Morning report: Soybeans, corn follow higher on the optimism, supported by weather concerns and energy gains. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 7-16 cents
Soybeans up 35-38 cents; Soymeal up $4.90/ton; Soyoil up $0.51/lb
Chicago wheat up 33-34 cents; Kansas City wheat up 29-30 cents; Minneapolis wheat up 33-36 cents
*Prices as of 7:10am CDT.
Feedback from the Field updates! How does your farm’s crop conditions stack up against other farms around the country? Click this link to take the survey and share updates about your farm’s crop development. 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 was published yesterday and highlights the increased heat and dryness across the Midwest – and the growing toll it’s taking on crops. “It’s beginning to look like 2012,” foreshadows a grower in Indiana.
Inputs
It’s no secret there is a growing mismatch between wholesale and retail fertilizer prices. And as global money managers liquidate long positions on commodities as the Federal Reserve battles inflation, fertilizer companies have also suffered stock losses as revenue prospects from farmer sales suddenly shrink.
“Investors and analysts are trying to decide now whether fertilizer stocks got swept up in the broad market selloff and could reverse course, or if they were bid up too high in the panic after Russia invaded Ukraine and have farther to fall,” writes reporter Pia Singh in a Wall Street Journal article published this morning.
The article points out that before the recent hedge fund liquidation, fertilizer producers Mosaic and CF Industries were among the top performers in the S&P 500. “Competitors Nutrien Ltd., Corteva Inc. and CVR Partners LP have traded in similar arcs,” observes Singh.
While some on Wall Street may be growing bearish on fertilizer companies, Tracey Allen, a commodity strategist at JPMorgan Chase & Co. thinks there are still good reasons to be long on fertilizers. Even as inventories stockpile ahead of fall application season, farmer demand is likely to remain strong as food and fertilizer supplies around the world remain tight and fuel prices remain high.
“Fertilizer prices are going to be a very important driver of agricultural prices going forward,” Allen told the WSJ.
Corn
Corn prices were on track for a $0.07-$0.16/bushel gain this morning as markets evaluated potential storm damage and future forecasts that are increasingly dry for crops across the Heartland. Some bargain buying was also likely at play.
Slightly stronger oil prices also contributed to the morning’s gains – a good sign ahead of today’s weekly ethanol production data to be released by the EIA, which is likely to reflect the recent holiday travel surge and bode favorably for ethanol and corn producers. U.S. crude oil appeared to face price resistance just below the $100/barrel benchmark – a good sign for consumers and farmers alike.
Cash bids for corn rose across all originators in the Midwest yesterday as falling prices led buyers to increase cash premiums in hopes of encouraging more farmer sales. Basis rose at elevators, processors, river terminals, and ethanol plants throughout the Heartland today. However, farmers did not seem keen to take up buyers on the stronger cash offerings, so country movement remained slow.
Soybeans
Soybean futures traded $0.35-$0.38/bushel higher this morning on similar prospects to those of corn, though the domestic soybean complex is largely supported by tightening stocks following last week’s USDA Acreage report, which pointed to 133 million fewer bushels of potential 2022 U.S. soybean production. A weaker dollar also helped support gains across the oilseed and grains complex this morning.
Recession concerns and export tax reductions for Indonesian palm oil shipments all took a bearish toll on palm oil prices overnight, but prices rebounded on a round of bargain buying this morning. “Palm prices look well-supported as discount to soybean oil is wider and prices have fallen to induce buying activity,” a trader in Kuala Lumpur told Reuters this morning.
Soybean buyers were also eager to stimulate more country movement of soybeans across the Midwest yesterday, as cash offerings for soybeans widened at elevators, crush facilities, and river terminals destined for export markets. Farmer sales remained slow as the stronger basis offering continues to hover well below recent futures market highs.
Cash soymeal offerings were largely unchanged from Tuesday at rail and truck terminals, with most bids holding at a strong premium over futures. “Tight supplies were underpinning the market even though most end users had already placed their orders for July,” a rail broker told Reuters yesterday morning.
“Most dealers were trying to keep their posted offer against the Chicago Board of Trade July futures contract for as long as possible because it was trading at a $43 premium to the August contract,” the broker shared.
Soymeal export markets were mostly steady for the nearby contracts – hopefully a good reflection of impending export demand this fall. But barge bids for November and December shipments eased, which encompasses the end of peak export season for soybeans in the U.S.
Wheat
After reaching a nearly five-month low during yesterday’s trading session, wheat prices rebounded $0.29-$0.36/bushel higher this morning on continued concerns about limited access to Black Sea supplies. Plus – the dollar weakened slightly overnight, boosting international demand prospects for U.S. wheat.
“The wheat market is recovering but we have to really see if there is buying to support prices when the U.S. sessions starts,” a Singapore-based grains trader told Reuters of the rally last night.
India announced a slight change to export policies overnight, tightening restrictions on wheat flour exports beginning July 12. The country banned wheat exports in mid-May as a severe drought decimates production hopes. India had become a significant global export hub for wheat following Russia’s invasion in Ukraine.
Forecasts for European Union wheat production dominated overnight headlines as a Reuters poll forecasted E.U.’s 2022 soft wheat production at 4.6 billion bushels. USDA’s current forecast for E.U.’s total wheat production stands at 5.0 billion bushels.
Forecasters have had a challenging time predicting total E.U. wheat production ahead of harvest this season after an imbalance of sudden drought and favorable growing weather in the region’s major wheat producing regions.
The E.U. soft wheat crop is slated to be 3.4% lower than last year’s haul amid the variation. Spain and Italy are expected to suffer substantial losses while results from top producer France are expected to be highly varied based on location. Romania and Bulgaria are predicted to harvest bumper crops though heat stress continues to be a concern in Hungary.
Harvest outcomes for Germany, Poland, and Britain are still uncertain, but many traders are likely to increase forecasts following beneficial rains. Quality has been even more difficult than yield to predict and any substantial deviations from idyllic protein ratings could cause market upheaval across the E.U. over the coming year.
Cash bids on both hard and soft red winter wheat in the Plains and Midwest traded largely to a discount to futures prices yesterday, with little additional movement from yesterday’s trading session. Harvest pressure continues to be a key driver for cash wheat markets and many growers are content to wait to sell until they see a rebound in futures market prices.
Russia & Ukraine
Check out this Reuters report for all of the latest insights regarding the Russian occupation in Ukraine. Ukraine’s export volumes continue to struggle to even come close to matching year-ago volumes as Black Sea terminals remain inaccessible. Russian officials continued to spit barbs against the West overnight. And the E.U. continues to scramble for fuel alternatives in case Russian natural gas deliveries are interrupted.
Weather
More rains and some cooler temperatures are forecast for the Heartland today, according to NOAA’s short-range forecasts. Once again, heavy showers and thunderstorms will continue to stretch from the Plains through the Eastern Corn Belt, dropping up to an inch of precipitation along the way over the next 24 hours.
Regions including Western Illinois, Northeast Missouria and Eastern Iowa could see rainfall totals up to 2 inches during that time. Skies are not likely to clear across the Heartland until Saturday afternoon, providing heat-stressed crops a favorable reprieve just ahead of peak reproductive season.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday continue to trend on the warm side for the Heartland during the second week of July. While the chances for rain in the Upper Midwest are growing increasingly slim, above average precipitation forecasts are being predicted for the Southern Plains and Southeast.
But that’s not all bad news – that is right around the time that corn pollination will begin so the dry weather will actually be a welcome weather event for corn growers across the country. Of course, that condition will only be met if the Midwest receives substantial rainfall this week and no other unfortunate weather events during peak pollination.
Financials
The Federal Reserve anticipates “more restrictive” rate increases as long as inflationary pressures remain high, according to minutes released yesterday from the Federal Open Market Committee’s (FOMC) mid-June 2022 meeting.
The minutes show that the Fed is aware that the interest rate hikes will likely slow economic growth (GDP) over time but that returning to inflationary levels around 2% is “critical” for keeping employment stable. There was some evidence of “economic cooling” through mid-June, but not enough to stave off further inflationary pressures.
“Many participants judged that a significant risk now facing the committee was that elevated inflation could become entrenched if the public began to question the resolve of the committee,” the minutes showed. “They recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.”
For more of the top highlights from the Fed’s June 2022 FOMC meeting minutes, check out this great Bloomberg article.
The markets look to be trading higher today, with S&P 500 futures up 0.22% to $3,856.75 at last glance on optimism ahead of today’s weekly jobs report. The market took comfort in the Fed’s ongoing efforts to stem inflation, though recession concerns continue to be at the back of traders’ minds.
According to the CME Group, “futures bets show traders assign a roughly 96% probability that the Fed will deliver a 0.75 percentage-point rate hike at its meeting later this month,” a Wall Street Journal report said this morning.
And while that may be a depressing statistic, remember – it’s not near as depressing as being Boris Johnson today.
What else I’m reading this morning on our website, FarmFutures.com:
AgMarket.Net’s Brian Splitt asks – “Have grain prices hit their peak?”
Advance Trading’s JJ Keske uncovers three reasons why farmers don’t use options to manage risk.
Are you playing the grain market blame game? Bryce Knorr has helpful insights for farmers who may have been surprised by higher corn acres in last week’s USDA report.
The latest Purdue University-CME Ag Economy Barometer finds that farmers’ expectations of the future are weakening amid rising input costs and uncertainty about the future.
Looking to expand your farm? Darren Frye has three questions farmers should answer before they pull the trigger on expansion plans.
Commstock’s Matthew Kruse expects yield will become a more critical factor in determining ending stocks in the future, limiting any potential U.S. acreage expansion in the future.
Naomi Blohm has the latest insights on how to manage price volatility this summer.
Morning Ag Commodity Prices – 7/7/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.6
7.44
7.6
0.1575
2.12%
SEP ’22 CORN
$ / BSH
6.145
6.0125
6.14
0.1425
2.38%
DEC ’22 CORN
$ / BSH
5.9925
5.865
5.985
0.135
2.31%
MAR ’23 CORN
$ / BSH
6.05
5.925
6.04
0.1275
2.16%
MAY ’23 CORN
$ / BSH
6.08
5.9575
6.0725
0.1225
2.06%
JUL ’23 CORN
$ / BSH
6.07
5.95
6.0625
0.1175
1.98%
SEP ’23 CORN
$ / BSH
5.74
5.645
5.7375
0.085
1.50%
DEC ’23 CORN
$ / BSH
5.6275
5.525
5.61
0.0725
1.31%
MAR ’24 CORN
$ / BSH
5.685
5.615
5.685
0.0675
1.20%
JUL ’22 SOYBEANS
$ / BSH
16.175
15.91
16.175
0.3725
2.36%
AUG ’22 SOYBEANS
$ / BSH
14.8775
14.4875
14.84
0.375
2.59%
SEP ’22 SOYBEANS
$ / BSH
13.815
13.43
13.79
0.38
2.83%
NOV ’22 SOYBEANS
$ / BSH
13.64
13.2525
13.5875
0.36
2.72%
JAN ’23 SOYBEANS
$ / BSH
13.6775
13.3
13.63
0.3575
2.69%
MAR ’23 SOYBEANS
$ / BSH
13.62
13.25
13.575
0.3525
2.67%
MAY ’23 SOYBEANS
$ / BSH
13.605
13.2625
13.5775
0.35
2.65%
JUL ’23 SOYBEANS
$ / BSH
13.5725
13.235
13.5625
0.3625
2.75%
AUG ’23 SOYBEANS
$ / BSH
0
#N/A
13.0125
0
0.00%
SEP ’23 SOYBEANS
$ / BSH
12.2
#N/A
12.585
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
12.725
12.395
12.6625
0.275
2.22%
JUL ’22 SOYBEAN OIL
$ / LB
60.73
60.73
60.73
0.51
0.85%
AUG ’22 SOYBEAN OIL
$ / LB
60.65
58.56
60.6
2.04
3.48%
JUL ’22 SOY MEAL
$ / TON
467.5
467.4
467.5
4.9
1.06%
AUG ’22 SOY MEAL
$ / TON
426.6
415.2
425.2
9.6
2.31%
SEP ’22 SOY MEAL
$ / TON
400.5
391
399.5
8.3
2.12%
OCT ’22 SOY MEAL
$ / TON
389
379.3
388.4
9.1
2.40%
DEC ’22 SOY MEAL
$ / TON
389.2
379.7
388.2
8.7
2.29%
JUL ’22 Chicago SRW
$ / BSH
0
#N/A
7.9225
0
0.00%
SEP ’22 Chicago SRW
$ / BSH
8.455
8.0775
8.4025
0.3575
4.44%
DEC ’22 Chicago SRW
$ / BSH
8.6175
8.2325
8.5625
0.3475
4.23%
MAR ’23 Chicago SRW
$ / BSH
8.7675
8.3925
8.7025
0.3325
3.97%
MAY ’23 Chicago SRW
$ / BSH
8.8125
8.46
8.755
0.32
3.79%
JUL ’23 Chicago SRW
$ / BSH
8.65
8.3025
8.595
0.2875
3.46%
SEP ’23 Chicago SRW
$ / BSH
8.54
8.2675
8.5075
0.28
3.40%
JUL ’22 Kansas City HRW
$ / BSH
0
#N/A
8.4925
0
0.00%
SEP ’22 Kansas City HRW
$ / BSH
8.8575
8.5375
8.815
0.3
3.52%
DEC ’22 Kansas City HRW
$ / BSH
8.94
8.625
8.8975
0.2975
3.46%
MAR ’23 Kansas City HRW
$ / BSH
8.99
8.705
8.9675
0.3125
3.61%
MAY ’23 Kansas City HRW
$ / BSH
8.98
8.7775
8.9625
0.2925
3.37%
JUL ’23 Kansas City HRW
$ / BSH
8.75
8.525
8.75
0.255
3.00%
SEP ’23 Kansas City HRW
$ / BSH
8.62
8.62
8.62
0.235
2.80%
JUL ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
8.805
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.225
8.895
9.225
0.3625
4.09%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.3625
9.04
9.3475
0.325
3.60%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.485
9.165
9.47
0.315
3.44%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.555
9.3325
9.51
0.25
2.70%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.4575
9.415
9.415
0.1275
1.37%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.1875
9.14
9.1875
0.2075
2.31%
SEP ’21 ICE Dollar Index
$
106.955
106.53
106.72
-0.178
-0.17%
AU ’21 Light Crude
$ / BBL
99.78
96.57
99.76
1.23
1.25%
SE ’21 Light Crude
$ / BBL
96.1
93
96.1
1.12
1.18%
AUG ’22 ULS Diesel
$ /U GAL
3.4697
3.3701
3.4163
0.0057
0.17%
SEP ’22 ULS Diesel
$ /U GAL
3.4027
3.3094
3.3543
0.0077
0.23%
AUG ’22 Gasoline
$ /U GAL
3.2835
3.21
3.2706
0.034
1.05%
SEP ’22 Gasoline
$ /U GAL
3.136
3.067
3.1233
0.0328
1.06%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
173.3
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
177.075
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
134.5
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
139.95
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
113.15
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
109.2
0
0.00%
JUL ’22 Class III Milk
$ / CWT
22.46
22.39
22.45
0.06
0.27%
AUG ’22 Class III Milk
$ / CWT
22.05
21.5
21.99
0.55
2.57%
SEP ’22 Class III Milk
$ / CWT
22.11
21.94
22.11
0.57
2.65%
