14.22
14.0325
14.185
0.0975
0.69%
JAN ’23 SOYBEANS
$ / BSH
14.31
14.14
14.2775
0.115
0.81%
MAR ’23 SOYBEANS
$ / BSH
14.36
14.1875
14.325
0.1175
0.83%
MAY ’23 SOYBEANS
$ / BSH
14.4
14.22
14.365
0.115
0.81%
JUL ’23 SOYBEANS
$ / BSH
14.39
14.23
14.365
0.115
0.81%
AUG ’23 SOYBEANS
$ / BSH
14.2075
14.08
14.1875
0.1225
0.87%
SEP ’23 SOYBEANS
$ / BSH
13.865
13.755
13.86
0.1425
1.04%
NOV ’23 SOYBEANS
$ / BSH
13.7325
13.5775
13.71
0.125
0.92%
AN2 ’24 SOYBEANS
$ / BSH
13
#N/A
13.605
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
13.6075
13.6075
13.6075
0.0675
0.50%
AY2 ’24 SOYBEANS
$ / BSH
13.6525
#N/A
13.51
0
0.00%
OCT ’22 SOYBEAN OIL
$ / LB
66.71
65.33
66.6
1.08
1.65%
DEC ’22 SOYBEAN OIL
$ / LB
63.37
61.63
63.23
1.08
1.74%
OCT ’22 SOY MEAL
$ / TON
424.5
419.1
419.8
-2
-0.47%
DEC ’22 SOY MEAL
$ / TON
416.7
411.7
412.1
-0.6
-0.15%
JAN ’23 SOY MEAL
$ / TON
413.7
409.3
410.1
0.4
0.10%
MAR ’23 SOY MEAL
$ / TON
407.9
404.3
405.8
1.4
0.35%
MAY ’23 SOY MEAL
$ / TON
406.1
402.3
402.9
0.8
0.20%
DEC ’22 Chicago SRW
$ / BSH
9.145
8.9575
9.0925
0.06
0.66%
MAR ’23 Chicago SRW
$ / BSH
9.2625
9.085
9.2125
0.0625
0.68%
MAY ’23 Chicago SRW
$ / BSH
9.315
9.165
9.2625
0.0575
0.62%
JUL ’23 Chicago SRW
$ / BSH
9.1425
9.005
9.12
0.0825
0.91%
SEP ’23 Chicago SRW
$ / BSH
9.0875
8.96
9.0425
0.06
0.67%
DEC ’23 Chicago SRW
$ / BSH
9.0925
8.9675
9.0525
0.0625
0.70%
AR2 ’24 Chicago SRW
$ / BSH
9
8.955
8.985
0.0575
0.64%
DEC ’22 Kansas City HRW
$ / BSH
9.86
9.695
9.8025
0.0425
0.44%
MAR ’23 Kansas City HRW
$ / BSH
9.82
9.6775
9.765
0.045
0.46%
MAY ’23 Kansas City HRW
$ / BSH
9.7925
9.6425
9.7425
0.05
0.52%
JUL ’23 Kansas City HRW
$ / BSH
9.6
9.5
9.5725
0.07
0.74%
SEP ’23 Kansas City HRW
$ / BSH
9.48
9.41
9.4425
0.0325
0.35%
DEC ’23 Kansas City HRW
$ / BSH
9.455
9.4325
9.4325
0.025
0.27%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.3525
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.8075
9.655
9.745
0.02
0.21%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.845
9.705
9.785
0.015
0.15%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.865
9.7575
9.8225
0.0275
0.28%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.79
9.755
9.7875
0.045
0.46%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.445
9.4
9.4425
0.02
0.21%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.3775
#N/A
9.3675
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
0
0
0.00%
DEC ’21 ICE Dollar Index
$
113.72
112.71
112.78
0.272
0.24%
NO ’21 Light Crude
$ / BBL
82.82
80.34
82.43
0.28
0.34%
DE ’21 Light Crude
$ / BBL
81.88
79.45
81.59
0.35
0.43%
OCT ’22 ULS Diesel
$ /U GAL
3.4901
3.3953
3.4889
0.0395
1.15%
NOV ’22 ULS Diesel
$ /U GAL
3.3739
3.2789
3.3716
0.0344
1.03%
OCT ’22 Gasoline
$ /U GAL
2.5756
2.5329
2.569
-0.0089
-0.35%
NOV ’22 Gasoline
$ /U GAL
2.4637
2.4116
2.4616
-0.0001
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
175.375
0
0.00%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
175
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
143.05
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
146.275
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
89.375
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
75.825
0
0.00%
SEP ’22 Class III Milk
$ / CWT
19.86
19.84
19.86
-0.03
-0.15%
OCT ’22 Class III Milk
$ / CWT
21.95
21.86
21.88
0.03
0.14%
NOV ’22 Class III Milk
$ / CWT
20.92
20.92
20.92
0
0.00%
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