Morning report: Macroeconomic concerns, harvest pressure push corn and soy prices lower overnight. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 1-2 cents
Soybeans down 6-10 cents; Soymeal down $0.40/ton; Soyoil down $1.10/lb
Chicago wheat up 10-11 cents; Kansas City wheat up 10-11 cents; Minneapolis wheat up 9-10 cents
*Prices as of 6:55am 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 continue to wait for crops to mature.
Here are a few of my favorite farmer comments from our weekly series. Enjoy and stay safe this fall!
“So far so good if we can get the equipment tuned in.” – Kentucky corn grower
Harvest started in this area this week,” reported a Western Minnesota corn grower. “Moisture is at 22% and yields are trending normal.”
“Corn is probably a week away from being fully mature,” estimated a Eastern Nebraska corn producer. “It hasn’t quite black layered yet. Dry land yields are going to be all over the board and significantly down from last year on corn.”
“Just tried a few acres out,” shared a South-Central Iowa soybean grower who observed significant yield variability amid dry conditions for both corn and soybean crops. “Too little rain.”
“Late rain of 4 inches was maybe too late to help and may cause split pods to develop,” a Central Illinois soybean producer fretted.
“Hail and drought will definitely lower this year yields,” said an Eastern Nebraska soybean producer.
A South-Central Illinois grower is going all in on winter wheat this fall thanks to good market incentives. “We will double our wheat acres if the price nears 10 dollars.”
Corn
Corn prices edged $0.01-$0.02/bushel lower overnight amid a stronger dollar and favorable weather forecasts for U.S. harvest progress this week. The stronger dollar indicates persisting recession fears continuing to play out in financial markets and spilling over into the commodities market (again).
The morning’s losses were limited by slower than expected harvesting paces in the U.S., as reported in Monday’s Crop Progress report from USDA.
Corn markets will be closely monitoring the results of the U.S. Energy Information Administration’s (EIA) weekly Petroleum Inventory Status report today for ethanol production signals. Last week’s report showed ethanol production through the week ending September 16 drop to 37.8 million gallons/day (901,000 barrels/day) – the lowest weekly output volume for ethanol since the February 2021 cold snap depleted natural gas supplies across the country, forcing a large share of the country’s ethanol capacity offline.
What was the cause of last week’s data blip? Rising fuel prices that are forcing more Americans to reduce gasoline consumption as energy and other necessary household costs continue to eat up a larger share of Americans’ paychecks.
Was last week an anomaly or will we see ethanol output trend lower in today’s report? We’ll find out in a couple hours!
Farmers are continuing to plead to U.S. legislators to protest Mexico’s late-2020 ban of genetically modified corn. While U.S. corn imported into Mexico for livestock feed is not likely to be impacted by the ban, it still represents a threat to trade flows with the U.S.’s largest buyer of U.S. corn. Mexico uses 18%-20% of its corn imported from the U.S. for human consumption.
Agriculture Secretary Tom Vilsack emphasized challenging Mexico’s ban in a livestream meeting with U.S. ag officials yesterday. “I recognize the importance of 2023 in terms of getting clarity about exactly where we are,” Vilsack said. “We do need to press the issue and will this year and take whatever steps are necessary and appropriate to raise this issue a notch or two as we get closer to 2024.”
Soybeans
Soybean prices fell $0.06-$0.10/bushel overnight in response to global recession fears and favorable harvest progress in the U.S. The soybean complex also lost some price support overnight from the global edible oil complex. Some of the losses were held at bay by lingering concerns about the viability of grain flows through Black Sea corridors.
Soyoil prices tumbled nearly 2% lower overnight after competing palm oil futures in Malaysia tumbled 8% lower on recession fears and production expansion in Southeast Asia. Palm oil is the world’s largest produced – and exported – edible oil and prices in the edible oil complex are largely influenced by price shifts from each edible oil variety.
The global edible oil complex has shown considerable price sensitivity to recessionary pressures in recent months. The nearby October 2022 U.S. soyoil futures contract has dipped a staggering $26/lb – a 29% loss – since late April 2022, with the decline accelerating in June and July when global recessionary fears began to sink into the markets.
Plus, war dynamics continue to influence pricing for the edible oil complex. As Ukrainian sunflower oil supplies have become more accessible to outside markets, thanks to the “Black Sea Grains Initiative,” sunflower oil prices have been nearly cut in half from record highs set in April 2022.
“Sunoil and sun seed stocks are much higher than normal in Ukraine and Russia. They have been now competing with each to clear inventories. It will weigh on sunoil prices and keep them around soyoil,” a New-Delhi-based dealer with a global trading firm told Reuters overnight.
Argentine farmers slowed soybean selling paces last week after its central bank restricted foreign exchange rate discounts for companies transacting 2021/22 soybean export sales. Through the week of September 15-21, Argentine farmers sold nearly 59 million bushels of soybeans – over a 30% decrease from the previous week’s sales.
Argentina had implemented a preferential foreign exchange rate to encourage farmer soybean sales. Argentina’s inflationary pressures run much higher than those currently experienced in the U.S., and farmers hold onto crops as a means of hedging against inflation.
But since taxes on agricultural exports are a critical source of government revenues, the recent farmer hoarding does not bode favorably for Argentina’s governmental cash flows. That dynamic prompted the preferential foreign exchange rate implementation from the Argentine government earlier this month.
Farmer selling paces boomed after the new exchange rate began. As a result, Argentina’s agriculture ministry predicts that 66.7% of the 201/22 corn crop has already been sold, 5% higher than the same volume sold a year prior.
Argentina will end the preferential foreign exchange rate for farmers at the end of this month (on Friday).
Wheat
Another day, another new 20-year high for the U.S. Dollar. Just a bit of context – the last time the dollar was this high was in the aftermath of the 9/11 attacks and the early days of the war in Afghanistan.
But wheat prices didn’t seem to notice as U.S. prices staged a $0.09-$0.13/bushel rally overnight, rising higher on worries that Russia’s partial military mobilization will slow harvest progress in the world’s largest wheat exporter and subsequently interfere with global wheat trade flows.
“There is some support from fears that Russia/Ukraine war disrupts exports from the Black Sea, and also concern with Russia’s threats to use nuclear weapons,” research firm Hightower Report said in a note, as reported by Reuters. “This support may be short-lived.”
Inputs
This Reuters article featuring coverage of statistics from Germany’s fertilizer industry caught my eye on Monday, though I didn’t get a chance to cover it in the Monday newsletter. Here’s the punchlines:
German farmers are scaling back purchases of fertilizer this fall amid high costs and restricted ammonia production across the European Union in the wake of the region’s ongoing natural gas conflict with Russia.
Year-to-date German fertilizer imports have declined 11% from the same time a year ago. , as farmer fertilizer volumes (both domestic and international) purchased from April to June 2022 fell nearly 19% lower than the same period a year ago.
“Behind the decline in sales is the highly energy-intensive nature of the production of most fertilisers,” Germany’s government statistics office said on Monday. “The high gas prices and the associated decline in fertiliser production and sales have been increasingly reflected in fertiliser prices since this spring.”
Germany’s top fertilizer production facilities operated by BASF, Yara, and SKW Piesteritz have either halted or reduced anhydrous ammonia production after Russia stopped natural gas flows to Germany.
My takeaways? High input prices could lead to demand destruction from E.U. farmers next year, especially if supplies are not brought back online after peak fall fertilizing activities. Market players have not been able to originate more affordable fertilizer supplies for German farmers, meaning that costs are likely to keep profit margins tight next year.
Finally, even though Germany is not a major global grains producer, the signals its farmers are sending to the market indicate that farmers would prefer to sacrifice yield potential in an attempt to keep profit margins from drifting into the red.
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.
And 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.
Both forecasts are showing above average chances for moisture in the Central Rockies, which bodes favorably for my lawn!
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 in the Caribbean. The storm made landfall in Cuba early this morning as a Category 4 storm in the Gulf of Mexico and is expected to hit Western Florida and begin its northern ascent late this evening.
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 if the rain volumes increase past one to two inches as the storm moves north.
Financials
The S&P 500 is priming for recording another record low during today’s trading session, slipping 0.53% overnight to $3,641.75 amid its sixth consecutive session of losses. Ongoing recessionary fears are largely to blame.
The latest victim of a strong dollar amid inflationary woes? Cotton.
What else I’m reading this morning on our website, FarmFutures.com:
More than Dirt columnist Mike Downey cautions farmers to be aware of lifetime gifting rules as inflation fuels record large increases to lifetime gift exemptions.
Advance Trading’s Eric Meyer prepares farmers for thinning profit margins in the upcoming year.
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 – 9/28/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.685
6.615
6.665
-0.01
-0.15%
MAR ’23 CORN
$ / BSH
6.735
6.6725
6.72
-0.0075
-0.11%
MAY ’23 CORN
$ / BSH
6.7425
6.6825
6.7275
-0.0075
-0.11%
JUL ’23 CORN
$ / BSH
6.6875
6.625
6.6725
-0.005
-0.07%
SEP ’23 CORN
$ / BSH
6.24
6.1775
6.205
-0.0075
-0.12%
DEC ’23 CORN
$ / BSH
6.115
6.0675
6.11
0.0075
0.12%
AR2 ’24 CORN
$ / BSH
6.175
6.1375
6.1675
-0.0025
-0.04%
AY2 ’24 CORN
$ / BSH
6.185
6.18
6.18
-0.0125
-0.20%
JUL ’24 CORN
$ / BSH
6.1625
6.1625
6.1625
0.005
0.08%
NOV ’22 SOYBEANS
$ / BSH
14.125
13.9225
14.01
-0.07
-0.50%
JAN ’23 SOYBEANS
$ / BSH
14.185
13.9825
14.0725
-0.0675
-0.48%
MAR ’23 SOYBEANS
$ / BSH
14.2175
14.025
14.1
-0.07
-0.49%
MAY ’23 SOYBEANS
$ / BSH
14.25
14.07
14.135
-0.07
-0.49%
JUL ’23 SOYBEANS
$ / BSH
14.24
14.06
14.1325
-0.0675
-0.48%
AUG ’23 SOYBEANS
$ / BSH
14.015
13.93
13.98
-0.035
-0.25%
SEP ’23 SOYBEANS
$ / BSH
13.665
13.6025
13.635
-0.0125
-0.09%
NOV ’23 SOYBEANS
$ / BSH
13.54
13.4075
13.49
-0.01
-0.07%
AN2 ’24 SOYBEANS
$ / BSH
13
#N/A
13.5225
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.4525
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.4175
#N/A
13.42
0
0.00%
OCT ’22 SOYBEAN OIL
$ / LB
66.24
64.55
64.66
-1
-1.52%
DEC ’22 SOYBEAN OIL
$ / LB
62.88
61.01
61.25
-1.14
-1.83%
OCT ’22 SOY MEAL
$ / TON
427.5
423
426.5
0.4
0.09%
DEC ’22 SOY MEAL
$ / TON
415.7
411
414.3
0.7
0.17%
JAN ’23 SOY MEAL
$ / TON
411.9
407.7
410.7
1
0.24%
MAR ’23 SOY MEAL
$ / TON
406.5
402.9
405.8
1.5
0.37%
MAY ’23 SOY MEAL
$ / TON
404.8
400.4
402.7
1
0.25%
DEC ’22 Chicago SRW
$ / BSH
8.855
8.62
8.835
0.12
1.38%
MAR ’23 Chicago SRW
$ / BSH
8.98
8.75
8.9625
0.12
1.36%
MAY ’23 Chicago SRW
$ / BSH
9.0375
8.8075
9.02
0.115
1.29%
JUL ’23 Chicago SRW
$ / BSH
8.8675
8.655
8.855
0.095
1.08%
SEP ’23 Chicago SRW
$ / BSH
8.8175
8.6175
8.8125
0.085
0.97%
DEC ’23 Chicago SRW
$ / BSH
8.825
8.625
8.825
0.0825
0.94%
AR2 ’24 Chicago SRW
$ / BSH
8.75
8.62
8.75
0.0625
0.72%
DEC ’22 Kansas City HRW
$ / BSH
9.5675
9.3525
9.55
0.1175
1.25%
MAR ’23 Kansas City HRW
$ / BSH
9.535
9.325
9.5225
0.1175
1.25%
MAY ’23 Kansas City HRW
$ / BSH
9.5125
9.305
9.5125
0.1275
1.36%
JUL ’23 Kansas City HRW
$ / BSH
9.3175
9.1425
9.3175
0.0975
1.06%
SEP ’23 Kansas City HRW
$ / BSH
9.23
9.12
9.23
0.08
0.87%
DEC ’23 Kansas City HRW
$ / BSH
9.2
9.18
9.1875
0.0225
0.25%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.12
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.54
9.3675
9.525
0.0925
0.98%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.5775
9.43
9.5675
0.0875
0.92%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.53
9.53
9.53
0.0175
0.18%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.545
#N/A
9.4675
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.2
9.14
9.2
0.01
0.11%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.08
#N/A
9.15
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
0
0
0.00%
DEC ’21 ICE Dollar Index
$
114.745
113.925
114.63
0.583
0.51%
NO ’21 Light Crude
$ / BBL
79.33
76.55
78.78
0.28
0.36%
DE ’21 Light Crude
$ / BBL
78.57
75.84
78.06
0.25
0.32%
OCT ’22 ULS Diesel
$ /U GAL
3.31
3.205
3.308
0.0481
1.48%
NOV ’22 ULS Diesel
$ /U GAL
3.2153
3.0929
3.2105
0.0476
1.50%
OCT ’22 Gasoline
$ /U GAL
2.5183
2.4631
2.5007
0.0076
0.30%
NOV ’22 Gasoline
$ /U GAL
2.4012
2.3337
2.381
0.0083
0.35%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
175.7
0
0.00%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
176.125
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
143.575
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
146.9
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
88.7
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
76.25
0
0.00%
SEP ’22 Class III Milk
$ / CWT
19.88
19.88
19.88
0
0.00%
OCT ’22 Class III Milk
$ / CWT
21.3
21.3
21.3
0.01
0.05%
NOV ’22 Class III Milk
$ / CWT
20.66
20.66
20.66
0.16
0.78%
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