Morning report: Corn and soybeans continue to face early planting delays, resulting in bullish price action this morning. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 5-8 cents
Soybeans up 8-15 cents; Soymeal up $4.50/ton; Soyoil up $0.71/lb
Chicago wheat up 24-26 cents; Kansas City wheat up 18-21 cents; Minneapolis wheat up 16-20 cents
*Prices as of 6:55am CDT.
Feedback from the Field is back! Our Feedback from the Field series is live for the 2022 season! Just 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!
Good morning! As I mentioned in yesterday’s newsletter, I was out for part of last week at meetings and at my family’s farm in Illinois. And while I don’t like to admit this, I missed some data updates while on the road last week. So in the first part of today’s letter, I’m going to hit the high points on some of the data that was released last week and explain why it continues to be relevant this week and into the coming weeks.
Thanks for your patience! Have a great Tuesday. -JH
Inputs
Last Thursday, the Illinois USDA released its bi-weekly production costs report for the two weeks ending April 21. While prices remain high, the latest report saw some price easing, especially for anhydrous ammonia, urea, DAP, and potash.
There is a bit of a reverse seasonality trait to this change – many farmers locked in input pricing last fall and also applied fertilizers heavily last fall to offset rising availability concerns. This blip in price suggests that despite the regular seasonal uptick in fertilizer demand, these products have been largely exempt from the rising price dynamic this spring simply because farmers already made those applications last fall.
Urea saw the biggest bi-weekly change, falling 5% from the previous report’s high down to $977.33/ton. Conversely, diesel prices saw the biggest price appreciation, rising 5% to $4.50/gallon for purchases over 1,000 gallons. UAN prices edged up $4.53/ton to settle at $625.59/ton, setting a new price high.
To be sure, even with the small amount of price relief in retail input prices, production costs remain high. From the beginning of April to the end of April, per bushel NPK costs to produce 200 bushel-per-acre corn edged $0.08-$0.12/bushel lower, giving farmers more comfortable profit margins as December 2022 corn futures prices rose $0.22/bushel during that time, setting a life of contract high of $7.4975/bushel on April 18.
Per acre NPK values still sit at $219.20-$244.28/acre, up $96.80-$102.82/acre (70-88%) from a year ago. But the recent rally in the corn market has more than offset the rise in inputs, especially amid the Black Sea conflict, which is keeping Ukrainian corn supplies off the global market.
Using a combination of Purdue and University of Illinois crop budgets, I estimate that with this morning’s price for December 2022 futures ($7.3925/bushel at last glance), growers can still grab $164/acre in net earnings for 2022 crops – after land, labor, and equipment costs are factored in.
High production costs certainly have a negative impact on producer sentiment, but this latest corn rally has ensured that the rising costs are not negatively impacting farm-level profit margins – for now, at least.
Cattle on Feed
USDA-NASS released monthly Cattle on Feed statistics on Friday. The big story from the report was that March 2022 sales for slaughter volumes soared to 2 million head on the nose, rising 9.6% from the previous month. To be sure, March marketings are typically higher than those of the prior month due to the longer reporting period.
But there is more to this story than just dates. An increasing number of cows (replacement stock) made up that volume as producers in the Plains pulled cows off dry pastures early this year and lucrative cull prices led producers to send those animals straight to slaughter instead of pursuing other options.
Further proof of this liquidation cycle? Placement volumes measured 0.4% lower than the same time last year, down to 1.99 million head. Producers in the Plains – the primary region in the U.S. where cattle are produced – continue to face steep headwinds this year as drought, high feed prices, and limited hay availability force many producers to contract herd sizes.
Profit margins remain stable for cattle producers, but input costs are restrictive enough that expansion signals are not likely to return to the cattle market likely until 2024. If you think that it’s been wild following grain markets this spring, don’t sleep on cattle markets. There are going to be a lot interesting price and market dynamics that play out in the coming months.
Crop Progress report
To be honest, I didn’t have a lot of expectations for significant corn planting development from yesterday’s report – and I wasn’t wrong. Corn planting only advanced 3% on the week to end the week of April 24 at 7% complete. That value is now 9% behind last year’s paces and 8% behind the five-year average.
Cool and wet weather continues to keep planters out of the fields. There is a chance for some weather clearing in the Heartland this week that could prompt a flurry of planting activity but that’s only if weather conditions hold and if soil temperatures do actually warm enough to allow for planting.
Feedback from the Field data has reported no planting activity in the Midwest so far. The lone respondent who has finished planting is based in the Mississippi River Delta in Louisiana.
Soybean planting progress is still in its early days, rising 2% on the week to 3% complete as of Sunday. That’s 4% behind last year and 2% behind the five-year average.
Crops across the board continue to be delayed in planting. Spring wheat sowings continue to face headwinds in the Northern Plains (specifically the Red River Valley), where growers are battling spring snow showers and excessive flooding. Spring wheat sowing rose 7% on the week to 13% complete as of April 24, but that total still lags 2% behind the five-year average with delayed progress in Idaho, Minnesota, and North Dakota holding the complex back.
Winter wheat conditions fell 3% on the week, with only 27% of the crop rated in good to excellent condition as of April 24. Only 11% of the winter wheat crop has headed compared to the five-year average of 19%. The drought on the Plains continues to sink 2022 wheat yield estimates.
Corn
Corn prices rose $0.05-$0.07/bushel this morning, with nearby contracts holding steady above the $8/bushel benchmark, on continued planting delays in the Midwest this spring. While yield downgrades are likely still too early to be factored in at this point, it is the slowest start to the corn planting season since 2013.
It also reduces the chances of the market buying more corn acres to be planted this spring, suggesting that USDA’s March 31 Prospective Plantings report that posited larger soybean acreage than corn this spring may soon become a reality.
Soybeans
Soybean prices rallied $0.08-$0.13/bushel higher overnight on U.S. early planting delays. But bullish price action was also realized from Indonesia, where the government has see-sawed between measures to restrict palm oil exports in recent days.
The latest news finds the government preparing to widen its previously announced export ban on refined palm olein if the country faces domestic shortages of palm oil used for cooking. More specifically, shipments of refined, bleached and deodorized (RBD) palm oil will be banned but crude palm oil and other palm oil derivatives can still be shipped.
Regardless, RBD shipments total 40% of Indonesia’s palm exports which could cause significant cash shortages for the Southeast Asian country.
Palm oil is the largest produced edible oil in the world. Indonesia and Malaysia are the world’s top producers and exporters of this edible oil. Since the top four edible oils (palm, soy, canola, and sunflower) are already in tight supply, Friday’s announcement triggered a rally in the soyoil complex as the four oils typically act as substitutions for one another, especially in high-price situations.
In the U.S., soyoil futures rose 1% higher on the news.
Wheat
Wheat prices staged a rally this morning on yesterday’s Crop Progress report, which found declining winter wheat condition ratings and delayed spring wheat planting progress. The prospects elevated global supply concerns amid the Black Sea conflict, though U.S. wheat export have yet to see a boost in shipping volumes from the war.
“U.S. HRW (Hard Red Winter) wheat crops are nearing a point where forecasts will be downgraded,” 7 Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters.
“A lower U.S. wheat crop would further exacerbate the supply tightness on the wheat market as Ukraine is likely to grow significantly less wheat this year on account of the war,” Commerzbank said in a note seen by Reuters reporters.
Weather
Temperatures will likely rise higher than yesterday across much of the Corn Belt, according to NOAA’s short-range forecasts. Yesterday’s showers will move out of the far Eastern Corn Belt this morning, though a chance of snow and rain will linger in the Great Lakes region overnight.
But overall, today and Wednesday should have mostly clear skies in store for the Heartland. A chance of showers will move in across the Central Plains on Thursday but should linger in the region through at least Thursday afternoon, giving growers in the Eastern Corn Belt a chance to start planting if soils are dry enough.
Financials
S&P 500 futures fell 18.25 points (0.43%) to $4,274.50 overnight as Russia threatened nuclear war following U.S. Secretary of State Anthony Blinken and Defense Secretary Lloyd Austin’s visit to Kyiv yesterday. Austin stated that Washington wants the Russian army “weakened to the degree that it can’t do the kinds of things that it has done in invading Ukraine.”
In response to the additional aid provided to the Ukrainians by the U.S., Russian Foreign Minister Sergei Lavrov retaliated overnight, threatening nuclear attacks in response to Austin’s comments. “The danger is serious, real. It can’t be underestimated,” Lavrov said in an interview on Russian state TV outlets late last night.
Lavrov indicated that the Kremlin remains open to further negotiations with the West, despite the nuclear threats.
Also worth a read on our website, FarmFutures.com
Naomi Blohm expects grain prices will stay in a holding pattern over the next few weeks, supported by tight ending stocks but stalemated by a lack of fresh market news.
Roger Wright explains how put options can add value to cash grain sales.
Mike Downey weighs the odds of farmland prices cooling off and the results could have challenging implications for future farmland buyers.
Advance Trading’s Josh Green has fresh insights for how to make a profitable year even more profitable.
Dave Kohl questions if food producers are losing touch with mainstream consumers.
Bryce Knorr has the latest insights into the fertilizer market and a few key reasons why high fertilizer prices are likely to stick around.
Morning Ag Commodity Prices – 4/26/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
8.085
8.0025
8.075
0.0725
0.91%
JUL ’22 CORN
$ / BSH
8.06
7.985
8.045
0.065
0.81%
SEP ’22 CORN
$ / BSH
7.5875
7.5125
7.58
0.065
0.86%
DEC ’22 CORN
$ / BSH
7.415
7.3375
7.41
0.07
0.95%
MAR ’23 CORN
$ / BSH
7.445
7.375
7.445
0.07
0.95%
MAY ’23 CORN
$ / BSH
7.4525
7.39
7.4525
0.0625
0.85%
JUL ’23 CORN
$ / BSH
7.42
7.3575
7.4175
0.055
0.75%
MAY ’22 SOYBEANS
$ / BSH
17.2175
17.03
17.1825
0.1475
0.87%
JUL ’22 SOYBEANS
$ / BSH
16.92
16.73
16.8925
0.14
0.84%
AUG ’22 SOYBEANS
$ / BSH
16.365
16.195
16.35
0.1325
0.82%
SEP ’22 SOYBEANS
$ / BSH
15.5275
15.365
15.485
0.1
0.65%
NOV ’22 SOYBEANS
$ / BSH
15.0825
14.89
15.065
0.1225
0.82%
JAN ’23 SOYBEANS
$ / BSH
15.0925
14.915
15.0575
0.0925
0.62%
MAR ’23 SOYBEANS
$ / BSH
14.9575
14.795
14.9125
0.08
0.54%
MAY ’23 SOYBEANS
$ / BSH
14.92
14.7925
14.9175
0.0925
0.62%
JUL ’23 SOYBEANS
$ / BSH
14.83
14.795
14.83
0.005
0.03%
MAY ’22 SOYBEAN OIL
$ / LB
84
82.62
83.56
0.82
0.99%
JUL ’22 SOYBEAN OIL
$ / LB
81.24
79.82
80.74
0.66
0.82%
MAY ’22 SOY MEAL
$ / TON
458
452.7
457.7
5.3
1.17%
JUL ’22 SOY MEAL
$ / TON
450.9
445.5
450.5
4.9
1.10%
AUG ’22 SOY MEAL
$ / TON
441.6
435.4
441.4
4.8
1.10%
SEP ’22 SOY MEAL
$ / TON
430.5
425.3
429.8
3.9
0.92%
OCT ’22 SOY MEAL
$ / TON
418.6
413
417.5
2.7
0.65%
MAY ’22 Chicago SRW
$ / BSH
10.8925
10.6675
10.885
0.265
2.50%
JUL ’22 Chicago SRW
$ / BSH
10.9925
10.77
10.985
0.26
2.42%
SEP ’22 Chicago SRW
$ / BSH
10.9575
10.755
10.9475
0.235
2.19%
DEC ’22 Chicago SRW
$ / BSH
10.8825
10.7075
10.875
0.2125
1.99%
MAR ’23 Chicago SRW
$ / BSH
10.8275
10.7325
10.8275
0.195
1.83%
MAY ’22 Kansas City HRW
$ / BSH
11.685
11.5175
11.685
0.2325
2.03%
JUL ’22 Kansas City HRW
$ / BSH
11.78
11.5925
11.765
0.235
2.04%
SEP ’22 Kansas City HRW
$ / BSH
11.7675
11.575
11.7625
0.2375
2.06%
DEC ’22 Kansas City HRW
$ / BSH
11.715
11.555
11.7125
0.2175
1.89%
MAR ’23 Kansas City HRW
$ / BSH
11.67
11.61
11.67
0.22
1.92%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.99
11.79
11.99
0.2225
1.89%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.9675
11.8
11.925
0.15
1.27%
SEP ’22 MLPS Spring Wheat
$ / BSH
11.8125
11.66
11.79
0.135
1.16%
DEC ’22 MLPS Spring Wheat
$ / BSH
11.7975
11.67
11.75
0.1075
0.92%
MAR ’23 MLPS Spring Wheat
$ / BSH
11.7175
#N/A
11.585
0
0.00%
JUN ’21 ICE Dollar Index
$
101.97
101.535
101.925
0.156
0.15%
JU ’21 Light Crude
$ / BBL
99.82
97.06
99.12
0.58
0.59%
JU ’21 Light Crude
$ / BBL
98.95
96.37
98.26
0.59
0.60%
MAY ’22 ULS Diesel
$ /U GAL
4.195
4.1044
4.1882
0.0973
2.38%
JUN ’22 ULS Diesel
$ /U GAL
3.7178
3.6258
3.6911
0.037
1.01%
MAY ’22 Gasoline
$ /U GAL
3.2745
3.2033
3.2509
0.0111
0.34%
JUN ’22 Gasoline
$ /U GAL
3.2521
3.1808
3.23
0.0094
0.29%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
156.55
0
0.00%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
161.3
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
139.1
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
135.425
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
107.8
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
114.025
0
0.00%
APR ’22 Class III Milk
$ / CWT
0
#N/A
24.32
0
0.00%
MAY ’22 Class III Milk
$ / CWT
24.85
24.76
24.85
0.17
0.69%
JUN ’22 Class III Milk
$ / CWT
25
24.82
25
0.18
0.73%
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