Wheat selloff trickles into corn, soy prices

Morning report: More insights from the Kansas Wheat Quality Council’s Wheat Tour! (Comments are updated by 7:30 a.m. Central Time.)

Corn down 5-11 cents
Soybeans mixed; Soymeal up $3.50/ton; Soyoil down $1.20/lb
Chicago wheat down 23-26 cents; Kansas City wheat down 33-36 cents; Minneapolis wheat down 12-14 cents

*Prices as of 6:55am CDT.

New Feedback from the Field column! Corn and soybean plants are emerging almost as quickly as they were planted according to responses from growers in our latest Feedback from the Field column. Planting is progressing, but not as quickly as most growers would like.

Most notably, spring wheat producers across North Dakota are already weighing the possibility of prevent plant acreage as rain delays continue to mount. Little progress has been made and it could drastically alter USDA’s 2022 spring wheat production forecasts calculated from last week’s USDA all wheat and winter wheat projections.

Want to see how your farm’s progress stacks up against other growers across the country? 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!

Corn

Corn prices fell $0.06-$0.10/bushel overnight, following losses in the wheat and energy complexes. Easing export demand for U.S. corn also played a factor and could trigger further losses if today’s Export Sales report from USDA points to shrinking U.S. corn export volumes.

Corn export volumes continue to wane as peak export season comes to an early close while global buyers eagerly anticipate Brazil’s safrinha crop, slated to be harvested in the coming weeks. Monday’s Export Inspections report suggests that weekly corn loadings could fall by nearly a third from the prior week as high prices deter interested buyers.

Soybeans

The oilseed market was active overnight, resulting in a mixed morning for the soybean complex. Nearby contracts (July and August) rose $0.02-$0.05/bushel while the deferred months fell $0.02-$0.08/bushel.

Global supplies remain tight, which bode well for an unseasonably high U.S. soybean export loading pace, but prospects of a record 2022 U.S. crop are increasing as more acres in the Dakotas and Minnesota are likely going to move from spring wheat and corn into soybeans amid ongoing planting delays.

China will begin importing more Canadian canola this year, lifting a three-year ban imposed after China alleged (to Canadian protests) the Canadian canola imports contained pests. Canadian officials noted that the move is not likely to trigger a surge in Chinese purchases of Canadian canola as current stock volumes and projected 2022 acreage is low, keeping prices high.

“We welcome this decision to remove the restrictions and immediately reinstate the two companies to allow them to export Canadian canola seeds,” said Canadian Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau in a statement.

“This will improve the current shortage of rapeseed domestically. China’s two major import sources for rapeseed are Canada and Russia, and there are great supply risks for Russia now,” Haitong Futures analyst Kong Lingqi told Reuters.

Soyoil prices tumbled overnight after Indonesia announced that it will lift its ban on palm oil exports, effective on Monday. The announcement reverses the ban issued on April 28 that sent global edible oil market prices soaring.

President Joko Widodo noted in the announcement that domestic cooking oil prices have fallen enough to ease some of the inflationary concerns surrounding the edible oil complex. “Average price of (bulk) cooking oil before the export ban in April was 19,800 rupiah per litre and after the ban the average price dropped to around 17,200 to 17,600 rupiah per litre,” he said.

Farmer protests of the ban also encouraged Widodo to reevaluate the ban. The original price target was 14,000 rupiah per liter, but there was enough negative pressure on Widodo to reverse the ban prematurely. Indonesia is the world’s top producer and exporter of palm oil.

Export loading paces should provide some bullish price prospects for markets in today’s weekly Export Sales report from USDA. Soybean loadings also continue to be unseasonably high as global buyers scramble for available supplies amid South American crop shortfalls. Nearly 1.2 billion bushels of South American soybean production were lost to drought this year – the equivalent to 27% of the U.S.’s 2021 soybean crop.

Wheat

Wheat markets tumbled $0.10-$0.35/bushel lower overnight as bumper Russian crop forecasts eased global supply concerns in the wheat market. Hopes for improved access to Ukrainian wheat stocks in storage also had bearish sentiments for the wheat market.

Losses were capped by a falling dollar, poor U.S. winter wheat crop conditions. ongoing spring wheat planting delays that show no sign of abating, and a potential seasonal uptick in U.S. wheat export loading volumes.

Today’s Export Sales report from USDA should (finally) feature some bullish news for U.S. wheat exporters. Monday’s Export Inspections report pointed to strong wheat export loading volumes last week as seasonal shipping paces start to accelerate. While I don’t think today’s report will indicate a dramatic increase in wheat exports, I think it will, at the very least, stave off further USDA cuts to 2021/22 U.S. wheat exports in next month’s WASDE report series.

Wheat tour updates

My colleague, Jennifer Latzke, who is the editor at Kansas Farmer, spent yesterday on Day Two of the Kansas Wheat Quality Council’s annual tour. Latzke traversed southwestern Kansas yesterday, noting that drought damage will leave some 2022 winter wheat acreage abandoned.

Out of 254 stops for the day, the average yield is 37 bushels per acre. That’s 20 bushels per acre lower than the Day 2 tally last year.

Chris Kirby, with the Oklahoma Wheat Commission, shares that of the 4.4 million acres planted to wheat this year, they’re expecting to abandon a large portion of their crop to drought.

If you farm west of I-35 it’s drought, drought, drought, she says. USDA estimates the state may have a 57-million-bushel crop. That’s half of what the state produced last year.

The combines in the southern part of Oklahoma are already rolling. And with above 100-degree temperatures and high winds on the forecast, Kirby says she expects harvest to proceed fast across the state.

USDA-NASS forecasted the highest volume of winter wheat abandonment since 2002 in their most recent forecast for winter wheat production issued last week.

“We just didn’t get the rain,” one grower told Latzke.

“At $13 per bushel, every bushel harvested counts,” Latzke surmises. “But other fields that are not so lucky will be zeroed out by crop insurance adjusters and grazed.” But the losses don’t stop there.

“If you think it’s dry in the wheat field, you should see the pastures in the area,” Latzke said. “Cattlemen are scrambling for forage for their herds, and even grazing wheat that’s headed out and thin is something for hungry herds.”

Kansas State Extension specialists observed that wheat quality improved as the tour moved east. Yields are already locked in but now quality becomes a concern until harvest begins. “The protein is already in the grain and millers and bakers may have high protein wheat coming out of the state this year,” Latzke reasons. “But there might not be much of it.”

Be sure to follow along with the wheat tour on the Kansas Farmer Twitter account for Latzke’s updates. I’m currently following Kansas Farmer Twitter account Latzke’s Twitter account for the latest insights! And follow #wheattour22 for updates from various routes throughout the day.

Inputs

Nutrien is eyeing a potential building site in Louisiana to create a low carbon emission anhydrous ammonia plant. The price tag for the plant is currently set at $2 billion, though that is likely to trend higher in the coming months as construction costs rise.

A statement from Canadian-headquartered Nutrien projects the plant’s production capacity at 1.2 million tonnes per year with the capability to capture no less than 90% of carbon emissions. Nutrien has already signed a letter of intent with Mitsubishi Corporation, who will buy 40% of the offtake from Nutrien and funnel it into the Asian fuel market.

Nutrien isn’t exactly a pioneer on this front. CF Industries Holdings, the world’s largest anhydrous ammonia producer based in Chicago, announced a similar arrangement with Mitsui & Co. for another $2 billion low-carbon ammonia plant during its quarterly earnings call earlier this month.

“Given the fact that we generated $2.8 billion of free cash flow in the last 12 months, it’s imminently affordable and not a crazy amount,” Chief Executive Tony Will told analysts about the plant’s cost.

Weather

It’s going to heat back up again today in the Heartland but I’m worried about snow here on the Colorado Front Range, according to NOAA’s short-range forecasts. A cold front in the Rockies could push mixed precipitation into the Western Plains and Northern Plains over the next couple days.

We usually expect an April or early May snowstorm here in Colorado, but there have been few snow or rain showers this spring. So this isn’t exactly unusual but it’s not exactly normal, either.

Growers in the Northern Plains and Upper Midwest are likely to continue dodging rain showers again today and tomorrow. Up to an inch and a half of precipitation will accumulate, so that literally dampens any farmer outlook for planting through the weekend.

NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending wetter for the Eastern Corn Belt and Northern Plains, which could further limit planting progress this spring.

Financials

China didn’t just make moves to buy Canadian canola overnight. While the world slept, China entered into talks with Russia to purchase oil to replenish state reserves. Russian oil is currently trading at a discount to global prices as economic sanctions limit its viability on the market.

“Crude would be used to fill China’s strategic petroleum reserves, and talks are being conducted at a government level with little direct involvement from oil companies, said one person,” according to a Bloomberg report.

Volumes have not yet been announced. Despite complete U.S. and U.K. bans on Russian oil purchases, as well as looming measures expected from the European Union, Russia continues to sell its discounted oil to buyers in India and China who are willing to circumnavigate the financial institutions sanctioned by the West.

For anyone following the Black Sea conflict over the past few months, this development should not be surprising. China and India have wasted little time in passing up the opportunity to access cheap Russian energy supplies. I suspect that this foreshadows future trade alliances in the post-Ukrainian war world so it’s worth keeping a close eye on this deal to see how it plays out.

Because it will have significant consequences for market players around the globe.

Stocks are slated for another day of deep losses. S&P 500 futures were already down 4.04% this morning to $3,923.68 following yesterday’s $1.5 trillion selloff triggered by recession fears, high inflation, and rising interest rates.

“The S&P 500 is on track for its longest losing weekly streak since 2001 as traders flee risk assets over fears that the Federal Reserve will push the economy into a recession as it tries to curb inflation,” said a Bloomberg report this morning. “The benchmark is close to falling into a bear market, after dropping 18% since a record high in January.”

“The US selloff was rather orderly and the market isn’t oversold, yet. That tells us that we are likely not at the bottom yet,” Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital, told Bloomberg. “Consumer sentiment remains depressed and we are seeing consumers retrenching on some discretionary spending.”

Still digesting last week’s WASDE reports?

Me too! Our team did a lot of insightful work on last week’s WASDE reports – and there was a lot of information to digest! China, fertilizer, tight global corn and wheat stocks, and pending 2022 U.S. production implications were top of mind for me. Here are our team’s best insights on these issues!

For the top highlights, check out Ben Potter’s and my podcast recapping the report.
For my analysis on 2022 U.S. production estimates, check out this article.
Fertilizer prices may also impact 2022/23 global corn and wheat production. Here is what to expect.
Global corn and wheat acres are expected to contract this year due to high input costs and the conflict in the Black Sea. Soybean acreage is expected to rise, but total acreage for the three crops will shrink for the first time since 2019. Is the global acreage expansion over?

What else I’m reading this morning on our website, FarmFutures.com:

Executive editor Mike Wilson foreshadows that if drought doesn’t ding the farm this summer, your biggest worry could be how to minimize taxes from another very profitable year – despite costly inputs.
Senior editor Ben Potter examines ways to offset higher fertilizer prices at the farm level.
Bryce Knorr points out that it will take significant crop damage to keep feeding corn bulls, so impending weather forecasts may create more market volatility.
Darren Frye offers valuable tips on prioritizing time and finances during spring planting season.
Roger Wright concludes a four-part series on buying put options, pointing out that buyers will never have to add money to margin positions by using this strategy.

Morning Ag Commodity Prices – 5/19/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.865
7.7325
7.7525
-0.0625
-0.80%
SEP ’22 CORN
$ / BSH
7.5675
7.4175
7.4475
-0.085
-1.13%
DEC ’22 CORN
$ / BSH
7.435
7.2675
7.3025
-0.1
-1.35%
MAR ’23 CORN
$ / BSH
7.465
7.3025
7.34
-0.0975
-1.31%
MAY ’23 CORN
$ / BSH
7.4625
7.3125
7.3725
-0.0625
-0.84%
JUL ’23 CORN
$ / BSH
7.4025
7.255
7.3175
-0.0625
-0.85%
SEP ’23 CORN
$ / BSH
6.79
6.66
6.6975
-0.0275
-0.41%
JUL ’22 SOYBEANS
$ / BSH
16.7975
16.6075
16.6325
0.005
0.03%
AUG ’22 SOYBEANS
$ / BSH
16.195
16.02
16.055
-0.015
-0.09%
SEP ’22 SOYBEANS
$ / BSH
15.495
15.2975
15.35
-0.04
-0.26%
NOV ’22 SOYBEANS
$ / BSH
15.0825
14.87
14.93
-0.065
-0.43%
JAN ’23 SOYBEANS
$ / BSH
15.1075
14.9
14.955
-0.07
-0.47%
MAR ’23 SOYBEANS
$ / BSH
14.975
14.7775
14.8225
-0.0825
-0.55%
MAY ’23 SOYBEANS
$ / BSH
14.955
14.76
14.8025
-0.0825
-0.55%
JUL ’23 SOYBEANS
$ / BSH
14.875
14.7475
14.7875
-0.08
-0.54%
AUG ’23 SOYBEANS
$ / BSH
10.75
#N/A
14.675
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
81.2
78.58
79.18
-1.37
-1.70%
AUG ’22 SOYBEAN OIL
$ / LB
78.42
76.17
76.58
-1.26
-1.62%
JUL ’22 SOY MEAL
$ / TON
418
414
416.2
2.2
0.53%
AUG ’22 SOY MEAL
$ / TON
413.4
409.2
412
2.6
0.64%
SEP ’22 SOY MEAL
$ / TON
408
403.7
406.9
2.3
0.57%
OCT ’22 SOY MEAL
$ / TON
401.9
397.5
400.4
1.2
0.30%
DEC ’22 SOY MEAL
$ / TON
402.3
397.7
400.6
0.5
0.12%
JUL ’22 Chicago SRW
$ / BSH
12.4775
12.015
12.0625
-0.245
-1.99%
SEP ’22 Chicago SRW
$ / BSH
12.4925
12.0475
12.1
-0.23
-1.87%
DEC ’22 Chicago SRW
$ / BSH
12.5075
12.0725
12.11
-0.2325
-1.88%
MAR ’23 Chicago SRW
$ / BSH
12.4775
12.07
12.105
-0.21
-1.71%
MAY ’23 Chicago SRW
$ / BSH
12.2475
11.8675
11.8875
-0.2
-1.65%
JUL ’22 Kansas City HRW
$ / BSH
13.4525
12.9025
12.92
-0.325
-2.45%
SEP ’22 Kansas City HRW
$ / BSH
13.48
12.9425
12.9425
-0.3275
-2.47%
DEC ’22 Kansas City HRW
$ / BSH
13.5
12.96
12.96
-0.32
-2.41%
MAR ’23 Kansas City HRW
$ / BSH
13.4
12.9575
12.97
-0.245
-1.85%
MAY ’23 Kansas City HRW
$ / BSH
13.14
12.7
12.7
-0.2225
-1.72%
JUL ’22 MLPS Spring Wheat
$ / BSH
13.83
13.3625
13.4075
-0.12
-0.89%
SEP ’22 MLPS Spring Wheat
$ / BSH
13.8
13.355
13.37
-0.1425
-1.05%
DEC ’22 MLPS Spring Wheat
$ / BSH
13.7275
13.33
13.345
-0.13
-0.96%
MAR ’23 MLPS Spring Wheat
$ / BSH
13.6875
13.3375
13.3375
-0.0975
-0.73%
MAY ’23 MLPS Spring Wheat
$ / BSH
13.2575
13.2575
13.2575
-0.0525
-0.39%
JUN ’21 ICE Dollar Index
$
103.935
103.245
103.345
-0.517
-0.50%
JU ’21 Light Crude
$ / BBL
110.9
106.7
108.24
-1.35
-1.23%
JU ’21 Light Crude
$ / BBL
108.55
104.36
105.92
-1.12
-1.05%
JUN ’22 ULS Diesel
$ /U GAL
3.707
3.5432
3.592
-0.0761
-2.07%
JUL ’22 ULS Diesel
$ /U GAL
3.6097
3.449
3.4944
-0.0749
-2.10%
JUN ’22 Gasoline
$ /U GAL
3.733
3.5435
3.6302
-0.0904
-2.43%
JUL ’22 Gasoline
$ /U GAL
3.6108
3.4236
3.5043
-0.087
-2.42%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
155.85
0
0.00%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
165.8
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
131.5
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
131.7
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
106.1
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
108.525
0
0.00%
MAY ’22 Class III Milk
$ / CWT
25.08
25.07
25.07
0.09
0.36%
JUN ’22 Class III Milk
$ / CWT
24.82
24.75
24.81
0.24
0.98%
JUL ’22 Class III Milk
$ / CWT
24.78
24.65
24.65
0.25
1.02%

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