Morning report: Plus – an unlikely group allies together to advocate for E15 expansion. (Comments are updated by 7:30 a.m. Central Time.)
Corn mixed
Soybeans mixed, Soymeal down $1.30/ton, Soyoil up $0.98/lb
Chicago wheat up 1-3 cents, Kansas City wheat mixed, Minneapolis wheat down 1 cent
*Prices as of 6:55am CST.
Happy Thanksgiving Week! Remember – a lot of traders are out of the office for the holiday this week, so that can leave a lot of the price variation throughout the week dependent upon algo trading and low volumes.
Which is just a fancy way of saying that while Mom and Dad are away, the quants play! And that there might be some price activity this week that seems erratic and not easily explained. Don’t expect the markets to make or break your 2022 (or 2023) this week but remember that trading will revert back to normal(ish) conditions when everyone returns to the office next week.
If you are taking time off this week, save this newsletter for next week and enjoy your down time. For those of you who are like me and still working while everyone is out (hang tough, friends!), here is what you need to know today!
Corn
Corn prices were mixed this morning, as 2022 crop contracts traded $0.02-$0.03/bushel higher on news that a ragtag group of U.S. energy, renewable fuel, and ag lobbying groups had banded together to push the U.S. Congress for a wider expansion of E15 blends released overnight.
Deferred contract months shed $0.01-$0.02/bushel as export prospects remain uncertain for the 2023/24 marketing year.
USDA released its latest Crop Progress report through the week ending November 20 yesterday. This is the second to last Crop Progress report of the season. Next week’s report will be the last and will only feature harvest updates for cotton and peanuts and winter wheat crop conditions.
It’s also the last week of corn harvest updates from USDA! Last week was the final week of reporting for soybean harvest.
As of November 20, 96% of U.S. corn had been harvested, up 3% from the previous week and 6% ahead of the five-year average. Harvest is wrapping up ahead of schedule in every major corn-producing state (except Pennsylvania). Wisconsin, Michigan, and Pennsylvania still have some fields left standing, though the majority of crops in those states have already been combined.
USDA’s 96% completion rate was on the low end of analyst expectations (96%-97%), but with most of the crop already out of fields, the pre-report analyst miss is not likely to make a difference in prices during the overnight trading session.
Soybeans
Soybean prices were slightly mixed this morning, though traded largely flat as demand prospects from top global soybean buyer China remained uncertain after a recent surge in COVID-19 cases in the country. Futures prices for 2022 crop contracts rose $0.01/bushel higher while deferred contracts traded $0.00-$0.06/bushel lower as markets anticipate a bumper harvest from Brazil in the coming months.
Bullish USDA export inspection data also helped prop up yesterday’s price gains. Through the week ending November 17, federal inspectors surveyed 2.33 million bushels of U.S. soybeans destined for international markets, up from 1.96 million bushels inspected for export last week.
Cash soybean prices were largely flat at Midwestern elevators and river export terminals but strengthened $0.05-$0.10/bushel at crush facilities across the region. While basis on the river continues to trade at a wide discount to futures prices, cash offerings from processors are as high as $0.65/bushel over January 2023 futures prices.
The higher cash offerings were meant to encourage more farmer sales of soybeans to keep production schedules up with end user demand.
Soyoil prices continued to rise during yesterday’s trading session as a weaker Malaysian currency (the ringgit) boosted global palm oil export prospects – and carried the edible oil complex along with it.
Soymeal futures prices reversed earlier losses from this morning to close up $1.10/ton. Some bargain buying was likely at play after soybean prices hit a two-week low. Soymeal prices on the cash market were mostly unchanged to slightly weaker as many livestock and poultry feeders have pre-booked their necessary supplies for the week in anticipation of the Thanksgiving holiday.
Strong crush margins continue to keep plentiful soymeal supplies available to the market, which was a key driver of the weaker cash offerings yesterday.
Brazilian soybean planting is now 80% complete, according to Brazilian agribusiness consultancy AgRural. While that figure represented an 11% increase in planted area from the previous week, it remains 6% behind year-ago paces.
Irregular rains have made planting season in Brazil a little dicey this season, though at this point AgRural does not believe there is significant cause for concern with regard to yield and production prospects. Brazil is expected to harvest its largest soybean crop in history early next spring and as the world’s largest soybean exporter, it will be able to offer its excess supplies at an affordable market rate, especially relative to U.S. soybeans.
However, it will likely need more rain in the coming weeks to stave off dry La Ni?a weather patterns. “Although the [recent] rains were very welcome, the volumes and distribution were not enough to bring relief to all dry areas,” AgRural said.
Planting is largely finished in Brazil’s Center West and Mato Grosso regions. However, peak sowing activity remains underway in other primary soybean producing states in Brazil’s southern regions.
Planting paces for Brazil’s first corn crop of the season are also lagging slightly behind last year’s speeds. About 82% of the crop has already been planted in Brazil’s center-south states, up 12% on the week but still 9% slower than a year ago.
Brazil’s first crop of corn typically represents 25% of its annual production. The second crop – planted directly after soybean harvest – accounts for the country’s largest haul of annual corn bushels harvested.
Wheat
Wheat prices fought for gains this morning, but ultimately traded $0.01-$0.03/bushel lower at last glance. Lackluster wheat ratings, which according to yesterday’s Crop Progress report are the lowest on record since USDA began tracking winter wheat condition ratings in 1996, helped limit losses in the early morning trading session. However, competitive Russian wheat prices and worries about China’s economic outlook new COVID-19 restrictions eroded U.S. wheat prices this morning.
“U.S. hard red winter wheat areas will continue dry biased and warming this week will attempt to stimulate new plant development in the southern Plains,” Terry Reilly, senior analyst with Futures International, told Reuters this morning.
Winter wheat condition ratings held steady at 32% good to excellent for the second straight week. Analysts had been banking on at least a 1% increase in the winter wheat ratings leading up to the report, but USDA did not warrant a change from last week, opening the door to some potentially bullish price action in the overnight wheat markets.
Winter wheat conditions have been improving in recent weeks, but poor conditions this fall due to drought across the Midwest and Plains means that Fall 2022 conditions for the 2023 growing season are likely worse than the 2012/13 season, which had the lowest fall condition ratings prior to this year.
Winter wheat emergence rates surpassed the five-year average thanks to more moderate fall weather and some precipitation across the Midwest and Plains over the past week. As of November 20, 87% of the U.S. winter wheat crop had emerged, 1% ahead of the five-year average for the same reporting period and 6% ahead of last week’s rates.
Southern regions of the European Union continue to battle dry weather this fall, casting doubts onto production hopes for winter crops planted this fall for harvest in 2023.
“In most regions, the exceptional warm temperatures, combined with adequate topsoil moisture conditions, favored emergence and early establishment of winter crops, and allowed late sown crops to catch up in development,” MARS, the E.U.’s crop monitoring service, stated in a monthly report published this morning.
Southeastern Bulgaria, southern Spain, central and northern Italy, and eastern Romania are all experiencing abnormal dryness for this time of year and are the areas where chances for winter wheat yield damage are highest.
So far, other areas are largely enjoying favorable weather conditions for winter wheat and rapeseed crop development across the bloc which bodes more optimistically for winter wheat production in 2023. Regardless, more moisture is needed to replenish soil moisture levels across the E.U. following last summer’s catastrophic drought to ensure more dry weather issues do not disrupt 2023 yield prospects.
The European Union is the world’s second largest wheat exporter.
Rail strike
The U.S.’s largest rail workers union struck down a vote on a deal with railways in protest over paid sick leave terms today. The vote raises the risk that a rail workers strike could be imminent and could shutdown grain and fertilizer supplies for farmers who are already facing logistical hurdles amid low river levels and delayed shipping paces on the Mississippi River.
“We’re heavily reliant on rail and particularly reliant on rail right now because of the Mississippi River,” Matt Ziegler, manager of public policy at the National Corn Growers Association, told Bloomberg late last week. “This potential strike is coming at an inopportune time with that factor and also the fact that we’re finishing up harvest.”
Soaring diesel costs mean that any grain, fertilizer, or other ag supply shipments that need to be diverted from the railways or rivers in the coming weeks are likely to incur a steeply expensive bill – if that option is not already altogether cost prohibitive.
Union Pacific issued notices to fertilizer companies last week to limit shipments via railways to help reduce railway congestion. Lewis Williamson, a managing director at HTS Commodities in Memphis, told Bloomberg that some food companies had idled production amid congested railways and limited car inventories, so the strike is not likely to help ease these supply chain issues at all.
The newly rejected deal, which was written by a board of advisors appointed by President Biden following earlier strike threats in late August 2022, was just narrowly rejected by the railway workers in the transportation division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) union.
The new worry is that if the dispute between the railways and their workers continues into the new year, workers could see less favorable resolutions if Congress is forced to get involved as the U.S. House shifts to Republican control.
“I see a minimal improvement in sick pay, and huge pressure from the (Biden) administration to accept a deal,” Joe Brock, a former Teamsters local president and current principal at Reliant Labor Consultants, hypothesized in a Reuters article. Brock’s comments suggest that the rail workers may be running out of bargaining leverage after this failed vote.
For more details on the strike, I highly recommend checking out this Reuters article.
Weather
Happy Thanksgiving week! Mostly clear skies are forecasted for the Heartland this week, according to NOAA’s short-term forecasts. A chance of snowfall is possible tonight along the Canadian border in Michigan’s Upper Peninsula, though any accumulation will likely remain light.
NOAA’s 6-10-day forecasts are now trending warmer than average for the Southern and Central Plains and Eastern Corn Belt but cooler for the West and Northern Plains through the end of November. Chances for rain will be above average for the North and Central Plains and entire Midwest during that time.
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. The above average chances for rain will recede slightly from the Central Plains during that period, but will continue to linger above the Northern Plains, Great Lakes Region, and Eastern Corn Belt.
Financials
S&P 500 futures rose 0.37% this morning to $3,973.25 as thin trading volumes propped up the morning’s gains following yesterday’s Wall Street losses due to rising COVID-19 cases in China.
What else I’m reading this morning on our website, FarmFutures.com:
Water Street Solutions’ CEO Darren Frye has three tips so that farmers can use 2022 as a springboard into 2023.
Bryce Knorr has calculated out crop budgets for the 2023 growing season and all signs point to profits as 2022 comes to a close.
Is another rail strike on the horizon? This Bloomberg article reports how farmers will be impacted by a railway shutdown.
The last Feedback from the Field column from the 2022 growing season, which features a yard update!
My latest E-corn-omics column features a recap of the top highlights from last Tuesday’s USDA Data Users’ Meeting.
Last week was a busy one at USDA. Here are all the agency’s announcements over the past week.
Morning Ag Commodity Prices – 11/22/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.6175
6.58
6.61
0.015
0.23%
MAR ’23 CORN
$ / BSH
6.6575
6.6175
6.6475
0.0125
0.19%
MAY ’23 CORN
$ / BSH
6.6425
6.6075
6.6325
0.0075
0.11%
JUL ’23 CORN
$ / BSH
6.5875
6.5525
6.5775
0.005
0.08%
SEP ’23 CORN
$ / BSH
6.19
6.1675
6.19
-0.0025
-0.04%
DEC ’23 CORN
$ / BSH
6.07
6.04
6.06
-0.0125
-0.21%
AR2 ’24 CORN
$ / BSH
6.1325
6.1075
6.125
-0.015
-0.24%
AY2 ’24 CORN
$ / BSH
6.155
6.1475
6.155
-0.0125
-0.20%
JUL ’24 CORN
$ / BSH
6.1425
6.13
6.13
-0.025
-0.41%
JAN ’23 SOYBEANS
$ / BSH
14.3875
14.3
14.3375
-0.03
-0.21%
MAR ’23 SOYBEANS
$ / BSH
14.4325
14.345
14.385
-0.0325
-0.23%
MAY ’23 SOYBEANS
$ / BSH
14.495
14.4125
14.4525
-0.0275
-0.19%
JUL ’23 SOYBEANS
$ / BSH
14.5125
14.4475
14.47
-0.0375
-0.26%
AUG ’23 SOYBEANS
$ / BSH
14.335
14.2625
14.3
-0.0375
-0.26%
SEP ’23 SOYBEANS
$ / BSH
13.98
13.8875
13.9325
-0.0375
-0.27%
NOV ’23 SOYBEANS
$ / BSH
13.79
13.71
13.7425
-0.0425
-0.31%
AN2 ’24 SOYBEANS
$ / BSH
13.8
13.7575
13.7575
-0.0425
-0.31%
AR2 ’24 SOYBEANS
$ / BSH
13.705
#N/A
13.7
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.5975
13.5975
13.5975
-0.055
-0.40%
UL2 ’24 SOYBEANS
$ / BSH
11.75
#N/A
13.65
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
74.07
72.91
73.78
0.78
1.07%
JAN ’23 SOYBEAN OIL
$ / LB
71.88
70.64
71.57
0.84
1.19%
DEC ’22 SOY MEAL
$ / TON
412.5
409.4
409.6
-1.8
-0.44%
JAN ’23 SOY MEAL
$ / TON
409.2
405.6
405.7
-2.3
-0.56%
MAR ’23 SOY MEAL
$ / TON
405.1
401.2
401.2
-2.8
-0.69%
MAY ’23 SOY MEAL
$ / TON
402.1
398.2
398.4
-2.7
-0.67%
JUL ’23 SOY MEAL
$ / TON
401.4
397.3
397.3
-3.1
-0.77%
DEC ’22 Chicago SRW
$ / BSH
8.03
7.935
7.9975
0.005
0.06%
MAR ’23 Chicago SRW
$ / BSH
8.21
8.1175
8.18
-0.0025
-0.03%
MAY ’23 Chicago SRW
$ / BSH
8.2975
8.2075
8.2725
-0.0025
-0.03%
JUL ’23 Chicago SRW
$ / BSH
8.33
8.2375
8.3075
-0.0025
-0.03%
SEP ’23 Chicago SRW
$ / BSH
8.38
8.2975
8.3525
-0.015
-0.18%
DEC ’23 Chicago SRW
$ / BSH
8.4625
8.37
8.43
-0.02
-0.24%
AR2 ’24 Chicago SRW
$ / BSH
8.3925
8.3925
8.3925
-0.085
-1.00%
DEC ’22 Kansas City HRW
$ / BSH
9.3775
9.315
9.345
0.0025
0.03%
MAR ’23 Kansas City HRW
$ / BSH
9.2475
9.1675
9.2025
-0.025
-0.27%
MAY ’23 Kansas City HRW
$ / BSH
9.1725
9.1075
9.15
-0.02
-0.22%
JUL ’23 Kansas City HRW
$ / BSH
9.085
9.03
9.0725
-0.0175
-0.19%
SEP ’23 Kansas City HRW
$ / BSH
9.0725
9.045
9.0725
-0.0075
-0.08%
DEC ’23 Kansas City HRW
$ / BSH
9.1
9.07
9.07
-0.035
-0.38%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.05
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.505
9.45
9.4775
-0.0025
-0.03%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.5575
9.505
9.5325
-0.005
-0.05%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.585
9.5625
9.575
-0.005
-0.05%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.5675
#N/A
9.5525
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.3475
9.34
9.3475
0.0075
0.08%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.39
#N/A
9.3925
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.4225
0
0.00%
DEC ’21 ICE Dollar Index
$
107.66
107.165
107.4
-0.332
-0.31%
JA ’21 Light Crude
$ / BBL
81.4
79.85
81.19
1.15
1.44%
FE ’21 Light Crude
$ / BBL
81.16
79.74
80.97
1.06
1.33%
DEC ’22 ULS Diesel
$ /U GAL
3.523
3.484
3.5207
0.0234
0.67%
JAN ’23 ULS Diesel
$ /U GAL
3.4058
3.3648
3.3988
0.0201
0.59%
DEC ’22 Gasoline
$ /U GAL
2.5105
2.4423
2.4978
0.0607
2.49%
JAN ’23 Gasoline
$ /U GAL
2.4225
2.3702
2.4178
0.0532
2.25%
JAN ’23 Feeder Cattle
$ / CWT
0
#N/A
182.625
0
0.00%
MAR ’23 Feeder Cattle
$ / CWT
0
#N/A
185.1
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
153.55
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
156.725
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
83.8
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
90.15
0
0.00%
NOV ’22 Class III Milk
$ / CWT
21.01
#N/A
21.02
0
0.00%
DEC ’22 Class III Milk
$ / CWT
21.27
21.15
21.27
0.02
0.09%
JAN ’23 Class III Milk
$ / CWT
20.53
20.53
20.53
0
0.00%
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