Morning report: Recession worries loom large. Wheat rises on bargain buying. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 4-8 cents
Soybeans down 14-23 cents; Soymeal down $0.70/ton; Soyoil down $2.85/lb
Chicago wheat up 11-13 cents; Kansas City wheat up 9-10 cents; Minneapolis wheat up 6-8 cents
*Prices as of 7:10am CDT.
Feedback from the Field updates! Our FFTF responses have trended lower over the past couple weeks thanks to ongoing crop protection activities. Same here, as I mix up a small batch of mesotrione to kill the latest round of broadleaf weeds in my lawn. Regardless, we are still receiving valuable insights from farm country as this heat wave continues to roast the Heartland.
Want to see how your farm stacks up? 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!
Russia & Ukraine
Overnight, Russia accused the West of spreading lies about the origins of the ongoing global food crisis.
“It is a lie – such accusations are complete lies,” Russian foreign ministry spokeswoman Maria Zakharova told reporters in Moscow this morning. “So the West can supply all these arms to Ukraine but for some reason nothing can be taken out of Ukraine?”
Sanctions imposed by the West on Russia due to its unprovoked invasion of Ukraine – compounded with the inaccessibility to Ukrainian grain supplies – have restricted global food and edible oil supplies over the past four months, with little progress having been made in recent weeks to make more grain available on the global markets at affordable prices.
So no new news there.
Wheat harvest has begun in Russia, but not without its fair share of challenges due to the ongoing Ukrainian war. Russia continues to keep a high export tax in place. That, combined with a strong rouble, freight and logistics challenges, and few pre-booked sales mean that Russian exporters are scrambling to find available supplies from farmers with which to load cargo vessels destined for international locations.
Russia is expected to harvest its largest crop in the post-Soviet era. But the high wheat export tax (about $3.86/bushel) along with high freight and insurance costs, are slowing down export paces. And with the ongoing turmoil in the Black Sea, few farmers have booked forward sales, leaving exporters reliant on raising cash bids to lure freshly harvested bushels out of the fields.
“None of the problems have been solved as of yet despite statements by the Western officials,” Eduard Zernin, who heads the Russian association of grain exporters, told Reuters. The U.S. previously stated late last month that it would consider issuing “comfort letters” to freight and insurance companies to help offset the higher prices and additional risks for grain and fertilizer shipments out of Russia.
“July sales are most likely to be below what they were a year ago,” Black Sea forecaster SovEcon predicted yesterday. On the bright side, the slower Russian export paces bode well for U.S. wheat exporters, who are currently in peak shipping season.
Corn
Corn prices fell $0.04-$0.08/bushel this morning as extended weather forecasts improved for the Corn Belt and the oil market declined amid growing global recession fears. A global market slowdown has largely eclipsed tight supply concerns in the oil market, marking a shift in trading patterns across the market over the past four months.
Corn condition ratings dropped 2% week-over-week to 70% good to excellent as of June 19, as last week’s heat wave took a bite out of ratings across the Midwest. The rating downgrade had been widely anticipated by analysts, whose pre-report estimates ranged between 68%-71% good to excellent with an average guess of 70%.
Since USDA’s projection aligned perfectly with the average trade guess, markets had little extra price incentive to move higher this morning. Emergence rates rose 7% on the week to 95%, matching the five-year average for the same reporting period.
Soybeans
A selloff in the edible oils complex kept soybean prices trading in the red this morning. Soyoil prices fell 3.8%-4.0% overnight after a 10% dip in palm oil futures following losses in the crude oil market, a round of investor selling, and export optimism for top producer Indonesia.
“But declining open interest indicates some short covering have been taking place in the last 2-3 trading days,” a Kuala Lumpur-based trader told Reuters.
Soybean futures in Chicago dipped $0.14-$0.21/bushel lower on the prospects. Improving weather forecasts expected in the Midwest in the coming week boded well for crop development as markets continue to expect a record large crop – and acreage – from the U.S. this year.
Soybean planting progress edged six percentage points higher on the week to 94% planted as of June 19. That value bested the five-year average by a percent, though it fell a percent short of analyst expectations.
Emergence rates also remained a percent behind the five-year benchmark at 83%, reflecting a slow start to planting and a mid-June heat wave that is likely causing slight delays in crop development.
To that end, condition ratings slipped 2% on the week to 68% good to excellent. Pre-report trade estimates had ranged between 68%-70% with an average guess of 69% good to excellent, so the lower-than-expected ratings provided something of a floor for falling soybean prices in the overnight trading session.
Wheat
Wheat prices rose this morning after matching March 2022 lows in yesterday’s trading session. Bargain buyers lifted the wheat complex $0.05-$0.14/bushel this morning despite a stronger dollar and yesterday’s forecasts for an even larger Russian wheat crop expected by SovEcon.
Gains were capped by rapid winter wheat harvest paces in the Southern Plains and improving spring wheat conditions in the Northern Plains.
Winter wheat harvest accelerated on a week of hot and dry weather in the Plains, rising 15% to 25% complete as of June 19. The progress was faster than market watchers had anticipated, with pre-report trade estimates ranging between 16%-30% complete with an average estimate of 23% planted as of Sunday.
Heading progress remains slower than historical paces, rising 5% on the week to 91% headed as of last Sunday. The five-year average for the same reporting period stands at 95% as cool and wet weather in the Northern Plains and the Pacific Northwest has slowed maturation rates.
Condition ratings for the winter wheat crop were expected to hold steady at 31% good to excellent ahead of the report. USDA took a percentage point off last week’s reading, dropping the rating to 30% good to excellent as of June 19. While that total was still within the pre-report estimate range for winter wheat condition ratings, the slight downgrade could add some bullish pressure to higher wheat prices in Chicago and Kansas City this morning.
Spring wheat planting is largely wrapped up in the Northern Plains, rising 4% on the week to 98% complete as of June 19. Pre-report estimates had pegged the average completion rate at 99%, reflecting the severe planting delays experienced by growers up north this spring due to late season snowfall, cool temperatures, and excessive rainfall this spring.
Emergence rates rose 17% on the week to 89% emerged as of last Sunday. That total lags behind the five-year average by 8%. Condition ratings saw a rather miraculous 5% ratings upgrade week-over-week, rising to 59% good to excellent as of June 19.
This was the biggest surprise of USDA’s weekly Crop Progress report, as analysts on average had been expecting a 53% good-to-excellent average rating. The estimates had ranged between 51%-55%, so USDA’s higher than expected crop ratings yesterday held back gains on the Minneapolis Exchange relative to the morning’s price increases in Chicago and Kansas City.
Weather
After a band of storms and rain tore through the Heartland yesterday, growers across the Heartland will largely enjoy clear skies today, according to NOAA’s short-range forecasts. Chances for a band of scattered showers and thunderstorms will be possible across the Southern Plains this evening, but total precipitation accumulation is not expected to top more than a half inch.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending slightly cooler for the Heartland in the short run and heating up within the next two weeks, with little hope for extra moisture.
Financials
Profit takers had also swooped into Wall Street this morning following yesterday’s stock market gains. S&P 500 futures fell 1.19% overnight to $3,723.00 as oil prices dropped 3%-4%, bond yields edged down (bond rates traded 3.203% higher at last glance – bond yields drop when bond prices/rates rise), and the dollar rose 0.044 points to 104.260 as markets continue to respond negatively to rising inflation, looming recession fears, and rising central bank interest rate hikes around the world.
Amidst the fears, more investors turned to the safe haven assets listed above in hopes of hedging risk. “There is certainly an anxiousness in markets and that’s playing through in volatility,” Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald, told the Wall Street Journal this morning.
What else I’m reading this morning on our website, FarmFutures.com:
A bearish turn on Wall Street has trickled over into the commodity space. Bryce Knorr analyzes the murky impacts of the stock market’s downturn on grain markets.
Matthew Kruse analyzes how much heat corn can tolerate – and what that means for grain prices if the mercury stays high this summer.
Roger Wright explains how to calculate the time value of an option.
Is the future of Roundup in jeopardy? Gary Baise investigates.
Will you become a carbon farmer? Executive editor Mike Wilson calls for government polices that let farmers profit form practices that remove carbon and cool the planet.
Morning Ag Commodity Prices – 6/22/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.6775
7.545
7.57
-0.0375
-0.49%
SEP ’22 CORN
$ / BSH
7.135
6.9925
7.0275
-0.065
-0.92%
DEC ’22 CORN
$ / BSH
7.055
6.9
6.94
-0.075
-1.07%
MAR ’23 CORN
$ / BSH
7.105
6.955
6.99
-0.0775
-1.10%
MAY ’23 CORN
$ / BSH
7.115
6.97
7.0225
-0.06
-0.85%
JUL ’23 CORN
$ / BSH
7.0725
6.9275
6.97
-0.07
-0.99%
SEP ’23 CORN
$ / BSH
6.545
6.455
6.545
0.0325
0.50%
JUL ’22 SOYBEANS
$ / BSH
16.85
16.61
16.6725
-0.1375
-0.82%
AUG ’22 SOYBEANS
$ / BSH
16.02
15.755
15.82
-0.165
-1.03%
SEP ’22 SOYBEANS
$ / BSH
15.3375
15
15.065
-0.1975
-1.29%
NOV ’22 SOYBEANS
$ / BSH
15.1525
14.83
14.8875
-0.2175
-1.44%
JAN ’23 SOYBEANS
$ / BSH
15.1925
14.8775
14.945
-0.2075
-1.37%
MAR ’23 SOYBEANS
$ / BSH
15.075
14.8325
14.905
-0.18
-1.19%
MAY ’23 SOYBEANS
$ / BSH
15.0825
14.8225
14.8925
-0.175
-1.16%
JUL ’23 SOYBEANS
$ / BSH
15.0025
14.7975
14.85
-0.1875
-1.25%
AUG ’23 SOYBEANS
$ / BSH
10.75
#N/A
14.8
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
73.55
70.48
70.56
-2.81
-3.83%
AUG ’22 SOYBEAN OIL
$ / LB
71.84
68.61
68.73
-2.94
-4.10%
JUL ’22 SOY MEAL
$ / TON
433.4
428.1
430.6
-0.7
-0.16%
AUG ’22 SOY MEAL
$ / TON
417.6
412.2
414.6
-1.3
-0.31%
SEP ’22 SOY MEAL
$ / TON
408
401.7
404.4
-1.4
-0.34%
OCT ’22 SOY MEAL
$ / TON
401.4
395.5
398.4
-1.8
-0.45%
DEC ’22 SOY MEAL
$ / TON
404
397.5
400.7
-1.9
-0.47%
JUL ’22 Chicago SRW
$ / BSH
10.0725
9.6
9.8625
0.11
1.13%
SEP ’22 Chicago SRW
$ / BSH
10.185
9.7225
9.975
0.1025
1.04%
DEC ’22 Chicago SRW
$ / BSH
10.3525
9.8975
10.1325
0.095
0.95%
MAR ’23 Chicago SRW
$ / BSH
10.46
10.0125
10.2575
0.1
0.98%
MAY ’23 Chicago SRW
$ / BSH
10.4925
10.06
10.3075
0.11
1.08%
JUL ’22 Kansas City HRW
$ / BSH
10.66
10.255
10.51
0.0975
0.94%
SEP ’22 Kansas City HRW
$ / BSH
10.7275
10.325
10.5775
0.095
0.91%
DEC ’22 Kansas City HRW
$ / BSH
10.825
10.4275
10.6825
0.0975
0.92%
MAR ’23 Kansas City HRW
$ / BSH
10.8825
10.5025
10.7725
0.115
1.08%
MAY ’23 Kansas City HRW
$ / BSH
10.765
10.6225
10.685
0.0775
0.73%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.295
11.025
11.25
0.0725
0.65%
SEP ’22 MLPS Spring Wheat
$ / BSH
11.3
11.03
11.2475
0.0675
0.60%
DEC ’22 MLPS Spring Wheat
$ / BSH
11.365
11.1575
11.3375
0.075
0.67%
MAR ’23 MLPS Spring Wheat
$ / BSH
11.44
11.36
11.4225
0.0625
0.55%
MAY ’23 MLPS Spring Wheat
$ / BSH
11.46
#N/A
11.405
0
0.00%
SEP ’21 ICE Dollar Index
$
104.73
104.19
104.295
0.084
0.08%
AU ’21 Light Crude
$ / BBL
109.76
103.2
103.93
-5.59
-5.10%
SE ’21 Light Crude
$ / BBL
107.56
101.16
101.91
-5.43
-5.06%
JUL ’22 ULS Diesel
$ /U GAL
4.3856
4.2368
4.3
-0.0584
-1.34%
AUG ’22 ULS Diesel
$ /U GAL
4.2603
4.1179
4.1848
-0.0465
-1.10%
JUL ’22 Gasoline
$ /U GAL
3.8236
3.6638
3.7047
-0.0898
-2.37%
AUG ’22 Gasoline
$ /U GAL
3.7254
3.5614
3.6054
-0.0899
-2.43%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
175.3
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
177.275
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
137.825
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
136.25
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
112.725
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
109.8
0
0.00%
JUN ’22 Class III Milk
$ / CWT
24.28
#N/A
24.31
0
0.00%
JUL ’22 Class III Milk
$ / CWT
23.41
23.34
23.34
0.07
0.30%
AUG ’22 Class III Milk
$ / CWT
24.1
24.1
24.1
0.24
1.01%
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