Morning report: Plus – an update on Friday’s Cattle on Feed report. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 3-6 cents
Soybeans down 2-6 cents; Soymeal mixed; Soyoil down $0.61/lb
Chicago wheat down 17-18 cents; Kansas City wheat down 12-14 cents; Minneapolis wheat down 11-12 cents
*Prices as of 6:50am CDT.
Feedback from the Field updates! Are you combining yet?! 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 last week. So far, few of our respondents have crops that are ready for harvest, but with warm and dry weather on the horizon, that is not likely to remain the trend. Check out the latest article for all of the top market insights!
Corn
Another day, another round of price cuts in the grain market due to recession fears. Corn prices fell $0.03-$0.06/bushel at last glance as the dollar continued higher overnight. Clear skies in the U.S. Heartland this week also bode favorably for harvest progression, which added another bearish element to the grain markets this morning.
“The stronger dollar will be a burden to U.S. exports, especially at a time when a huge Russian wheat harvest is expected,” Matt Ammermann, StoneX commodity risk manager, told Reuters this morning. “Corn and soybeans are also seeing weakness from forecasts of dry U.S. weather this week which will be positive for U.S. harvest work.”
Global corn supplies are forecast to end the current marketing year at the tightest level since 2012. A recent grains outlook published by Reuters’ Tom Polansek overnight outlines the impacts of tight supplies, global water scarcity, and hopes for South America’s crops. I highly recommend giving it a read!
USDA released updated Cattle on Feed data on Friday, with placement and sales for slaughter data for August 2022 issued as well as September 1 inventory volumes. As of September 1, 11.279 million head of cattle were reportedly on feed across the country, up 0.5% from the previous month and 0.4% higher than year-ago volumes.
That reading came in on the high end of pre-report analyst estimates, which had predicted little to no deviation from last year’s September 1 reading of 11.234 million head, with an average expected range of 11.122 million – 11.380 million head.
The relatively flat inventory reading was somewhat encouraging for corn markets, as it suggested that restocking may be more feasible for farmers as corn crops are freshly harvested and made available for feed. To be clear, this is not remotely a sign that the liquidation cycle for the cattle market is about to end anytime soon, but it could slow the burn a little.
Case in point – August 2022 placements rose nearly 20% from the previous month to 2.112 million head. From a seasonal perspective, late summer and fall months are typically among the highest for feedlot restocking as summertime consumer demand for beef wanes amid the cooler temperatures.
That placements data point surpassed even the highest trade estimate of 2.064 million head leading up to the report, which suggests strong consumer (and export) beef demand is overpowering concerns about drought, pastures, and feed on the Plains to incentivize growers to expand their herds.
August 2022 cattle marketing volumes continued to climb in Friday’s report, rising to the second highest monthly sales for slaughter volume in the 2022 calendar year. USDA reported that 2.004 million head of cattle had been sold for slaughter in August 2022, up 6% from the same time a year ago as domestic and international demand for U.S. beef remains strong.
As an analyst, I have been growing concern about the sustainability of cattle demand for the corn market in recent months as more cows are sold for slaughter and drought conditions on the Plains have tanked pasture and corn yield conditions.
But these numbers suggest that I should maybe calm down my bearish anxieties about cattle demand for corn – for now.
“While Friday’s Cattle on Feed report didn’t show fewer on-feed numbers — or even fewer placements — the report wasn’t a runaway bearish train either,” DTN Livestock Analyst ShayLe Stewart commented of the report.
As beef demand remains high, the timeline between feeding out cattle and sending them onto the packing plant will continue to be tight. It may not be exactly an expansionary signal, but it is increasingly less of a contractionary force. An item to keep an eye on – placement rates of heifer calves (breeding stock).
“One thing to keep in mind when mulling over these placement figures is that in a normal year, heifer calves aren’t placed as aggressively in feedlots as they are right now,” Stewart said on Friday. “But given that drought conditions are still plaguing a considerable portion of the U.S., heifer calve continue to find their way into feedlots across the nation.”
Soybeans
Soybeans also felt the pain of global economic jitters, falling $0.02-$0.06/bushel on recession fears and advancing U.S. harvest rates expected with clear skies this week. Friday’s Quarterly Grain Stocks report is expected to show tighter U.S. soybean stocks (bullish), which could keep losses capped during today’s trading session.
China’s soymeal futures hit a new high overnight as supplies remain tight. Cash prices were reported at $747.94/metric tonne on Friday, which could thwart expansion efforts at play in China’s hog market over the summer. The previous price high was set in March 2022 after Russia choked off Ukraine’s oilseed supplies amidst its ongoing “special military operation.”
Chinese crush plants have dialed back production over the summer as tight supplies and high soybean prices limited profit potential.
“Soymeal supplies are sold out in China,” a Singapore-based trader with a company that has soy processing plants in China told Reuters. “For October, 80% of the soymeal likely to be produced has already been sold.”
That could be a good sign for U.S. farmers as peak soybean export season arrives – it means that China could be hungry for more U.S. soybeans this fall, especially as South American supplies remain scarce.
Wheat
Wheat prices tumbled $0.07-$0.18/bushel lower overnight as the dollar soared amidst rising global economic uncertainty.
“Fears of recession risk with reduced global demand is weakening wheat, corn and soybeans today,” Ammermann told Reuters this morning. “The U.S. Federal Reserve and other central banks are taking a firm stand on inflation by raising rates, regardless of arguments about whether this is appropriate.”
Russian weather forecasters are bracing for more rains in the country’s central and southern regions at a time during which weather patterns are typically dry. The excessive wetness in these regions coincides with peak winter grain planting activity in the regions where much of Russia’s winter crops are grown.
Consultancy SovEcon estimates that only 21.3 million acres of winter grains have been planted in this region, about 3.7 million fewer acres than the same time last year due to rain delays so far this fall.
“This is the lowest area for this week since 2013. The farmers need to speed up shortly or we are likely to see a substantial decrease in the final area,” Sovecon said.
Plus, some Russian growers are still awaiting soybean and sunflower harvests before planting winter crops. Oilseed crops could provide more competitive returns for farmers in the upcoming year as global buyers remain wary of Russian wheat shipments amid Ukrainian conflict sanctions, which could further shift Russian acreage out of wheat production in 2023.
That is a bullish omen for global wheat trade flows, which are struggling to cover growing global demand.
Russia is the world’s largest exporter of wheat, providing supplies largely to African and Middle Eastern nations. About 70% of Russia’s wheat is supplied by winter wheat varieties.
Weather
Weekend showers will move out of the Midwest by this afternoon, paving the way for clear skies and rapid harvest activity, according to NOAA’s short-range forecasts. It should be a mostly clear start to the week across the Heartland, allowing combines to progress through fields unencumbered.
The 6-10-day NOAA outlook continues to forecast high heat and excessive dryness for most of the Heartland through the end of September. The 8-14-day NOAA outlook is also trending warmer, much like the 6-10-day forecast.
The beginning of October is likely to be drier across the country, which will aid harvesting progress, which is likely to hit its peak activity over the next couple weeks. The 8-14-day forecast is beginning to show increased chances of moisture for the Central Rockies (which is great news for my new little grass seedlings!).
Financials
The British currency, the pound, hit a record-low price against the dollar overnight as Prime Minister Liz Truss’s new government implements steep tax cuts to encourage economic growth on the island nation. U.K. bonds are being widely sold off across international markets this morning as investors expect another round of interest rate hikes from the Bank of England this week.
Markets are highly skeptical that Britain’s new plan to fight inflation will prove effective and those doubts enhanced global economic jitters already at play in the markets overnight, leading S&P 500 futures 0.72% lower to $3,682.25.
The same fears that have been plaguing the global economy persisted again this morning. Translation: I am running out of new ways to write about the same issues that are dogging these markets! As worries about a global economic contraction continue to linger in the market, the dollar continued higher, oil prices drifted lower, and 10-year U.S. Treasury bond prices fell, which increased its yields.
Also – land loss to urban sprawl is always a popular topic among farmers. I stumbled across a really good article in the Wall Street Journal over the weekend that discusses the lack of land availability for housing in the U.S. that I think will resonate strongly with farmers. My favorite quote from the article – “What are you going to do with what’s left that’s a better investment than just continuing to own the land?”
Enjoy! And have a good week! -JH
What else I’m reading this morning on our website, FarmFutures.com:
Harvest is ramping up across the Heartland! Our upcoming Farm Progress 365 session has the latest insights to help farmers maximize yields and time sales effectively – join online from September 27 – September 29!
Commstock’s Matthew Kruse asks, “is $8/bushel corn high enough for you to sell?”
Davon Cook provides two new ways to think about next-gen farmers.
Roger Wright revisits the 2008 VeraSun Energy debacle to explain hedging blunders to growers.
Naomi Blohm explains why the latest selloff in the cotton market was likely overdone.
In Farm Futures’ September 2022 issue, Ben Potter offers insights for growers to maintain profitability in an uncertain 2023 following profitable 2021 and 2022 growing seasons.
Morning Ag Commodity Prices – 9/26/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.755
6.7
6.73
-0.0375
-0.55%
MAR ’23 CORN
$ / BSH
6.8
6.7475
6.775
-0.0425
-0.62%
MAY ’23 CORN
$ / BSH
6.805
6.7525
6.785
-0.0375
-0.55%
JUL ’23 CORN
$ / BSH
6.74
6.6875
6.715
-0.0425
-0.63%
SEP ’23 CORN
$ / BSH
6.2775
6.23
6.2475
-0.05
-0.79%
DEC ’23 CORN
$ / BSH
6.16
6.1
6.1175
-0.05
-0.81%
AR2 ’24 CORN
$ / BSH
6.2
6.2
6.2
-0.035
-0.56%
AY2 ’24 CORN
$ / BSH
6.22
6.2125
6.2125
-0.045
-0.72%
JUL ’24 CORN
$ / BSH
6.21
#N/A
6.23
0
0.00%
NOV ’22 SOYBEANS
$ / BSH
14.32
14.11
14.2525
-0.005
-0.04%
JAN ’23 SOYBEANS
$ / BSH
14.3725
14.16
14.3075
-0.01
-0.07%
MAR ’23 SOYBEANS
$ / BSH
14.3975
14.1975
14.33
-0.015
-0.10%
MAY ’23 SOYBEANS
$ / BSH
14.4225
14.225
14.355
-0.02
-0.14%
JUL ’23 SOYBEANS
$ / BSH
14.4025
14.2175
14.3425
-0.025
-0.17%
AUG ’23 SOYBEANS
$ / BSH
14.16
14.04
14.16
-0.02
-0.14%
SEP ’23 SOYBEANS
$ / BSH
13.745
13.6975
13.745
-0.035
-0.25%
NOV ’23 SOYBEANS
$ / BSH
13.6375
13.475
13.5675
-0.0475
-0.35%
AN2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.64
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
13.445
13.445
13.445
-0.125
-0.92%
AY2 ’24 SOYBEANS
$ / BSH
13.54
#N/A
13.5325
0
0.00%
OCT ’22 SOYBEAN OIL
$ / LB
67.27
65.83
66.5
-0.5
-0.75%
DEC ’22 SOYBEAN OIL
$ / LB
63.98
62.37
63.09
-0.59
-0.93%
OCT ’22 SOY MEAL
$ / TON
442.9
436.8
440.8
0.9
0.20%
DEC ’22 SOY MEAL
$ / TON
425.9
420.1
423.8
0.5
0.12%
JAN ’23 SOY MEAL
$ / TON
421.2
415.8
418.7
0.3
0.07%
MAR ’23 SOY MEAL
$ / TON
414.1
409
412.1
1
0.24%
MAY ’23 SOY MEAL
$ / TON
410
405
406.5
-0.5
-0.12%
DEC ’22 Chicago SRW
$ / BSH
8.9075
8.6525
8.6675
-0.1375
-1.56%
MAR ’23 Chicago SRW
$ / BSH
9.04
8.7975
8.805
-0.1325
-1.48%
MAY ’23 Chicago SRW
$ / BSH
9.105
8.8725
8.9
-0.1075
-1.19%
JUL ’23 Chicago SRW
$ / BSH
8.97
8.7425
8.745
-0.1375
-1.55%
SEP ’23 Chicago SRW
$ / BSH
8.9425
8.73
8.7325
-0.1325
-1.49%
DEC ’23 Chicago SRW
$ / BSH
8.92
8.755
8.755
-0.1425
-1.60%
AR2 ’24 Chicago SRW
$ / BSH
8.735
8.71
8.71
-0.1425
-1.61%
DEC ’22 Kansas City HRW
$ / BSH
9.615
9.395
9.41
-0.095
-1.00%
MAR ’23 Kansas City HRW
$ / BSH
9.5825
9.3725
9.3825
-0.09
-0.95%
MAY ’23 Kansas City HRW
$ / BSH
9.53
9.35
9.3675
-0.085
-0.90%
JUL ’23 Kansas City HRW
$ / BSH
9.4
9.235
9.2425
-0.075
-0.80%
SEP ’23 Kansas City HRW
$ / BSH
9.2525
9.175
9.1775
-0.09
-0.97%
DEC ’23 Kansas City HRW
$ / BSH
9.3525
9.2425
9.245
-0.0475
-0.51%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.25
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.59
9.4025
9.4075
-0.085
-0.90%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.635
9.4675
9.4775
-0.07
-0.73%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.6775
9.5825
9.5825
-0.0025
-0.03%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.56
9.56
9.56
0.02
0.21%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.3175
9.16
9.3175
0.085
0.92%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.1875
#N/A
9.1425
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
8.5825
0
0.00%
DEC ’21 ICE Dollar Index
$
114.445
112.665
113.49
0.528
0.47%
NO ’21 Light Crude
$ / BBL
79.97
77.21
78.15
-0.59
-0.75%
DE ’21 Light Crude
$ / BBL
79.46
76.75
77.68
-0.57
-0.73%
OCT ’22 ULS Diesel
$ /U GAL
3.2663
3.1515
3.1727
-0.0644
-1.99%
NOV ’22 ULS Diesel
$ /U GAL
3.1865
3.0781
3.1133
-0.0442
-1.40%
OCT ’22 Gasoline
$ /U GAL
2.4134
2.3395
2.3594
-0.0236
-0.99%
NOV ’22 Gasoline
$ /U GAL
2.3426
2.2651
2.2909
-0.0172
-0.75%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
178.125
0
0.00%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
178.35
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
144.25
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
148.55
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
92.625
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
82.8
0
0.00%
SEP ’22 Class III Milk
$ / CWT
19.85
19.83
19.83
-0.04
-0.20%
OCT ’22 Class III Milk
$ / CWT
20.91
20.9
20.9
0
0.00%
NOV ’22 Class III Milk
$ / CWT
20.7
20.6
20.6
-0.1
-0.48%
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