Morning report: Soybeans, corn edge up on easing recession fears, dry weather concerns. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 6-9 cents
Soybeans up 1-6 cents; Soymeal down $1.20/ton; Soyoil up $0.06/lb
Chicago wheat up 17-21 cents; Kansas City wheat up 15-17 cents; Minneapolis wheat up 22-25 cents
*Prices as of 6:50am 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.
Corn
After a remarkably volatile week in the commodity markets, the overnight trading session was – thankfully for this analyst – less volatile than its has been all week. Corn futures traded $0.05-$0.09/bushel higher overnight as the complex continues to back off a seven-month low reached earlier this week.
Dry weather concerns could prompt more gains in next week’s trading sessions, though were currently lending some price support to the corn complex this morning. Energy prices were mixed this morning, providing little extra benefit to the corn and soybean markets overnight.
Receding fears about a recession were also a key driver of bullish grain and oilseed prices this morning, though financial markets were showing some signs of caution following the assassination of Japan’s former prime minister, Shinzo Abe, overnight.
Cash corn prices continued higher at ethanol plants across the Midwest yesterday. Basis bids were flat to slightly higher at processor and elevator locations while remaining largely unchanged at river terminals destined for export markets. Cash prices continue to trade at a premium to futures prices and buyers are still rolling bids to the September 2022 futures contract as the July 2022 contract approaches expiration one week from yesterday.
Soybeans
Soybeans edged $0.01-$0.06/bushel higher this morning on many of the same factors influencing corn markets – easing recession fears, dry extended forecasts in the Midwest, bargain buying. Soybean prices have bounced back from a six-month low this week and improving global economic sentiment due in large part to another round of fiscal stimulus in China has also contributed to strength in the soy market.
China announced overnight it would sell 18.4 million bushels of soybeans from its state reserves on July 15. China has been holding auctions for state soybean supplies since earlier in 2022 as tight supplies continue to plague crush margins. This is a good sign of demand – it means that Chinese soy crushers are continuing production even amid higher prices.
Cash soybean prices showed signs of increasing at crush facilities, elevators, and river locations on the east side of the Mississippi River yesterday morning while bids to the west were largely flat. The soybean market rally Wednesday and yesterday has triggered a small quantity of new farmer sales, though the volumes sold tended to be on the small side.
Cash soymeal prices were mostly flat on the truck market yesterday due to light end user demand, but rail prices offered some price appreciation for soymeal sellers. Tight supplies are sending many dealers to roll cash bids from the August to September futures contract to take advantage of the $50/ton spread between the two. Cash prices were largely unchanged as a result.
Wheat
Demand continued to be the key driver of overnight gains in the wheat market, despite a stronger dollar. Bargain buying continues to be steady after Chicago futures hit a four-month low on Wednesday. Many traders are suggesting that the wheat market was oversold earlier this week, but a shift back to core market fundamentals reveals that tight supplies and steady demand continue to provide a floor under global wheat prices.
“Receding macro worries, and what most would regard as too low prices, set the market up for these gains,” Robin Gore, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters this morning, referring to the move in wheat prices.
“We also note that estimates for Argentina’s wheat planting are being cut because of continued dryness in some regions.”
Winter wheat harvest in the European Union’s top wheat producer, France, was 14% complete as of July 4, according to weekly data released overnight by the French farm office, FranceAgriMer. The agency finds 63% of France’s soft wheat crop to be in good to excellent condition as of Monday.
A week of downpours in Eastern Australia forced thousands of residents in Sydney’s suburbs to evacuate. Over 28 inches of rain have fallen over the past week in New South Wales, which bodes favorably for Australian wheat production forecasts.
Cash prices for soft red winter wheat rose yesterday in Ohio. Cash bids for hard red winter wheat in the Southern Plains also moved higher as buyers sought to bring more farmer-held bushels into the demand pipeline. Overall, basis offerings for hard and soft winter wheat around the country are trading at a discount to futures prices.
Egypt bought 2.3 million bushels of wheat from Germany earlier this week as wheat prices drop to pre-Black Sea conflict lows and Northern Hemisphere harvest pressure mounts. Egypt has been booking several large wheat purchases over the past week on the lower prices, booking nearly 48 million bushels of sales since July 1 from France, Germany, Russia, and Romania.
A 29.9-million-bushel purchase from France on Monday was Egypt’s largest single purchase in recent memory. The country’s General Authority for Supply Commodities (GASC) has been increasingly using direct deals instead of open-ended tenders to source its wheat supplies. Egypt is the world’s largest wheat importer.
“GASC seems to be taking its new strategy of direct purchases without tenders very intensively,” a trader observed to Reuters reporters in Egypt and Germany.
Plus – India is not typically a significant exporter of corn and soybean crops, but it the world’s largest exporter for one key summer crop – rice. The spring heat wave that decimated export prospects for the country’s wheat crop is now casting doubts onto rice production also.
“Rainfall deficit is quite high in eastern rice growing states. Area and yield could fall if these areas don’t get ample rainfall in next few days,” a Mumbai-based dealer with a global trading firm, told Reuters.
Summer crop planting progress is now 9.3% slower than the same time last year. For more details, check out this Reuters report.
Russia & Ukraine
Ukraine harvested its first million metric tonnes (MT) of grain for the 2022 growing season. Only about 3% of the total area planted for grain in 2022 has been harvested so far and storage concerns remain paramount for Ukrainain farmers who continue to work amid the ongoing Russian invasion.
Ukraine’s agriculture ministry reported overnight that 13.1 million bushels of wheat have already been harvested. The country expects to harvest 1.18 billion bushels of wheat this year and 1.66 billion bushels of corn.
The Ukrainian ag ministry predicts that only about 50MMT of grain will be harvested this year amid the ongoing war, with planted acreage down 25% from last year as a result.
Russian foreign minister Sergei Lavrov indicated overnight that Russia is willing to negotiate with Ukraine and Turkey to free up trapped Ukrainian grain supplies. However, Lavrov did not specify a timeline over which these negotiations would take place which added to the ongoing doubts surrounding Russia’s willingness to cooperate with Western allies regarding its unprovoked invasion into Ukraine.
Lavrov made those comments at a Group of 20 meeting in Indonesia. U.S. Secretary of State Antony Blinken countered Lavrov’s statements, saying, “To our Russian colleagues: Ukraine is not your country. Its grain is not your grain. Why are you blocking the ports? You should let the grain out.”
Markets have become increasingly numb to the barbs and hopes for grain exports exchanged by Russia, Ukraine, Turkey, and the rest of the West. Wheat and corn prices were largely unmoved by the prospects for negotiations this morning.
Inputs
To improve international access amid shortages of fertilizers and consumer products, Argentina’s central bank eased some foreign exchange market regulations yesterday afternoon. Essentially, the move allows for longer payment terms for Argentine buyers who are now searching abroad for these products and easier access to foreign exchange markets to minimize currency transaction fees.
The move is widely viewed as an attempt to fend of strike intentions by Argentine farmers, who have threatened protests in mid-July amid fuel shortages and soaring fertilizer expenses. Argentina is the world’s third largest corn and soybean exporter.
Spot markets for diesel fuel in the Midwest rose yesterday. Traders told Reuters they suspect that a refinery in the region has been taken offline, triggering the higher diesel prices.
E-corn-omics
My latest E-corn-omics column breaks down the key highlights from last Thursday’s Acreage and Quarterly Grain Stocks reports from USDA. Plus, I’ve created a few charts to help readers visualize the data in a more comprehensive manner (because sometimes those stocks reports are difficult to interpret).
The report was largely bullish for soybeans thanks to record third quarter usage and smaller 2022 sowings. Higher 2022 corn acreage and lower than expected Q3 usage rates hinted at bearish prospects for corn following the report’s release while wheat acreage and stocks results were met with neutral to bearish sentiments.
What does that mean for prices and farmers’ marketing plans for the rest of the summer? Check out my column for all the latest insights and analysis.
Weather
Rains are going to start shifting out of the Midwest over the next couple days, according to NOAA’s short-range forecasts. Heavy showers and thunderstorms are still forecast for the Great Lakes region today, with over an inch of accumulation expected in the Eastern Corn Belt over the next 24 hours.
Widespread showers are predicted across the country late this evening. By Sunday, skies should clear in most of the country except in the Northern Plains.
Recent rains across the Heartland weren’t enough to offset growing dryness across the country, according to the latest update from the University of Nebraska Drought Monitor. Through the week ending July 5, abnormally dry to exceptional drought regions in the U.S. increased 1.44% to cover 70.09% of the country due in no small part to increasing dryness in the Midwest.
It is the driest condition soil moisture levels have seen since late March of this year. Of more significant concern is how quickly that soil moisture is evaporating in the Midwest. In less than a month, dry/drought ratings in the nation’s top crop producing region have spiked from a measly 9.44% to a staggering 50.94%.
Such an extreme increase in dryness is concerning for crop conditions, as the heat stress could limit yield potential and result in lower production volumes. As global crop supplies remain tight, any additional crop stress is likely to add bullish pressure to grain and oilseed prices.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday continue to trend on the warm side to the west of the Mississippi River during the second week of July. The Eastern Corn Belt could see more moderated temperatures during that time.
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
Former Japanese prime minister Shinzo Abe was assassinated overnight. Abe’s famous “Abe-nomics” saw the country’s longest-serving prime minister infuse cheap cash into the country, attempt to deregulate corporations, and enact economic measures to empower women over his tenure, lifting Japan’s economy out of years of economic dysfunction to counteract a shrinking and aging population.
Financial markets wavered between losses and gains this morning, with the S&P 500 last trading 0.09% lower to $3,901.50. That volume still marks a two-week high for the index, with the S&P 500, Dow, and Nasdaq all slated to end the week higher. It marks the longest streak of gains for the S&P 500 since March.
What else I’m reading this morning on our website, FarmFutures.com:
Have ag prices landed on firm footing after the recent commodity selloff? Naomi Blohm predicts whether or not prices could drop another leg lower.
AgMarket.Net’s Brian Splitt highlights lessons from 2012 to forecast what markets may do heading into 2023.
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
Morning Ag Commodity Prices – 7/8/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.5725
7.44
7.56
0.09
1.20%
SEP ’22 CORN
$ / BSH
6.2
6.09
6.17
0.08
1.31%
DEC ’22 CORN
$ / BSH
6.07
5.9725
6.0625
0.1
1.68%
MAR ’23 CORN
$ / BSH
6.125
6.035
6.1175
0.0975
1.62%
MAY ’23 CORN
$ / BSH
6.165
6.07
6.1525
0.0975
1.61%
JUL ’23 CORN
$ / BSH
6.15
6.05
6.135
0.095
1.57%
SEP ’23 CORN
$ / BSH
5.8
5.7225
5.7225
0
0.00%
DEC ’23 CORN
$ / BSH
5.6725
5.59
5.6425
0.0525
0.94%
MAR ’24 CORN
$ / BSH
5.7475
5.68
5.71
0.04
0.71%
JUL ’22 SOYBEANS
$ / BSH
16.0225
15.9625
15.9625
0.05
0.31%
AUG ’22 SOYBEANS
$ / BSH
15.0125
14.7375
14.8675
0.015
0.10%
SEP ’22 SOYBEANS
$ / BSH
14.02
13.755
13.8975
0.0675
0.49%
NOV ’22 SOYBEANS
$ / BSH
13.86
13.5775
13.715
0.06
0.44%
JAN ’23 SOYBEANS
$ / BSH
13.905
13.6275
13.7625
0.06
0.44%
MAR ’23 SOYBEANS
$ / BSH
13.8225
13.5625
13.685
0.04
0.29%
MAY ’23 SOYBEANS
$ / BSH
13.8
13.5625
13.69
0.05
0.37%
JUL ’23 SOYBEANS
$ / BSH
13.7675
13.535
13.635
0.035
0.26%
AUG ’23 SOYBEANS
$ / BSH
12.5
#N/A
13.335
0
0.00%
SEP ’23 SOYBEANS
$ / BSH
12.2
#N/A
12.825
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
12.72
12.5225
12.565
-0.0225
-0.18%
JUL ’22 SOYBEAN OIL
$ / LB
63.25
63.23
63.23
0.06
0.09%
AUG ’22 SOYBEAN OIL
$ / LB
63.12
61.21
62.2
0.58
0.94%
JUL ’22 SOY MEAL
$ / TON
474.8
474.8
474.8
4.8
1.02%
AUG ’22 SOY MEAL
$ / TON
426.3
420.9
423
-0.5
-0.12%
SEP ’22 SOY MEAL
$ / TON
403.4
398.3
400.6
-0.4
-0.10%
OCT ’22 SOY MEAL
$ / TON
394
388.3
390
-1.3
-0.33%
DEC ’22 SOY MEAL
$ / TON
394.4
388.6
391.6
-0.2
-0.05%
JUL ’22 Chicago SRW
$ / BSH
8.4375
8.4175
8.42
0.175
2.12%
SEP ’22 Chicago SRW
$ / BSH
8.6125
8.3825
8.58
0.215
2.57%
DEC ’22 Chicago SRW
$ / BSH
8.76
8.54
8.7325
0.215
2.52%
MAR ’23 Chicago SRW
$ / BSH
8.8925
8.7
8.8475
0.195
2.25%
MAY ’23 Chicago SRW
$ / BSH
8.935
8.795
8.9075
0.1975
2.27%
JUL ’23 Chicago SRW
$ / BSH
8.78
8.63
8.745
0.175
2.04%
SEP ’23 Chicago SRW
$ / BSH
8.645
8.5375
8.5375
0.05
0.59%
JUL ’22 Kansas City HRW
$ / BSH
0
#N/A
8.91
0
0.00%
SEP ’22 Kansas City HRW
$ / BSH
9.0775
8.8925
9.05
0.1575
1.77%
DEC ’22 Kansas City HRW
$ / BSH
9.1575
9.0075
9.12
0.145
1.62%
MAR ’23 Kansas City HRW
$ / BSH
9.2025
9.0625
9.1475
0.1275
1.41%
MAY ’23 Kansas City HRW
$ / BSH
9.2025
9.055
9.14
0.115
1.27%
JUL ’23 Kansas City HRW
$ / BSH
9.02
8.8025
8.9575
0.105
1.19%
SEP ’23 Kansas City HRW
$ / BSH
8.9
8.8525
8.8525
0.1075
1.23%
JUL ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
9.13
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.65
9.38
9.57
0.225
2.41%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.77
9.5225
9.705
0.2425
2.56%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.82
9.65
9.82
0.2375
2.48%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.9
9.7275
9.9
0.24
2.48%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.8
9.8
9.8
0.125
1.29%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.5025
9.4475
9.5025
0.115
1.23%
SEP ’21 ICE Dollar Index
$
107.615
106.64
107.035
0.076
0.07%
AU ’21 Light Crude
$ / BBL
103.77
101.51
102.65
-0.08
-0.08%
SE ’21 Light Crude
$ / BBL
100.5
98.4
99.46
0.21
0.21%
AUG ’22 ULS Diesel
$ /U GAL
3.7042
3.5411
3.5803
-0.0936
-2.55%
SEP ’22 ULS Diesel
$ /U GAL
3.6237
3.4712
3.5078
-0.0861
-2.40%
AUG ’22 Gasoline
$ /U GAL
3.4274
3.3666
3.3888
-0.0316
-0.92%
SEP ’22 Gasoline
$ /U GAL
3.2623
3.2056
3.2238
-0.0221
-0.68%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
172.475
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
176.05
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
134.55
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
139.85
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
113.25
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
109.5
0
0.00%
JUL ’22 Class III Milk
$ / CWT
22.64
22.64
22.64
0
0.00%
AUG ’22 Class III Milk
$ / CWT
21.95
21.91
21.92
0.08
0.37%
SEP ’22 Class III Milk
$ / CWT
22.25
22.2
22.24
0.04
0.18%
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