Morning report: Corn also sees a small dip while soybeans firm on South American drought. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 2-5 cents
Soybeans up 5-17 cents; Soymeal up $3.90/ton; Soyoil up $1.05/lb
Chicago wheat down 19-21 cents; Kansas City wheat down 17-27 cents; Minneapolis wheat down 18-21 cents
*Prices as of 7:10am CDT.
Corn
Hopes for a ceasefire in Ukraine and lower energy prices on surging COVID-19 cases in China left corn futures trading $0.02-$0.06/bushel lower overnight. Losses were capped by rising concerns about Ukraine’s ability to plant its spring crops, which could see a 39% decrease in acreage this year due to the ongoing conflict.
“Ukraine and Russia are holding good amount of grains stocks. As soon as war ends, this stockpile will be available for shipping,” a Mumbai-based grains dealer with a global trading firm told Reuters last night.
The U.S. Energy Information Administration (EIA) releases its weekly look at ethanol production today. Surging oil prices are likely to keep ethanol output estimates high in today’s report. Last week’s data update saw ethanol output surge to a five-week high of 43.2 million gallons/day through the week ending March 4.
Gasoline consumption also inched up last week as spring break nears and warmer weather began to settle in across the country. Weekly consumer gasoline demand reached a four-week high of 376.4 million gallons/day, suggesting that even with soaring gasoline prices consumers were not yet willing to cut back on fuel.
But that’s good news for ethanol producers, who can provide a cheap additive to the precious fuel. Last week’s EIA report saw weekly ethanol blending rates rise to 37.6 million gallons/day – the highest weekly volume since Christmas 2021 travel season.
Soybeans
Soybean prices regained support overnight from the tight global oils market as well as tight crop supplies in South America. Soybean futures posted a $0.05-$0.16/bushel gain overnight on the sentiment as persistent drought conditions continued to raise questions about crop quality in Brazil and Argentina.
The National Oilseed Processors Association (NOPA) released its estimates on February 2022 crush volumes yesterday. In typical fashion for the February crush, volumes dropped 9% from the prior month to 165.1 million bushels. Over the past five years, February crush volumes have averaged about 10% lower than their January counterparts.
But the news wasn’t all bad. The February 2022 crush volume of 165.1 million bushels was the second highest February crush volume on record, trailing only the February 2020 high of 166.3 million bushels. It is also nearly a 10-million-bushel increase from February 2021 crush volumes, which were stunted by natural gas shortages due to the February 2021 cold snap in the Southern Plains.
NOPA’s estimate, derived from surveying NOPA members which handle 95% of all U.S. soybeans designated for crushing, was in line with the pre-report average trade guess of 165.0 million bushels. The analyst estimates ranged between 162.0 million – 169.1 million bushels.
Wheat
Wheat futures prices traded $0.18-$0.27/bushel lower overnight as hopes for a potential ceasefire between Russia and Ukraine grew, even though Russia continues to bombard and siege Ukrainian cities.
High grain prices are triggering China to purchase rice for livestock feed. Across Asia, many livestock feeders are substituting low-grade rice into rations in place of more expensive grains and oilseeds as global buyers continue to scramble for affordable feed supplies in the wake of the Russian-Ukrainian conflict in the Black Sea.
Rice is typically more expensive than wheat. But the surge in global wheat prices as Black Sea exporting activity slowed in the wake of Russia’s unprovoked military invasion of Ukraine erased rice’s premium over wheat, suddenly making lower quality wheat grades an attractive feedstock for Asian livestock producers.
“There could be greater interest in broken rice for animal feed if the strength currently dominating wheat and corn markets persists,” Rome-based FAO rice economist Shirley Mustafa told Reuters yesterday. “It is not just animal feed, there could also be a substitution in other use sectors, such as more people turning to rice for their meals.”
China has already booked potential purchases from of three million metric tonnes (MMT) this year, up from 2 MMT last year, with India as its primary source. Thailand has also become an attractive market for Chinese buyers, though those buyers will need to compete with domestic demand.
“Demand for Indian broken rice has gone up because of higher corn prices. Feed makers are trying to replace corn with rice,” B.V. Krishna Rao, president of India’s Rice Exporters Association, told Reuters.
“There is tremendous increase in demand for lower quality rice from Thailand’s animal feed industry,” one trader in Bangkok told Reuters. “In fact, much of Thailand’s broken rice is likely to be consumed in the domestic market.”
A continuation of war in the Black Sea region will inevitably spur more of these unusual ration substitutions and unlikely trade partnerships.
“As of now, broken rice is mainly for the feed sector, but as the war gets prolonged and buyers are not able to get hold of adequate wheat, then it comes to food security,” said one Singapore-based grains trader. “Buyers will do whatever they can to replace expensive wheat with rice or other alternatives.”
Inputs
Canadian potash producers are on track to benefit from Western trade restrictions with Belarus and Russia. India will increase its fertilizer purchases from our neighbors to the North, as its usual supplies remain tied up in the Black Sea conflict. India will also increase its imports from Canada, Israel, and Jordan in the coming weeks as spring sowing accelerates.
Prior to the Black Se conflict, India was going to sign a three-year fertilizer import agreement with Russia. That deal may resurface if a peaceful resolution can be made by the Russians in Ukraine in the coming weeks.
Meanwhile, Canadian-owned Brazil Potash Corp will increase production in the Amazon region to support tightening global fertilizer supplies. The move is widely regarded as a means of self-reliance in the wake of the Black Sea conflict. Brazil imports 95% of its potash supplies, primarily from Canada, Russia, and Belarus.
Weather
Spring weather is back in the Heartland, according to NOAA’s short-range forecasts. Mostly clear skies are forecast across the Midwest and Plains today, though a snow system building in the Central Rockies will likely push rain out to the Central Plains later today and through the night.
Financials
The Federal Reserve closes its two-day FOMC meeting today. It will likely raise the Federal Funds interest rate by 0.25% at the meeting’s close today. It marks the first time since 2018 that the Fed will have increased interest rates as inflation rates soar to 40-year highs. Expect the news at 11am CDT.
And speaking of Daylight Savings – the Senate passed a bill yesterday that would eliminate Daylight Savings! Politics aren’t usually my jam, but this is the one issue I would happily die on a hill over! Car accidents and heart attacks all increase this week because that single hour of sleep is that crucial for daily survival.
And as a dairy farmer who has milked many of those daylight savings mornings, I can tell you with absolute certainty that those cows have never supported daylight savings time – and I’ve seen the somatic cell counts to prove it. I am so happy that this passed. It’s a great victory for public health and well-being for humans and Holsteins alike!
China vowed vague support for its equities markets overnight, triggering a round of frantic stock buying that offset a panicked selloff from the previous few days as rising COVID-19 cases across China triggered lockdown activity.
The government was not clear what “support” would look like, but the Hang Seng China Enterprises Index gained a staggering 12.5% in the overnight trading session thanks to ecommerce gains and the largest property stocks rally in over a decade.
“It’s the end of capitulation,” Peter Garnry, head of equity and quantitative strategy at Saxo Bank, told Bloomberg this morning. “This confirms that the Chinese government sees healthy and strong equity markets as key for the country going forward. The equity market is totally sentiment driven right now and everyone is looking for an excuse to buy, though the headwinds for Chinese equities are still enormous.”
U.S. equity indices rose overnight on China’s support for its beaten-down markets. Moscow hinted that it may be ready for peace talks with Ukraine. Ukraine has proposed becoming a “neutral country” but will keep its own military forces. The Kremlin suggested it would be open to this, noting that it “could be viewed as a certain kind of compromise,” Kremlin spokesman Dmitry Peskov said overnight.
Energy prices continued to trade just under $100/barrel (please, please, please go lower – I’m so close to having to fill up my car!) this morning. Output estimates for Russia are likely to shrink by about a quarter in April, according to the International Energy Agency.
But rising lockdowns in China and rising U.S. crude supplies could offset the smaller supply, which is what seemed to be the more significant factor in the overnight trading session.
“Right now the volatility is so great, the moves are so dramatic, it makes it very difficult to take any kind of position in the market,” Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC, told Bloomberg. “We could have very tight markets in a month’s time which is going to feel a lot different to how it feels today.”
Also worth a read on our website, FarmFutures.com
My latest E-corn-omics column puts to rest fears about a looming potential global wheat shortage.
March Madness is here, and Bryce Knorr isn’t talking about basketball. Recent market volatility is at the highest Knorr has seen in 35 years in the markets. Check out Knorr’s tips for navigating these chaotic markets in a recent Ag Marketing IQ column.
Senior Editor Ben Potter has some last-minute tips to prep for profit as spring approaches.
A Twitter thread triggered conversations about opening up CRP acreage for planting this spring a couple weeks back. But Secretary of Agriculture Tom Vilsack says that’s not a likely solution to calming high commodity prices.
Rising nitrogen costs have sent farmers in search of cheaper alternatives. Potential options? Microbes, humates, and wine, writes Executive Editor Mike Wilson.
Morning Ag Commodity Prices – 3/16/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.57
7.47
7.53
-0.05
-0.66%
JUL ’22 CORN
$ / BSH
7.225
7.145
7.1875
-0.045
-0.62%
SEP ’22 CORN
$ / BSH
6.705
6.6425
6.6775
-0.025
-0.37%
DEC ’22 CORN
$ / BSH
6.53
6.47
6.4975
-0.015
-0.23%
MAR ’23 CORN
$ / BSH
6.5175
6.4575
6.49
-0.01
-0.15%
MAY ’23 CORN
$ / BSH
6.46
6.4475
6.4575
-0.0225
-0.35%
JUL ’23 CORN
$ / BSH
6.465
6.4125
6.4125
-0.0375
-0.58%
MAY ’22 SOYBEANS
$ / BSH
16.785
16.55
16.7475
0.16
0.96%
JUL ’22 SOYBEANS
$ / BSH
16.56
16.3275
16.5
0.1425
0.87%
AUG ’22 SOYBEANS
$ / BSH
16.1425
15.9725
16.07
0.1275
0.80%
SEP ’22 SOYBEANS
$ / BSH
15.3475
15.165
15.2775
0.1175
0.78%
NOV ’22 SOYBEANS
$ / BSH
14.85
14.625
14.7775
0.1075
0.73%
JAN ’23 SOYBEANS
$ / BSH
14.7125
14.5175
14.605
0.055
0.38%
MAR ’23 SOYBEANS
$ / BSH
14.2325
14.17
14.175
0.0525
0.37%
MAY ’23 SOYBEANS
$ / BSH
14.0275
13.9775
14.0275
0.05
0.36%
JUL ’23 SOYBEANS
$ / BSH
14.005
14
14.005
0.075
0.54%
MAY ’22 SOYBEAN OIL
$ / LB
74.92
73.62
74.71
1.03
1.40%
JUL ’22 SOYBEAN OIL
$ / LB
70.77
69.6
70.59
0.88
1.26%
MAY ’22 SOY MEAL
$ / TON
489.4
481.6
487.5
3.5
0.72%
JUL ’22 SOY MEAL
$ / TON
475.1
467.3
473.1
3
0.64%
AUG ’22 SOY MEAL
$ / TON
458.9
445.5
458.1
2
0.44%
SEP ’22 SOY MEAL
$ / TON
446.2
443.4
445
2.4
0.54%
OCT ’22 SOY MEAL
$ / TON
434.6
427.9
431.9
1.3
0.30%
MAY ’22 Chicago SRW
$ / BSH
11.595
11.1725
11.315
-0.2275
-1.97%
JUL ’22 Chicago SRW
$ / BSH
11.29
10.94
11.0725
-0.2025
-1.80%
SEP ’22 Chicago SRW
$ / BSH
10.72
10.4425
10.5275
-0.1925
-1.80%
DEC ’22 Chicago SRW
$ / BSH
10.16
9.9325
9.995
-0.1775
-1.74%
MAR ’23 Chicago SRW
$ / BSH
9.72
9.5375
9.5525
-0.16
-1.65%
MAY ’22 Kansas City HRW
$ / BSH
11.6025
11.2325
11.3625
-0.2125
-1.84%
JUL ’22 Kansas City HRW
$ / BSH
11.45
11.1175
11.24
-0.195
-1.71%
SEP ’22 Kansas City HRW
$ / BSH
11.11
10.8125
10.8475
-0.2675
-2.41%
DEC ’22 Kansas City HRW
$ / BSH
10.8125
10.5025
10.5025
-0.315
-2.91%
MAR ’23 Kansas City HRW
$ / BSH
10.295
#N/A
10.385
0
0.00%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.1075
10.8825
10.8825
-0.22
-1.98%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.94
10.735
10.7475
-0.195
-1.78%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.63
10.4575
10.465
-0.18
-1.69%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.5375
10.3725
10.3725
-0.165
-1.57%
MAR ’23 MLPS Spring Wheat
$ / BSH
10.4
10.4
10.4
-0.0225
-0.22%
JUN ’21 ICE Dollar Index
$
98.985
98.41
98.505
-0.559
-0.56%
AP ’21 Light Crude
$ / BBL
99.22
94.82
96.66
0.22
0.23%
MA ’21 Light Crude
$ / BBL
97.93
93.5
95.21
0.42
0.44%
APR ’22 ULS Diesel
$ /U GAL
3.1703
2.974
3.0865
0.0568
1.87%
MAY ’22 ULS Diesel
$ /U GAL
3.073
2.9039
2.9884
0.0426
1.45%
APR ’22 Gasoline
$ /U GAL
3.0948
2.9439
3.0084
0.0103
0.34%
MAY ’22 Gasoline
$ /U GAL
3.064
2.9173
2.9855
0.0198
0.67%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
156.35
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
162.6
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
140.85
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
136.8
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
102.4
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
110.65
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.38
22.38
22.38
0.01
0.04%
APR ’22 Class III Milk
$ / CWT
23.41
23.2
23.39
-0.02
-0.09%
MAY ’22 Class III Milk
$ / CWT
23.7
#N/A
23.87
0
0.00%
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