Morning report: Markets are expecting corn, soy supplies to tighten. Will USDA keep the bulls running today? (Comments are updated by 7:30 a.m. Central Time.)
Corn up 1-3 cents
Soybeans up 4-10 cents; Soymeal up $3.40/ton; Soyoil up $0.31/lb
Chicago wheat up 10-12 cents; Kansas City wheat up 8-10 cents; Minneapolis wheat up 4-5 cents
*Prices as of 6:55am CDT.
Happy WASDE day!
Two big USDA report days in just over a week? Sign us up!
After the excitement of last week’s Prospective Plantings report, I want readers to be prepared to know that Friday’s World Agricultural Supply and Demand Estimates report may not be as big of a market mover as last week’s reports from USDA.
Today’s reports will not feature the 2022 acreage estimates released by USDA’s National Agricultural Statistics Service last week. Those forecasts will be included in the May 2022 WASDE report, which will feature the first look at global supply and demand estimates for the 2022/23 marketing year.
But that doesn’t necessarily mean you should sleep on this report, either. Here is a breakdown of the top issues that will potentially move markets in today’s reports. As always, our team will be providing live coverage as the data is released. Tune in to FarmFutures.com or follow us on social media (@FarmFutures) for the latest news and analysis after USDA releases the reports at 11 a.m. CDT.
South American production shakeups
Brazil’s state agricultural agency, CONAB, released updated production values yesterday that will test USDA’s numbers in today’s report. USDA is typically conservative in their South American crop estimates relative to CONAB, though this year’s drought has triggered USDA to trim over a billion bushels of soybeans from Brazil, Argentina, and Paraguay’s production estimates since December 2021.
CONAB’s forecasts yesterday shook up the markets, forecasting higher 2021/22 corn production (4.55M bu.) in Brazil than soybeans (4.50M bu.). If those estimates are realized in today’s report, it will be the first time since 2012 that the Brazilian corn harvest was larger than its soybean counterpart.
A strong winter corn crop contributed to CONAB raising corn forecasts while slow soybean export paces justified further cuts to the soybean crop. CONAB upped its corn export forecasts as global pressure from Black Sea market closures entice export prospects for Brazilian corn supplies.
Markets are expecting USDA to boost Brazil’s corn harvest and add further cuts to its soybean crop. Additional cuts to both Argentina’s corn and soybean harvests are also widely anticipated by the market leading up to WASDE’s release.
Domestic usage adjustments
For corn, all eyes will be on export and ethanol usage rates. The trade is expecting USDA to tack on an additional 20 million bushels of 2021/22 corn consumption. Following large daily flash sale purchases by China earlier this week, I would expect the larger share of those 20 million bushels to be devoted to the export category.
An additional 5.5 million bushels will be added to demand categories based on last week’s Quarterly Grain Stocks report. The report reduced December off-farm stocks by 5.5 million bushels, meaning that usage during the September-November reporting period was higher than expected.
Domestic soybean stocks are also expected to be trimmed 20 million bushels on higher usage rates. September through February 2022 soy crush rates are trending fractionally below (0.4%) year-ago rates, so I’m inclined to believe USDA is going to raise soy exports to obtain this value.
During the last eight weeks, soybean export loading paces to top buyer China have risen 121% over volumes from the same time last year. This is significant because the time period typically represents peak Brazilian exporting periods – and downtime for U.S. soybean exports.
NASS found an extra 2 million bushels of soybeans on off-farm stocks during the September – November reporting period. If USDA chooses to apply this revision to demand estimates, then it will likely be offset by any usage increases USDA forecasts for domestic soybean stocks.
NASS’s downward revision to September – November wheat stocks totaled a massive 12 million bushels. But trade estimates expect wheat stocks to increase slightly (3M bu.) today, so I think any bullish revisions for past domestic wheat usage will be offset by lower usage forecasts expected for the remainder of the 2021/22 wheat marketing year.
World stocks
Markets will be keeping a close eye on wheat trade flows in today’s report. Pre-report trade estimates suggest net movements won’t significantly change but there could be some price action depending on how USDA realigns trade flows for Russia, Ukraine, Africa, and the Middle East.
A USDA attache report released last week pointed to declining wheat import volumes for top global importer Egypt in the upcoming 2022/23 marketing year as prices soar and wheat availability remains limited. Any further signs of demand destruction in today’s report could add bearish pressure to the volatile wheat complex.
Global soybean stocks are likely to see the biggest reductions following further cuts to South American soybean crops. Any losses to the Argentine corn crop will likely be offset by additions to Brazilian corn production and should net out to relatively small adjustments for global stocks.
USDA attache reports out over the past month suggest that Chinese import volumes for soybeans will increase in 2022/23, so that could open the door for some late season export premiums for U.S. soybean growers this summer.
USDA will not release its official estimates on the new marketing year until next month. But if these trends start to gain momentum in the coming weeks, the price effects could creep into current market and pricing dynamics.
Inputs
Spring planting pressure and forces constricting global fertilizer supplies due to the Black Sea war have finally collided at the ag retail level to send prices soaring in farm country over the past two weeks.
Illinois’ bi-weekly production costs summary from the Illinois USDA released yesterday found even though anhydrous ammonia costs rose by over $100/ton in the past two weeks to $1,616/ton, higher nitrogen costs are likely to be the least of farmers’ concerns.
DAP and MAP prices rose 14.4% and 9.7% over the past two weeks. Potash prices surged 6% higher during that time. Diesel prices saw some relief after President Biden announced plans to release 180 million barrels of state reserve oil supplies to domestic markets.
Urea prices jumped up by 15% on surging spring demand. UAN prices grew by 6.5%. Producer costs for NPK applications to support 200 bushel per acre corn yields are now 1.7-1.9x higher than the same time a year ago, currently ranging between $222-$246/acre in Illinois.
Fertilizer producer expansion, shifts in ag retail inventory management strategies, and some producer hoarding helped buffet retail prices from the initial shock of the Black Sea war, which has effectively taken Russian and Ukrainian fertilizer supplies off the global market in an era when global supplies were already tight due to an unprecedented compounding of factors.
But the surge in seasonal demand finally allowed these price gains to catch up with retail fertilizer prices this spring. For growers who are wrapping up spring fertilizer applications, this likely matters little. But anyone on the hunt for last minute supplies are likely not going to get a price break.
Corn
Corn prices edged $0.01-$0.03/bushel higher as markets expect tighter U.S. corn supplies in today’s USDA reports.
The current administration took a bullish stance on biofuels yesterday, denying 36 refineries biofuel blending exemptions, instead offering alternative forms of relief. After easing weekly ethanol production volumes this week, that news helped to reignite investor interest in corn consumed for ethanol in the overnight trade.
Soybeans
Traders are banking on steep cuts to South American soybean production today, as well as increased usage rates for U.S. soybeans which will likely lead to tighter global soybean supplies. Futures markets are already trading higher on the prospect this morning, so USDA’s cuts will need to be in line with current market estimates to continue those rallies later today.
China will be selling state reserves of imported soybeans again next week, with the volumes expected to total 18.4 million bushels. Tight supplies and abnormally large U.S. soybean purchases for this time of year suggest that China’s plan to constrict soybean imports this year may have been upended by South American crop shortfalls and the Black Sea conflict.
Wheat
Wheat futures prices moved $0.04-$0.14/bushel higher this morning as the markets try to anticipate how USDA envisions trade flows realigning amid the ongoing war in Ukraine.
Ukraine’s prime minister projected overnight that Ukrainian farmers will plant a smaller spring crop acreage this year, resulting in a 20% reduction of annual grain supplies compared year ago volumes. Fuel shortages continue to plague Ukrainian farmers struggling to continue planting activities in the middle of an ongoing war.
Financials
Kremlin spokesman Dmitry Peskov said overnight that Russia’s “special operation” in Ukraine could end in the “foreseeable future.” Russia was suspended from the U.N. Human Rights Council yesterday after reports of its troops’ brutality and torture against Ukrainian civilians were reported.
U.S. stock markets – as well as European and Asian equity indices – were on track for gains this morning as global central banks plan for tighter monetary easing policies to combat soaring global inflation. The dollar extended a rally into its seventh trading session, closing in on year-and-a-half highs. Oil futures are still recovering from China’s latest COVID outbreak and subsequent lockdown, with Brent crude futures hovering right at the $100/barrel benchmark.
Also worth a read on our website, FarmFutures.com
Naomi Blohm has four demand factors to watch in today’s WASDE reports.
The March 2022 Farm Futures survey found that fertilizer availability will not be as big of an issue for growers this spring. The bigger issues on farmers’ minds? Chemical and parts availability and, as always, weather.
Our Feedback from the Field series is live for the 2022 season! 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(TM) MyMap, so farmers can see others’ responses from across the country – or even across the county!
Even with high input costs, farmer profits are expected to remain comfortable this year. Bill Biedermann shares tips on how to maximize revenue opportunities so farmers can minimize the pain of higher inputs.
Morning Ag Commodity Prices – 4/8/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.5875
7.5275
7.585
0.0075
0.10%
JUL ’22 CORN
$ / BSH
7.515
7.455
7.515
0.0125
0.17%
SEP ’22 CORN
$ / BSH
7.205
7.16
7.205
0.015
0.21%
DEC ’22 CORN
$ / BSH
7.105
7.055
7.1025
0.0125
0.18%
MAR ’23 CORN
$ / BSH
7.12
7.075
7.12
0.0125
0.18%
MAY ’23 CORN
$ / BSH
7.1175
7.0875
7.1
-0.01
-0.14%
JUL ’23 CORN
$ / BSH
7.085
7.0425
7.085
0.0125
0.18%
MAY ’22 SOYBEANS
$ / BSH
16.575
16.455
16.535
0.08
0.49%
JUL ’22 SOYBEANS
$ / BSH
16.3725
16.2575
16.34
0.07
0.43%
AUG ’22 SOYBEANS
$ / BSH
15.955
15.86
15.9125
0.065
0.41%
SEP ’22 SOYBEANS
$ / BSH
15.165
15.0775
15.14
0.05
0.33%
NOV ’22 SOYBEANS
$ / BSH
14.7475
14.63
14.715
0.0525
0.36%
JAN ’23 SOYBEANS
$ / BSH
14.73
14.6375
14.6825
0.02
0.14%
MAR ’23 SOYBEANS
$ / BSH
14.5225
14.44
14.5125
0.02
0.14%
MAY ’23 SOYBEANS
$ / BSH
14.53
14.4525
14.4575
-0.025
-0.17%
JUL ’23 SOYBEANS
$ / BSH
14.5075
14.4925
14.4925
0.005
0.03%
MAY ’22 SOYBEAN OIL
$ / LB
73.18
72.67
73.02
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
71.73
71.16
71.65
0.15
0.21%
MAY ’22 SOY MEAL
$ / TON
463.8
460.5
463.7
3.5
0.76%
JUL ’22 SOY MEAL
$ / TON
457.8
454.5
457.8
3.4
0.75%
AUG ’22 SOY MEAL
$ / TON
447.6
444
447.6
3.1
0.70%
SEP ’22 SOY MEAL
$ / TON
435.2
430.8
435.2
2.4
0.55%
OCT ’22 SOY MEAL
$ / TON
422.1
418.3
422.1
2
0.48%
MAY ’22 Chicago SRW
$ / BSH
10.31
10.17
10.2575
0.0575
0.56%
JUL ’22 Chicago SRW
$ / BSH
10.355
10.2225
10.31
0.0575
0.56%
SEP ’22 Chicago SRW
$ / BSH
10.34
10.2075
10.2875
0.045
0.44%
DEC ’22 Chicago SRW
$ / BSH
10.2975
10.1675
10.2425
0.0325
0.32%
MAR ’23 Chicago SRW
$ / BSH
10.18
10.0675
10.1125
0
0.00%
MAY ’22 Kansas City HRW
$ / BSH
10.7975
10.655
10.7275
0.02
0.19%
JUL ’22 Kansas City HRW
$ / BSH
10.8275
10.68
10.76
0.0275
0.26%
SEP ’22 Kansas City HRW
$ / BSH
10.8375
10.6825
10.735
0.005
0.05%
DEC ’22 Kansas City HRW
$ / BSH
10.8175
10.695
10.73
0
0.00%
MAR ’23 Kansas City HRW
$ / BSH
10.7575
#N/A
10.685
0
0.00%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.0525
10.9725
11.0025
0.0075
0.07%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.045
10.9575
11
0.0075
0.07%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.8375
10.7525
10.7525
-0.03
-0.28%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.8225
10.7525
10.7525
-0.025
-0.23%
MAR ’23 MLPS Spring Wheat
$ / BSH
10.79
#N/A
10.74
0
0.00%
JUN ’21 ICE Dollar Index
$
99.98
99.755
99.96
0.2
0.20%
MA ’21 Light Crude
$ / BBL
97.73
95.29
96.28
0.25
0.26%
JU ’21 Light Crude
$ / BBL
97.06
94.72
95.66
0.15
0.16%
MAY ’22 ULS Diesel
$ /U GAL
3.3382
3.263
3.2936
0.0258
0.79%
JUN ’22 ULS Diesel
$ /U GAL
3.2045
3.1321
3.1588
0.016
0.51%
MAY ’22 Gasoline
$ /U GAL
3.0736
3.0166
3.0285
-0.0113
-0.37%
JUN ’22 Gasoline
$ /U GAL
3.0543
2.9974
3.0105
-0.01
-0.33%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
156.4
0
0.00%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
159.475
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
138
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
134.1
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
99.05
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
108.325
0
0.00%
APR ’22 Class III Milk
$ / CWT
24.1
24.1
24.1
-0.03
-0.12%
MAY ’22 Class III Milk
$ / CWT
24.67
24.67
24.67
-0.03
-0.12%
JUN ’22 Class III Milk
$ / CWT
24.61
24.55
24.55
-0.04
-0.16%
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