Morning report: Corn, edible oils also post modest gains after Russia stops guaranteeing safe passage for Ukrainian grain vessels.. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 5-16 cents
Soybeans up 4-9 cents; Soymeal up $1.10/ton; Soyoil up $1.31/lb
Chicago wheat up 45-50 cents; Kansas City wheat up 36-46 cents; Minneapolis wheat up 35-38 cents
*Prices as of 6:55am CDT.
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Breaking overnight
Russia announced on Saturday it would be terminating the Black Sea Grains Initiative when the agreement expires in two weeks, casting doubt on the safety and accessibility of Ukrainian grain and oilseed supplies to the international markets overnight.
Grain cargoes are still sailing out of Ukraine as of this morning, according to several outlets. But suddenly, wheat shipments to Africa and the Middle East out of Ukraine are uncertain, which makes those import-dependent regions more susceptible to food shortages.
“If I have to replace a vessel which was due to come from Ukraine, what are the options? Not much really,” a Singapore-based grains trader who supplies wheat to buyers in Asia and the Middle East told Reuters. “We have to see how the situation unfolds. It is not clear if Ukraine will continue to ship grains and what happens to Russian exports.”
The supply concerns are heightened this year after Europe and the U.S. faced drought conditions during this summer’s growing season that constricted wheat, corn, and oilseed yields. Argentina’s wheat crop is likely to face additional drought damages as well. Australia’s wheat crop, which was an important substitute on the world market following Russia’s initial invasion into Ukraine, is likely to be smaller than last year and is facing quality concerns after untimely and excessive rains during the approaching harvest season.
Ukraine’s corn export volumes have towered over other agricultural products since the Black Sea Grains Initiative began in August. However, much of the country’s wheat supplies remain trapped in the country, making Russia’s move cause more price gyrations in the international wheat markets than the corn markets during the overnight trading session.
Russia ramped up its missile attacks across Ukraine overnight to drive the point home, which also spooked grain markets higher this morning.
Corn
Corn prices rose 2% this morning ($0.05-$0.16/bushel) as markets responded to the weekend’s news that Russia would be ending the Black Sea Grains Initiative that freed up trapped Ukrainian grain supplies. The dollar also climbed this morning, which could further deter international interest in U.S. grain exports.
“This is an inflationary move, supporting prices of wheat and corn,” a Singapore-based trader told Reuters this morning. “Prices have risen but further gains will depend on how the situation unfolds.”
Soybeans
Soybean prices rose $0.04-$0.09/bushel this morning, deriving much of its strength from a surge in soyoil prices, which traded nearly 2% higher at last glance on rising accessibility fears regarding Black Sea oilseed supplies.
The soybean complex was largely insulated from Russia’s weekend diplomacy (or lack thereof) moves, however. The primary reason for that is because markets are eagerly awaiting Brazil’s behemoth crop, which could help offset some of the shortage concerns fueled by the Black Sea conflict.
Markets are eagerly awaiting USDA’s first look at September 2022 soy crushing volumes during today’s trading session. Pre-report trade estimates were not available at press time this morning, but earlier data this month from the National Oilseed Processors Association (NOPA) is a pretty good indicator of how today’s report will shake out.
In September 2022, NOPA found the monthly soy crush volume to be 158.1 million bushels, only 3% higher than year ago levels. The data was released two weeks ago on October 17. However, it was also the smallest monthly soy crush volume recorded since September 2021 as well. This is not unusual – September 2021 soybean crushing volumes were the smallest monthly volumes reported during the 2021/22 marketing year.
Many plants took scheduled downtime for seasonal maintenance and repairs during September. More specifically, the biggest declines were reported at plants in Illinois, Iowa (the top two soybean-producing states in the country), and the South. September is also the time of year where old crop supplies are at their lowest and new crop supplies are only slowly beginning to trickle out of the countryside into end users’ possession.
The trade is had expected a range of 152 million – 170.4 million bushels with an average guess of 161.6 million bushels of soybeans processed in September 2022 leading up to NOPA’s report’s release. The wide variance in the estimates reflected the uncertainty by the trade in the lead-up to the NOPA data update.
NOPA reporting is significant because NOPA crush plants handle approximately 95% of all U.S. soybeans destined for crush facilities. The findings of the September 2022 NOPA report were largely neutral (maybe slightly bullish if you need some optimism this morning) with regards to prices. Expect today’s USDA oilseed crushing reports to show similar sentiments.
Wheat
Wheat prices shot up a staggering 6% overnight ($0.36-$0.51/bushel) after Russia announced it would indefinitely terminate the Black Sea Grains Initiative in Ukraine. The global uncertainty pushed the dollar higher as global investors sought safe haven assets during the early morning trading session.
Weather
Trick-or-treaters in the Plains and Upper Midwest will enjoy warmer afternoon temps and clear skies for Halloween today, according to NOAA’s short-term forecasts. Showers will linger over the Eastern Corn Belt today, leaving a light quarter inch of accumulation in its wake. Ghouls and goblins in that area will need to remember umbrellas and/or raincoats while trick-or-treating tonight!
NOAA’s 6-10-day forecasts are now trending warmer for the Midwest and Plains and wetter for the western half of the country (plus Illinois and Wisconsin). Chances for rain are highest in the Pacific Northwest and Upper Midwest, though the Plains could see some moisture relief as well.
Those trends will begin to shift slightly in the 8-10-day outlook. Forecasts during that time are now trending warmer for the Midwest and Plains and wetter for the western half of the country (plus the Upper Midwest and Northern Plains). Chances for rain are highest in the Pacific Northwest and Upper Midwest, though the Central Plains could see some moisture relief as well.
Financials
The results from this weekend’s Brazilian presidential runoff election are in and in a somewhat surprising outcome, incumbent right-leaning President Jair Bolsonaro was ousted in favor of former leftist president Lula da Silva.
The excitement isn’t over yet, however. Bolsonaro hasn’t conceded the race yet and Lula faced several corruption scandals during a previous presidential tenure. The political instability could disrupt currency valuations that would impact export paces.
The Federal Reserve’s Federal Open Market Committee (FOMC) begins its two-day meeting tomorrow, at the conclusion of which markets are expecting another 0.75% increase in interest rates to calm inflation. Wall Street is not keen on the continued aggressive interest rate hike stance the Fed is likely to take by Wednesday, so S&P 500 futures drifted 0.27% lower to $3,700.50 at last glance.
What else I’m reading this morning on our website, FarmFutures.com:
Our latest special edition Farm Futures print issue features a series on farmer mental health. It is one of the pieces I am most proud of during my time here, so I cannot recommend checking it out enough.
Commstock Investment’s Matthew Kruse reports that planting season is in full swing in Brazil.
Roger Wright explains how to interpret today’s Export Inspections report from USDA.
Another rail strike threatens the ag industry at a time when barge and trucking companies are already stretched thin.
Naomi Blohm’s technical analysis shows soybeans could still rise $2.50/bushel but fundamental forces will likely be the key driver of higher – or lower – soybean prices.
Virginia Tech ag economist David Kohl cautions growers to be aware of global financial and economic instability in the coming months.
Morning Ag Commodity Prices – 10/31/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
7
6.935
6.9475
0.14
2.06%
MAR ’23 CORN
$ / BSH
7.0475
6.985
6.995
0.1275
1.86%
MAY ’23 CORN
$ / BSH
7.025
6.97
6.98
0.1175
1.71%
JUL ’23 CORN
$ / BSH
6.9575
6.9025
6.91
0.105
1.54%
SEP ’23 CORN
$ / BSH
6.455
6.395
6.4025
0.0575
0.91%
DEC ’23 CORN
$ / BSH
6.3
6.245
6.26
0.05
0.81%
AR2 ’24 CORN
$ / BSH
6.36
6.31
6.345
0.065
1.04%
AY2 ’24 CORN
$ / BSH
6.35
6.35
6.35
0.0525
0.83%
JUL ’24 CORN
$ / BSH
6.325
6.2975
6.2975
0.035
0.56%
NOV ’22 SOYBEANS
$ / BSH
14.1125
13.92
13.92
0.0425
0.31%
JAN ’23 SOYBEANS
$ / BSH
14.24
14.04
14.0425
0.04
0.29%
MAR ’23 SOYBEANS
$ / BSH
14.3175
14.12
14.1225
0.0325
0.23%
MAY ’23 SOYBEANS
$ / BSH
14.38
14.19
14.195
0.0325
0.23%
JUL ’23 SOYBEANS
$ / BSH
14.4
14.2225
14.2225
0.0275
0.19%
AUG ’23 SOYBEANS
$ / BSH
14.2375
14.07
14.07
0.02
0.14%
SEP ’23 SOYBEANS
$ / BSH
13.89
13.7625
13.7625
0.0325
0.24%
NOV ’23 SOYBEANS
$ / BSH
13.775
13.61
13.61
0.015
0.11%
AN2 ’24 SOYBEANS
$ / BSH
13.7825
13.7125
13.7825
0.1575
1.16%
AR2 ’24 SOYBEANS
$ / BSH
13.73
#N/A
13.5675
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.705
#N/A
13.555
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
73.95
72.5
73
1.21
1.69%
JAN ’23 SOYBEAN OIL
$ / LB
71.15
69.55
70.28
1.07
1.55%
DEC ’22 SOY MEAL
$ / TON
440.5
425.7
425.8
0.4
0.09%
JAN ’23 SOY MEAL
$ / TON
430
416
416.1
-0.1
-0.02%
MAR ’23 SOY MEAL
$ / TON
419.1
405.6
405.8
-0.9
-0.22%
MAY ’23 SOY MEAL
$ / TON
415
400.4
400.5
-1.3
-0.32%
JUL ’23 SOY MEAL
$ / TON
411.1
399.1
399.3
-1.2
-0.30%
DEC ’22 Chicago SRW
$ / BSH
8.9325
8.67
8.7375
0.445
5.37%
MAR ’23 Chicago SRW
$ / BSH
9.1125
8.8525
8.9125
0.4225
4.98%
MAY ’23 Chicago SRW
$ / BSH
9.19
8.935
9
0.4
4.65%
JUL ’23 Chicago SRW
$ / BSH
9.1225
8.9125
8.95
0.335
3.89%
SEP ’23 Chicago SRW
$ / BSH
9.1175
8.9425
8.9775
0.3
3.46%
DEC ’23 Chicago SRW
$ / BSH
9.1775
9.0075
9.03
0.2725
3.11%
AR2 ’24 Chicago SRW
$ / BSH
9.1075
8.975
9.0225
0.26
2.97%
DEC ’22 Kansas City HRW
$ / BSH
9.825
9.6025
9.66
0.41
4.43%
MAR ’23 Kansas City HRW
$ / BSH
9.79
9.585
9.63
0.3825
4.14%
MAY ’23 Kansas City HRW
$ / BSH
9.7825
9.53
9.6
0.3625
3.92%
JUL ’23 Kansas City HRW
$ / BSH
9.6375
9.3775
9.5
0.31
3.37%
SEP ’23 Kansas City HRW
$ / BSH
9.52
9.455
9.4675
0.2775
3.02%
DEC ’23 Kansas City HRW
$ / BSH
9.5225
9.445
9.5225
0.2875
3.11%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.1825
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.9
9.71
9.8
0.35
3.70%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.9625
9.7825
9.86
0.33
3.46%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.9875
9.845
9.95
0.365
3.81%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.9075
9.77
9.8575
0.275
2.87%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.595
9.33
9.54
0.2375
2.55%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.53
9.4525
9.53
0.215
2.31%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.305
0
0.00%
DEC ’21 ICE Dollar Index
$
111.105
110.585
111.055
0.449
0.41%
DE ’21 Light Crude
$ / BBL
88.65
86.28
86.58
-1.32
-1.50%
JA ’21 Light Crude
$ / BBL
87.36
85.02
85.32
-1.29
-1.49%
NOV ’22 ULS Diesel
$ /U GAL
4.62
4.54
4.5905
0.0407
0.89%
DEC ’22 ULS Diesel
$ /U GAL
3.7831
3.6744
3.6949
-0.0506
-1.35%
NOV ’22 Gasoline
$ /U GAL
2.91
2.9008
2.9008
-0.0058
-0.20%
DEC ’22 Gasoline
$ /U GAL
2.5675
2.5
2.5114
-0.0515
-2.01%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
177.875
0
0.00%
JAN ’23 Feeder Cattle
$ / CWT
0
#N/A
180.375
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
150.375
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
153
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
86.1
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
88.85
0
0.00%
OCT ’22 Class III Milk
$ / CWT
21.81
#N/A
21.83
0
0.00%
NOV ’22 Class III Milk
$ / CWT
20.5
20.35
20.35
0.14
0.69%
DEC ’22 Class III Milk
$ / CWT
19.14
18.84
19.14
0.33
1.75%
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