Afternoon report: The dollar wavered all day, leaving little support for soybean, wheat gains.
Corn
Corn prices rose (!) $0.02-$0.04/bushel in the last session of the holiday week. Despite a stronger dollar and thin trading volumes, futures prices appeared to be responsive to slowing Ukrainian shipping paces due to more Russian shenanigans. This morning’s export report was largely neutral for corn.
Markets are also watching weather forecasts in Brazil and Argentina as crop development rests high on everyone’s minds. More moderate and wetter forecasts are in store for both countries over the next 10 days, which is likely to help encourage crop development – except for the Argentine wheat crop (it’s already fried) – and could be a bearish bellwether for U.S. grain and oilseed prices over the next 10 days.
Cash corn prices were largely unchanged today, though basis weakened slightly at a pair of processors on each side of the Corn Belt. Processing basis remains at a premium to futures, so don’t panic just yet. But definitely consider making some sales if you are looking to offload extra supplies at a healthy profit.
Basis remains mixed on either side of the Corn Belt, with premiums favoring the West and discounts prevalent in the East. Processors and ethanol plants continue to command cash premiums, while river terminals bound for U.S. Gulf export markets are still trading at a discount to futures prices.
2022/23Corn export sales for the week ending November 17 came in at 72.8 million bushels, according to Friday morning’s USDA reports. No big surprises in the report, though weekly orders from Mexico jumped up 85% higher on the week to 67.1 million bushels.
Weekly corn export shipping volumes edged 18% lower on the week to 18.2 million bushels. Just over 9 million bushels were shipped to Mexico last week with another 2.8 million bushels destined for China.
Author’s note: I took a deep dive into this morning’s Weekly Export Sales reports from USDA in my latest E-corn-omics column. If you are curious as to how those numbers shook out for corn, soybeans, and wheat as well my insights into the report, check out my column!
Soybeans
Soybean prices closed today’s trading session mixed as the markets digested favorable U.S. shipping paces and renewed competition from Argentine soybean producers.
Cash soybean prices increased at an Indiana crush plant today, but basis offerings remained mostly flat during a quiet trading session. Cash offerings are increasingly mixed at Eastern Corn Belt elevators. Basis remains strong at crush plants across the Heartland, while river terminals continue to offer discounted cash bids.
Better than expected soymeal export data released by USDA this morning helped boost soymeal futures in today’s abbreviated trading session. But cash offers were largely unchanged after a week of quiet market activity due to the Thanksgiving holiday.
Current crop (2022/23) export sales came in on the lower end of analyst expectations at 25.4 million bushels in this morning’s weekly export sales report from USDA. That volume was down considerably after last week’s report, when China ordered nearly 57 million bushels for shipment in 2022/23. An unknown buyer cancelled 20.7 million bushels of 2022/23 soybean export orders, which eroded 26.3 million and 4.4 million bushels worth of Chinese and Mexican purchases, respectively.
Japanese buyers booked a small shipment (367K bu.) of 2023/24 U.S. soybeans, but other than that the new crop market was quiet over the November 11-17 reporting week.
U.S. soybean export volumes shipped through the week ending November 17 totaled 89.3 million bushels. That marked a 37% increase from the previous week, which trended similarly to Monday’s Export Inspections report.
Another Argentine government source has suggested that the country will devalue its currency in December to encourage farmer sales that will help generate tax revenues. However, the government is likely to take global soybean markets into less consideration this time, implementing a $3 billion floor for soybean exports.
That means that Argentine farmers will be incentivized to sell soybeans aggressively until at least $3 billion in sales have been raised, which could deter international buyers from U.S. shores during peak soybean export season in the U.S. in favor of better discounts from Argentina especially as the dollar remains strong.
The currency devaluation is likely to last until the end of the month. Argentina has struggled with high inflation for years, but the latest global surge in prices has hit the South American country especially hard. Farmers hold on to soybeans as a hedge against inflation, which prevents the government from raising further revenues.
Argentina is the world’s largest soymeal and soyoil exporter.
South American trucker strikes
Truckers and farmers in central and southern Peru blockaded major roads yesterday to protest rising fertilizer and fuel prices. Peru is not a major grain or oilseed exporting country, but it does offer a cautionary tale for the ill effects of high inflation.
The war in Ukraine has kept energy and fertilizer prices high this year and the slower shipping speeds have meant that Peruvian farmers have not had access to these key inputs when needed the most.
Further east in Brazil, road blockades were also staged this week to protest results from the country’s recent runoff election. The Brazilian farmer lobbying group, Abiove, reported that Brazilian corn freight prices surged 20% higher this week amid this latest market disruption.
Access to Brazil’s northern ports haven been the most contentious over the past week. Some Brazilian Abiove members are worried that they will not be able to deliver on corn export contracts due to the delays and are anxious about incurring demurrage charges at the ports if the road blockages continue to slow cargo loading speeds in Brazil.
Brazil is the world’s second largest corn exporter. After the South American grains powerhouse entered into an agreement with China earlier this fall, Brazil shipped its first corn cargo to China earlier this week. That means that provided more delays do not slow down shipping speeds, Brazilian corn will be more competitive against its U.S. counterparts this year, especially if Brazilian crop growers can escape a third consecutive La Ni?a cycle unscathed.
Wheat
U.S. wheat prices were mixed amid a stronger dollar, lackluster U.S. export data, and worries about new hurdles for Ukrainian grain shippers. There was also some hangover weakness at play from the overnight markets, where a large Russian crop continues to loom over markets even as European wheat supplies remain the most sought after on the world market currently.
Cash prices for soft red winter wheat in the Eastern Corn Belt were largely unchanged today, holding steady at a $0.30/bushel discount to futures prices. Basis offerings for hard red winter wheat in the Southern Plains was also flat but showed signs of firming at a Kansas location. Bids into U.S. Gulf export markets also strengthened, though protein premiums weakened.
Weekly sales of 2022/23 wheat exports totaled 18.8 million bushels, up from 10.7 million bushels the week prior though on the lower end of analyst expectations prior to the report’s release. Iraq was surprisingly the largest buyer of U.S. wheat over the past week, booking 7.3 million bushels through from November 11 to 17.
No new sales for the 2023/24 wheat exporting season were announced.
Wheat export shipments only tallied 5.1 million bushels, despite signals from Monday’s Export Inspections report that suggested those volumes could reach more than double that volume. Mexico was the top destination for U.S. wheat over the past week, with over 2.2 million bushels shipped to our neighbors down South.
I’ve written in recent days about slowing Ukrainian grain export paces following Russia’s agreement to extend the Black Sea Grains Initiative to keep those shipping lanes moving freely. The latest tea spilled this morning – Ukraine accused Russia of slowing down its grain shipments this week.
Some of the slowdowns were due to uncertainty surrounding whether the extension would be accepted. However, Russian officials taking part in the shipping process have refused to increase the speed of export inspections from Ukrainian ports. Only three Russian teams are currently supervising these inspections and the government refuses to increase staff.
Background: as part of the Black Sea Grains Initiative signed in August, teams of Russian and Ukrainian examiners would inspect impending shipments out of Ukrainian ports. This appears to be Russia’s latest method of upheaval in the Black Sea region after facing several strategic military defeats and growing global pressure to retreat from illegally annexed Ukrainian territories.
Two ships left from Ukrainian ports today. Only five ships per day (on average) have been departing from Ukrainian grain terminals since the agreement was extended last week. Prior to that point, Ukraine was shipping up to 10 vessels a day. U.N. reports show that 5-11 inspections per day were regularly reported by Russian officials prior to the extension. Now that range is trending between 0-6.
Russia denies the allegations (obvs).
Top global wheat buyer Egypt booked a 6.4-million-bushel tender on Thursday through a series of private agreements, according to traders. The sale is likely to be broken into three shipments originating from both Russia and Ukraine. The price was approximated at $9.83/bushel C&F.
Wheat growers in India are looking to expand planted acreage in the coming year after the Black Sea conflict turned it into a major player on the global export market this past spring. The Indian government expects that as of October 1, 37.8 million acres of wheat, up almost 11% from year ago sowings.
Prior to this year, India had harvested three consecutive bumper wheat crops. The Asian country typically keeps most of its supplies limited to its domestic markets via pricing controls, but the Black Sea conflict drove prices outside of that scope and led the Indian government to open its wheat export market to the rest of the world.
It remains to be seen if India will once again be a significant player in the wheat export market this year after a severe drought curbed production prospects this past summer. But it does suggest that India is prepping to take a more active role in global export markets in the near future.
Winter wheat crop conditions in France, the European Union’s largest soft wheat producer, are growing ahead of schedule, according to French farm office FranceAgriMer. About 38% of France’s soft wheat crops are already at the tillering stage thanks to milder than usual October weather. The same time a year ago, that metric stood at 7%.
The E.U. is the world’s second largest wheat exporter. Crop shortfalls due to drought across the Northern Hemisphere this past summer tightened supplies and kept wheat prices high. But if France’s crop continues to develop in such a positive direction, 2023 wheat harvests may be more bountiful than those recorded in 2022.
Inputs
Russian state media agency TASS cited Russia’s deputy ministry of industry and trade in a report today, which suggests that Russian fertilizer exports are likely going to end the 2022 calendar year 10% lower than year ago volumes.
“That’s it?” – my initial reaction based on the amount of complaining President Putin and his oligarchs have been carrying on with over the past couple months.
But my analytical reaction is this – this is a good sign for U.S. farmers as we start to look to a new growing season next spring. The data clearly indicates that Russia continued to export the large majority of its fertilizer supplies over the past year, despite international banking sanctions imposed by Western nations that increased risk premiums and freight costs associated with Russian fertilizer and grain shipments in the months following Russia’s invasion into Ukraine.
Weather
Mostly clear skies are forecasted for the Heartland today, according to NOAA’s short-term forecasts. The Southern Plains are likely to see a chance of rain today. East Texas could see up to two inches of moisture, but areas on the fringe are likely to see at least a tenth of an inch over the next 24 hours.
NOAA’s 6-10-day forecasts are now trending warmer and wetter for the end of the month. Higher than average temperature prospects are at play for the Southern and Central Plains and Eastern Corn Belt through the end of November, but cooler chances are prevailing for the West and Northern Plains in that time period. Chances for rain will be above average for the North and Central Plains and entire Midwest during that time while the Southern Plains remain dry.
Those trends will stay consistent in the 8-10-day outlook with only slight shifts expected. Temperature forecasts will remain warmer than usual for the Southeastern half of the country, but cooler temperatures will start to shift into the Upper Midwest during that time. However, above average chances for moisture will extend across the entire country during the first week of December, with the greatest chances likely in the Eastern Corn Belt.
Drought monitor data was released a business day early this week due to the holiday and I totally missed it. (Sorry! I was too preoccupied worrying about making and eating Thanksgiving pies.)
But at any rate, through the week ending November 22, dry conditions eased fractionally, falling by just over 0.1% from the previous week. As of Tuesday, 81.78% of U.S. land was in some sort of abnormally dry to exceptional drought condition.
With harvest in the review mirror for most of you readers, this may not seem as pressing of a concern as it did just a few months ago. But if you are farming next year, you should still be taking heartburn meds for this issue.
Around 68% of U.S. corn-producing acres are in a drought area, which could hinder 2023 crop production if rains/snows aren’t plentiful enough over the next several months. The more pressing concern is for winter wheat and cattle producers in the Plains.
USDA expects that 75% of the U.S.’s winter wheat production area is experiencing drought, which we’ve already seen take a toll on crop condition readings in the weekly Crop Progress reports. That is likely to lead to lower yields and quality issues with next summer’s wheat harvest in the Plains.
Plus, 73% of the nation’s cattle inventory is in an area facing extreme moisture losses. Many growers on the Plains were forced to sell breeding stock earlier this year due to low feed inventories, high feed expenses, and perhaps most importantly – dry pasturelands.
This drought is showing very few – if any – signs of relenting. I know I probably triggered some uncomfortable emotions with my earlier comment about the heartburn meds and my only way of apologizing for that is to assure you all that I am praying just as hard as the rest of you for more rain in the U.S. Hang in there, everyone.
Financials
This year’s avian influenza has officially set a new record high, according to USDA data released yesterday. The outbreak has resulted in the culling of 50.54 million birds in just the first 11 months of this year, surpassing the previous record of 50.5 million birds killed in 2015.
This year’s outbreak began in February and has been more virulent among wild birds and backyard flocks, which increases its potency for commercial flocks. The mass culling has led to soaring egg, turkey and chicken prices and been a contributor to inflationary pressures facing the economy this year.
China’s daily COVID-19 cases are rising with the latest caseload estimate just short of 32,000 as of yesterday. It marked the first time in the pandemic that China’s COVID-19 cases have surpassed the 30K benchmark.
As a result, many cities are tightening restrictions to help curb the virus’s transmission, which does not bode favorably for global commodity demand. The renewed restrictions were enforced just weeks after China decided to ease some testing and quarantine requirements for travelers and infected persons.
China’s zero-COVID policy has persisted much longer than expected for a couple key reasons. First – China’s Sinovax vaccine was not as effective at controlling the virus as mRNA doses have been in the West. Second – the virus has mutated faster than vaccine manufacturers can keep up with, allowing the virus to spread rapidly.
These factors mean that lockdown restrictions are the most effective way that China can control the virus, especially if it chooses to stick with its zero-COVID policy. There is hope that China will start to scale back its stringent restrictions, but this latest surge in infections makes that outlook a little less certain.
S&P 500 futures edged 0.03% lower today to $4,026.12 amid thin trading volumes. The market is already pricing in lower Black Friday sales volumes. Oil markets gave up its early morning gains and closed the day lower on worries about Chinese demand prospects.
What else I’m reading this morning on our website, FarmFutures.com:
Drought is gripping the U.S., but this Bloomberg report shares that California farmers are slated to lose $3 billion as a result.
Roger Wright addresses the right time to roll low-priced HTA contracts in Wright’s latest round of marketing questions from farmers.
What future fuel will you burn on your farm? Diesel and gasoline have long been the energy source of choice on the farm, but that could be changing.
Mike Downey asks – what is the practical value of your farmland?
Farm Futures executive editor Mike Wilson reports that farmers looking to invest profits, lower tax bills and boost productivity may need to get in line as drainage contractors try to meet hot demand.
Closing Ag Commodity Prices – 11/25/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.6975
6.61
6.6825
0.05
0.75%
MAR ’23 CORN
$ / BSH
6.73
6.6425
6.7125
0.05
0.75%
MAY ’23 CORN
$ / BSH
6.7175
6.635
6.7
0.045
0.68%
JUL ’23 CORN
$ / BSH
6.66
6.58
6.6475
0.0475
0.72%
SEP ’23 CORN
$ / BSH
6.25
6.1875
6.2225
0.0175
0.28%
DEC ’23 CORN
$ / BSH
6.13
6.0625
6.1075
0.0225
0.37%
AR2 ’24 CORN
$ / BSH
6.195
6.1525
6.175
0.02
0.08%
AY2 ’24 CORN
$ / BSH
6.15
6.15
6.2025
0.0225
-0.49%
JUL ’24 CORN
$ / BSH
6.2025
6.1825
6.1875
0.02
0.24%
JAN ’23 SOYBEANS
$ / BSH
14.48
14.31
14.35
-0.01
-0.07%
MAR ’23 SOYBEANS
$ / BSH
14.5375
14.3675
14.41
-0.01
-0.07%
MAY ’23 SOYBEANS
$ / BSH
14.6025
14.44
14.4825
-0.005
-0.03%
JUL ’23 SOYBEANS
$ / BSH
14.6325
14.465
14.5125
0.0025
0.02%
AUG ’23 SOYBEANS
$ / BSH
14.45
14.305
14.345
0.0025
0.02%
SEP ’23 SOYBEANS
$ / BSH
14.0575
13.94
13.9725
0.005
0.02%
NOV ’23 SOYBEANS
$ / BSH
13.8625
13.745
13.7825
0.005
0.04%
AN2 ’24 SOYBEANS
$ / BSH
13.8575
13.7725
13.7975
0.0175
0.22%
AR2 ’24 SOYBEANS
$ / BSH
13.75
13.6575
13.685
0.0175
0.13%
AY2 ’24 SOYBEANS
$ / BSH
13.6
13.6
13.645
0.03
-0.11%
UL2 ’24 SOYBEANS
$ / BSH
13.605
13.605
13.6425
0.03
-0.06%
DEC ’22 SOYBEAN OIL
$ / LB
75.32
74.41
74.5
-0.41
-0.55%
JAN ’23 SOYBEAN OIL
$ / LB
72.66
71.53
71.62
-0.58
-0.80%
DEC ’22 SOY MEAL
$ / TON
414.3
407.9
408.4
-1.3
-0.32%
JAN ’23 SOY MEAL
$ / TON
412.1
405.4
406.3
-1.1
-0.27%
MAR ’23 SOY MEAL
$ / TON
408.5
402
404.2
0.2
0.05%
MAY ’23 SOY MEAL
$ / TON
405.2
399.3
401.6
0.7
0.17%
JUL ’23 SOY MEAL
$ / TON
403.9
398.1
400.6
0.8
0.23%
DEC ’22 Chicago SRW
$ / BSH
7.9975
7.7225
7.7275
-0.2075
-2.61%
MAR ’23 Chicago SRW
$ / BSH
8.2025
7.93
7.94
-0.195
-2.40%
MAY ’23 Chicago SRW
$ / BSH
8.3
8.045
8.0475
-0.185
-2.25%
JUL ’23 Chicago SRW
$ / BSH
8.3225
8.0825
8.0825
-0.175
-2.12%
SEP ’23 Chicago SRW
$ / BSH
8.38
8.16
8.1675
-0.1475
-1.77%
DEC ’23 Chicago SRW
$ / BSH
8.465
8.2625
8.2725
-0.13
-1.55%
AR2 ’24 Chicago SRW
$ / BSH
8.4825
8.2975
8.2975
-0.1375
-1.63%
DEC ’22 Kansas City HRW
$ / BSH
9.385
9.1975
9.2075
-0.095
-1.02%
MAR ’23 Kansas City HRW
$ / BSH
9.29
9.095
9.1075
-0.09
-0.98%
MAY ’23 Kansas City HRW
$ / BSH
9.2125
9.0175
9.0175
-0.1075
-1.18%
JUL ’23 Kansas City HRW
$ / BSH
9.1
8.915
8.915
-0.105
-1.16%
SEP ’23 Kansas City HRW
$ / BSH
9.075
8.8975
8.9025
-0.1
-1.11%
DEC ’23 Kansas City HRW
$ / BSH
9.1
8.9625
8.9625
-0.06
-0.67%
AR2 ’24 Kansas City HRW
$ / BSH
8.9775
8.9775
8.9775
0.0075
0.08%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.65
9.5575
9.5575
-0.02
-0.21%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.59
9.4725
9.4775
-0.045
-0.47%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.585
9.465
9.465
-0.0675
-0.71%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.545
9.43
9.43
-0.08
-0.84%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.2825
9.17
9.17
-0.1125
-1.21%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.325
9.2225
9.2225
-0.0925
-0.99%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.28
0
0.00%
DEC ’21 ICE Dollar Index
$
106.345
105.605
105.925
-0.042
-0.04%
JA ’21 Light Crude
$ / BBL
79.9
76.58
76.76
-1.18
-1.51%
FE ’21 Light Crude
$ / BBL
79.92
76.75
76.9
-1.17
-1.50%
DEC ’22 ULS Diesel
$ /U GAL
3.4384
3.271
3.279
-0.0803
-2.39%
JAN ’23 ULS Diesel
$ /U GAL
3.358
3.2006
3.2105
-0.0663
-2.02%
DEC ’22 Gasoline
$ /U GAL
2.4793
2.3516
2.37
-0.1044
-4.22%
JAN ’23 Gasoline
$ /U GAL
2.4086
2.2912
2.3068
-0.0862
-3.60%
JAN ’23 Feeder Cattle
$ / CWT
180.2
178.225
178.475
-0.775
-0.43%
MAR ’23 Feeder Cattle
$ / CWT
182.9
181.6
181.925
-0.425
-0.23%
DE ’21 Live Cattle
$ / CWT
153.725
153.05
153.325
-0.025
-0.02%
FE ’21 Live Cattle
$ / CWT
155.75
154.85
155.35
-0.075
-0.05%
DEC ’22 Live Hogs
$ / CWT
84.675
83.525
83.7
-0.25
-0.30%
FEB ’23 Live Hogs
$ / CWT
90.15
87.95
88.475
-0.325
-0.37%
NOV ’22 Class III Milk
$ / CWT
21.05
21.02
21.04
0.02
0.10%
DEC ’22 Class III Milk
$ / CWT
21.08
20.3
20.31
-0.69
-3.29%
JAN ’23 Class III Milk
$ / CWT
20.44
20.02
20.06
-0.38
-1.86%
