Morning report: Corn, soy markets rise ahead of tomorrow’s USDA reports. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 6-12 cents
Soybeans up 2-7 cents; Soymeal up $6.30/ton; Soyoil down $0.21/lb
Chicago wheat up 15-17 cents; Kansas City wheat up 15-17 cents; Minneapolis wheat up 12-15 cents
*Prices as of 7:10am CDT.
Feedback from the Field updates!
My latest FFTF column showcases growers’ increasing worries about heat stress, which was reflected in Monday’s weekly Crop Progress report from USDA.
“We had too much rain at the end of May,” explained a Central Kansas corn grower who reported local corn crops to be in fair condition. “Then it turned hot and dry due to a flash drought. Corn standing 3-4 feet is starting to tassel.”
Is heat stress a concern on your operation? Click this link to take the survey and share updates about your farm’s spring 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!
Corn
Higher prices in the energy complex helped lift corn prices $0.02-$0.07/bushel higher this morning. Gains were limited as market watchers expect USDA to increase corn acreage in tomorrow’s June 30 Acreage and Quarterly Grain Stocks reports.
Soybeans
Cuts to anticipated 2022 soybean acreage in tomorrow’s USDA reports helped lift soybean prices $0.07-$0.10/bushel higher during the overnight trading session. A soymeal tender issued by South Korea overnight helped improve export prospects for U.S. producers. Higher energy prices also trickled over into the soy complex this morning.
Wheat
Strong demand signals from a few of the world’s top global wheat buyers helped push up wheat prices this morning. Bangladesh, Pakistan, Jordan, Algeria, Taiwan, and Egypt have all issued tenders over the past couple days, keeping demand prospects alive and well in the wheat market amid the market’s latest price selloff.
The sentiment pushed up U.S. wheat prices to the tune of $0.10-$0.17/bushel this morning. Bargain buyers were also playing back into the wheat market after three consecutive days of losses for the wheat complex.
“Grain market rebounded on buying interests and as Egypt announced a wheat tender. In addition, after last week’s sharp decline, traders are correcting their positions before tomorrow’s USDA report,” French consultancy Agritel said in a note.
Hopes for a wheat acreage expansion in Argentina are drying up amid another year of La Ni?a-induced drought conditions.
“This season for wheat is complicated,” Argentine farmer Juan Francisco Arregui explained to Reuters. “The crop needs rain to arrive soon but weather forecasts were not promising.”
South America has battled drought for the last nine months, with nearly 1.1 billion bushels of 2021/22 soybean production disappearing from the continent during that time. There was enough soil moisture to plant winter wheat crops in Argentina, but soils are quickly drying up in the latest heat wave.
“”It means that the wheat crop is not sure by any means. We can get it started, but hey then we are waiting for rain,” said Arregui.
Global markets have largely been depending on expanding Argentine wheat acreage this year amid tight global supplies due to the ongoing conflict in the Black Sea between Russia and Ukraine. But that outlook is becoming less likely as rain remains scarce in the forecasts, which will likely create more market volatility for global wheat prices.
“Today anything that goes wrong with wheat is more important and means greater losses. That is what we are seeing,” Cristian Russo, head agronomist at the Rosario Grains Exchange, told Reuters. The Rosario Grains Exchange’s optimistic 2022/23 Argentine wheat production forecast currently stands at 680 million bushels. USDA’s current forecast is 735 million bushels.
High fertilizer costs and limited availability could also hurt Argentine wheat yields this year. Prior to the Black Sea war’s onset, Russia was a key fertilizer supplier to Argentina. The tighter fertilizer availability and higher costs are pushing more Argentine growers to produce soybeans instead of wheat, which utilize less fertilizer supplies.
It could also result in fewer fertilizer applications for Argentine corn and wheat crops, which could further limit production capacity.
Plus, government interventions to tax Argentine grain and oilseed exports are also skewing market incentives for Argentine farmers. “The government has kept a lower cap on wheat exports than last year, raised export tariffs on soymeal and oil and threatened higher taxes for wheat, although there is not enough support in congress for that step,” a Reuters report explained.
“Here you go to bed on a Sunday and on Monday you don’t know what news you’re going to find,” Arregui lamented of changing government policies towards ag shipments, which account for a substantial portion of Argentina’s tax revenues. “Every day they are making decisions that indirectly affect what you do and it’s a terrible uncertainty, you can’t plan anything. It really costs you a lot every day.”
Yesterday, Russia announced it would be changing the formula it uses to calculated export taxes on agricultural shipments. While the details were not readily available at press time, the modified formula is expected to ease the pain of a high rouble-dollar exchange rate to make Russian wheat shipments more competitive on the global market.
The Russian rouble has soared to new heights against the dollar, limiting the attractiveness of its grain and sunflower oil shipments on the global market. Not to mention the added costs of Russia’s export quota as well as the additional logistics challenges and payment issues incurred from the ongoing Western banking sanctions.
The goal of the new formula-derived tax is to ease the price impact from the rouble-dollar exchange rate and keep Russian wheat shipments as an attractive option for global buyers as tight supplies continue to dominate the wheat market.
Russia has been using a formula-based export tax and export quota system to limit export volumes for the past year in an effort to ensure domestic food price stability. This week’s tax has been set at the equivalent of $3.977/bushel.
Weather
After several days of clear skies, scattered showers are likely to pop up in the Upper Plains and Upper Midwest later this evening, according to NOAA’s short-range forecasts. The showers are likely to pause tomorrow and then resume and shift southeast into the Great Lakes region by Friday.
Accumulation over the next 24 hours will be very light – not topping more than a half inch from Colorado and Wyoming to northern Minnesota. Yesterday’s cooler temperatures will heat up today into the 90s and even into the 100s in South Dakota and Nebraska.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending on the warm side for the Heartland during the first week of July. But both forecasts are showing above average chances for moisture during that time, which should help to advance crop development over the next couple weeks.
Financials
S&P 500 futures dipped 0.27% overnight to $3,815 as markets brace for comments from a panel of the world’s top central bankers in Portugal later this morning. The comments, which will be provided by leaders from the U.S. Federal Reserve, European Central Bank, and Bank of England, are expected to highlight the global fight against inflation and looming recession fears across the world.
“We expect markets to tread water at best until we get a convincing signal that inflation has peaked. Our confidence in a soft landing has gone down even further and the market has headed that way as well,” Arun Sai, a multiasset strategist at Pictet Asset Management, told the Wall Street Journal this morning.
“Investors were getting a little concerned that we would have a replay of the sovereign debt crisis. The ECB has reaffirmed that this is not going to be the case, they have a policy tool kit and can address that,” added Salman Baig, a multiasset investment manager at Unigestion.
What else I’m reading this morning on our website, FarmFutures.com:
Bryce Knorr ponders the end of corn’s bullish run and what the market needs to go higher following last week’s selloff in the grain markets.
Last week, the Commerce Department found that UAN imports from Russia and Trinidad and Tobago were dumped onto the market at unfairly subsidized rates. However, the Commerce Department will not announce if duties will be placed on these imports until later this summer.
Independence Day is this weekend and cookout costs are 17% higher than last year due in large part to higher burger prices.
Do you spend all day putting out fires? Darren Frye has three actions to more efficiently utilize your time.
Naomi Blohm previews this week’s June 30 USDA Acreage and Quarterly Grain Stocks report, noting that amid historical stocks, next week’s report will likely set the price tone for the summer.
Morning Ag Commodity Prices – 6/29/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.675
7.555
7.6675
0.0725
0.95%
SEP ’22 CORN
$ / BSH
6.7225
6.6425
6.7125
0.015
0.22%
DEC ’22 CORN
$ / BSH
6.625
6.5425
6.615
0.0225
0.34%
MAR ’23 CORN
$ / BSH
6.6825
6.6025
6.6725
0.0225
0.34%
MAY ’23 CORN
$ / BSH
6.69
6.625
6.6875
0.015
0.22%
JUL ’23 CORN
$ / BSH
6.66
6.585
6.655
0.02
0.30%
SEP ’23 CORN
$ / BSH
6.2225
6.1725
6.2225
0.005
0.08%
JUL ’22 SOYBEANS
$ / BSH
16.7875
16.53
16.7575
0.12
0.72%
AUG ’22 SOYBEANS
$ / BSH
15.6575
15.4675
15.6425
0.0775
0.50%
SEP ’22 SOYBEANS
$ / BSH
14.895
14.68
14.88
0.075
0.51%
NOV ’22 SOYBEANS
$ / BSH
14.725
14.4975
14.7125
0.0875
0.60%
JAN ’23 SOYBEANS
$ / BSH
14.7625
14.5425
14.755
0.09
0.61%
MAR ’23 SOYBEANS
$ / BSH
14.665
14.4575
14.65
0.075
0.51%
MAY ’23 SOYBEANS
$ / BSH
14.6425
14.4375
14.6275
0.0775
0.53%
JUL ’23 SOYBEANS
$ / BSH
14.5975
14.4
14.575
0.065
0.45%
AUG ’23 SOYBEANS
$ / BSH
12.5
#N/A
14.28
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
72.11
71.03
71.88
-0.21
-0.29%
AUG ’22 SOYBEAN OIL
$ / LB
69.14
67.94
69.08
0.08
0.12%
JUL ’22 SOY MEAL
$ / TON
464.5
454.4
463
7.9
1.74%
AUG ’22 SOY MEAL
$ / TON
426.9
420
426
6.3
1.50%
SEP ’22 SOY MEAL
$ / TON
412.2
406.1
411.2
5.4
1.33%
OCT ’22 SOY MEAL
$ / TON
404.3
398.7
403.3
5
1.26%
DEC ’22 SOY MEAL
$ / TON
406.3
400.2
404.9
4.7
1.17%
JUL ’22 Chicago SRW
$ / BSH
9.4
9.19
9.365
0.1525
1.66%
SEP ’22 Chicago SRW
$ / BSH
9.56
9.3325
9.5225
0.1625
1.74%
DEC ’22 Chicago SRW
$ / BSH
9.685
9.47
9.65
0.15
1.58%
MAR ’23 Chicago SRW
$ / BSH
9.76
9.5525
9.725
0.1375
1.43%
MAY ’23 Chicago SRW
$ / BSH
9.7725
9.6025
9.765
0.15
1.56%
JUL ’22 Kansas City HRW
$ / BSH
10.015
9.84
10.0075
0.17
1.73%
SEP ’22 Kansas City HRW
$ / BSH
10.0875
9.9
10.055
0.1525
1.54%
DEC ’22 Kansas City HRW
$ / BSH
10.1775
10
10.1425
0.1475
1.48%
MAR ’23 Kansas City HRW
$ / BSH
10.235
10.07
10.2025
0.145
1.44%
MAY ’23 Kansas City HRW
$ / BSH
10.16
10
10.1525
0.15
1.50%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.495
10.35
10.44
0.0925
0.89%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.57
10.4
10.5125
0.105
1.01%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.6625
10.5
10.625
0.1425
1.36%
MAR ’23 MLPS Spring Wheat
$ / BSH
10.7825
10.62
10.7675
0.1475
1.39%
MAY ’23 MLPS Spring Wheat
$ / BSH
10.835
10.74
10.835
0.15
1.40%
SEP ’21 ICE Dollar Index
$
104.45
104.14
104.25
-0.011
-0.01%
AU ’21 Light Crude
$ / BBL
113.34
110.78
113.24
1.48
1.32%
SE ’21 Light Crude
$ / BBL
110.38
107.88
110.33
1.44
1.32%
JUL ’22 ULS Diesel
$ /U GAL
4.1995
4.11
4.1585
-0.0409
-0.97%
AUG ’22 ULS Diesel
$ /U GAL
4.1216
4.0228
4.078
-0.0367
-0.89%
JUL ’22 Gasoline
$ /U GAL
3.9109
3.8568
3.9035
-0.0316
-0.80%
AUG ’22 Gasoline
$ /U GAL
3.8346
3.7642
3.8321
-0.0121
-0.31%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
171.825
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
174.95
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
136.3
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
132.725
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
109.925
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
103.825
0
0.00%
JUL ’22 Class III Milk
$ / CWT
22.68
22.65
22.66
0.04
0.18%
AUG ’22 Class III Milk
$ / CWT
23.28
23.16
23.28
0.12
0.52%
SEP ’22 Class III Milk
$ / CWT
23.61
23.61
23.61
0.08
0.34%
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