Morning report: Plus – I do a bit of redneck economics on unplanted 2022 corn acreage in the Upper Midwest. Check out my results! (Comments are updated by 7:30 a.m. Central Time.)
Corn up 1-3 cents
Soybeans mixed; Soymeal down $2.00/ton; Soyoil down $0.29/lb
Chicago wheat down 3-4 cents; Kansas City wheat down 5-6 cents; Minneapolis wheat up 4-7 cents
*Prices as of 7:00am CDT.
Good morning! Monday is Memorial Day. Markets will be closed to observe the holiday, so there will be no morning or afternoon market newsletter. I hope you are able to enjoy the weekend with your loved ones!
Black Swan in the Black Sea: Our May/June 2022 print edition cover story was about the ongoing crisis in the Black Sea. Our online series, which has been updated to reflect current market conditions, will go live this week.
The four-part Black Swan in the Black Sea series concludes today. We hope it helps you to better understand the new dynamics shaping agriculture, energy, and fertilizer markets.
The first article in the series examines the war’s impacts to the corn market. Part two, released on Wednesday, examined how wheat trade flows have shifted – and could further shift – due to the Black Sea conflict.
Yesterday’s installment examined the impact of the Black Sea conflict on global fertilizer markets and addressed who will first feel the pain of tight global fertilizer supplies. It also featured updated analysis from the latest USDA-World Agricultural Supply and Demands Estimate report issued in early May on global acreage shifts that could impact next year’s fertilizer prices.
Today’s final installment shows how edible oil trades could foreshadow future trading relations in the Black Sea conflict era. The outlook for global grain and oilseed markets remains murky and likely quite volatile for the foreseeable future.
Many unprecedented factors vexed the agricultural commodity and fertilizer space before late February, constricting global supplies and pressuring prices higher. Russia’s invasion into Ukraine was another unwelcome headache for global food producers.
But there is a silver lining — for now. Crop prices accelerated more rapidly than fertilizer costs following the war’s onset. That dynamic could change as demand heats up this fall for 2023 inputs, which are likely to be in high demand as growers seek to offload cash reserves before Uncle Sam comes calling.
While more price highs may appear in this volatile environment, don’t miss out on the unprecedented revenue opportunities the war is providing growers. It might be a while before input prices go down, but crop prices will inevitably drop first. And when they do, make sure you have the cash reserves on hand to adjust to what will certainly be another unprecedented market environment.
Feedback from the Field updates! Planting progress may be slowing down in the Heartland, but growers in the Upper Midwest continue to face planting obstacles, according to responses from growers in our latest Feedback from the Field column. Planting is progressing, but not as quickly as most growers would like.
Most notably, corn and spring wheat producers across North Dakota and Minnesota are already weighing the possibility of prevent plant acreage as rain delays continue to mount. We even had a response from a grower on the Canadian prairies this week who also indicated that delays in that region could cause acreage shifts.
“We are getting more rain today,” the farmer shared late last week. “So we are delayed planting for a few more days. Soon it will be late for spring wheat here.”
Want to see how your farm’s progress stacks up against other growers across the country? 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!
Corn
A rainy holiday weekend for the Upper Midwest triggered a $0.01-$0.03/bushel gain for the corn market this morning. Weak export results from yesterday’s weekly Export Sales report from USDA led to a selloff during Thursday’s trading session, so there was also a bit of bargain buying by end users at play in the corn markets this morning.
The rain isn’t all bad news, either. For crops already in the ground, the upcoming weekend rains will help benefit soil moisture conditions that should create an optimal environment for crop development. That sentiment kept a cap on the morning’s gains in the corn market.
The University of Illinois Farmdoc Daily team tweeted out this graphic yesterday. Prevent plant date deadlines for passed earlier this week for most of the Northern Plains and are approaching over the next several days for other areas of the Upper Midwest.
Corn prices have enjoyed a bullish run thanks to planting delays, though that likely offers growers little solace as many seek to price out 2023 bushels. Which is more difficult to do when your crop isn’t even in the ground.
So what kind of potential losses are we looking at in the corn market in terms of these planting delays? Using data from Monday’s Crop Progress report, 2021 state yield results, and March 31 Prospective Planting acreages, I have a few insights using a bit of redneck economics.
Redneck economics means that I use available data – though not precise – to run possible scenarios to try to plan for future events. It’s not precise, but it helps give a better idea of what could happen. I borrowed the concept from a few epidemiologists.
The most significant planting delays this year are in the Upper Midwest. Prevent plant deadlines passed on Wednesday in North Dakota, South Dakota, and parts of Minnesota, so these three states are the focus of my analysis.
As of last Sunday, these states combined for a total of 8.4 million unplanted 2022 corn acres. That’s 9.3% of expected 2022 U.S. corn acreage. There were a few days of somewhat clear skies in the Northern Plains this week, which could have helped planting progress between Sunday and Wednesday. But we won’t have better insights on those rates until the next Crop Progress report out on Tuesday.
But if we stick with the planting rates as of Sunday, we can still calculate an idea of the production loss we may be facing this year. I used 2021 state yields for my calculations. They are not exact and reflect drought stress in the Upper Midwest last year. But we are past the point of hoping for above-trendline yields in the region as that planting window passed around the middle of May, so I can justify using 2021 yields that way.
I calculate that unmet 2022 corn production in Minnesota, North Dakota, and South Dakota will total 1.069 billion bushels as of last Sunday. That’s 7.4% of the anticipated 2022 crop, which is currently forecast at 14.46 billion bushels.
Remember – this value will likely shrink after Tuesday’s Crop Progress report, so don’t throw the baby out with the bathwater just yet.
As Naomi Blohm pointed out in a recent Ag Marketing IQ column, most of the corn grown in this region is shipped via train to the Pacific Northwest to be loaded for export customers on the other side of the world. So these shortfalls are most likely to impact export volumes first.
But the question remains as to whether or not the losses will be significant enough to curb demand for other corn end users as well. 1.069 billion bushels – while likely an over-estimate of 2022 production losses and not inclusive of other delays in the Eastern Corn Belt and Wisconsin – would be a significant enough blow to U.S. and global corn supplies coming into a year with historically tight corn stocks.
Feed, residual, food, seed, and industrial (ethanol) usage categories would likely all be forced to shift lower to accommodate for a smaller crop and tight beginning stocks for the 2022/23 marketing year. Otherwise, imports likely from Brazil or Argentina would be necessary to keep usage rates at the current projected level for 2022/23.
The good news for farmers is that high corn prices are likely here to stay. Even if Ukrainian corn stocks can enter global channels via a Russian “humanitarian corridor,” Ukraine’s 2022/23 corn crop is slated to be 54% smaller than last year’s. Only counting the current losses in the Upper Midwest – and as of last Sunday – this year’s U.S. crop could be the smallest since 2013.
I cannot stress this enough – these figures are likely to improve with Tuesday’s Crop Progress report. And they are not exact estimates.
But the importance of these delays should not be understated in a year when supplies both at home and abroad are already running thin. And when the margins are this tight, growers and analysts alike need to be penciling out every possible supply, demand, and price scenario that could be faced this year.
I’ll update these figures following Tuesday’s Crop Progress report. I hope those of you with acreage left to plant have a productive, warm, and dry Memorial Day weekend. Good luck!
Soybeans
Soybean futures were mixed this morning. Nearby prices traded $0.01-$0.04/bushel lower on weak soyoil usage rates in China due to ongoing COVID lockdowns. Deferred month contracts saw a $0.01-$0.02/bushel gain on continued planting delays expected in the Upper Midwest.
“Soybeans are drawing support from the planting delay in the U.S. and sharp rally in vegetable oil prices,” a Mumbai-based dealer with a global trading firm told Reuters overnight.
Wheat
Wheat prices continued their descent this morning, with Chicago and Kansas City futures $0.02-$0.06/bushel lower on hopes for more Ukrainian grain shipments. Minneapolis futures rose $0.04-$0.08/bushel on continued planting delays in the Northern Plains. The trade remains skeptical about Russia’s agreement to provide “humanitarian corridors” for Ukrainian grain export cargoes, which will likely create significant market volatility over the coming week.
“Volatility remains high in a market currently dominated by geopolitics,” consultancy Agritel said in a note.
Weather
Temperatures will warm into the 60s-70s today across much of the Heartland, according to NOAA’s short-range forecasts. Rains will dissipate from the Eastern Corn Belt by tomorrow afternoon, but at the same time will shift back into the Upper Midwest for most of the holiday weekend.
NOAA’s 6- to 10-day forecasts updated yesterday are trending wetter for much of the Heartland while the 8- to 14-day forecast is beginning to show a period of clear skies for the Upper Midwest.
What else I’m reading this morning on our website, FarmFutures.com
Naomi Blohm points out that end users celebrated the recent selloff in the corn market.
AgMarket.Net’s Bill Biedermann thinks producers should expect sideways grain markets this summer – at least until June 30 USDA reports.
Congress is investigating price fixing concerns in the beef market.
The U.S. is once again challenging Canada’s dairy policies via a USMCA dispute. Senior policy editor Jacqui Fatka breaks down the key details.
Advance Trading’s Eric Meyer asks – what is keeping you from locking in high prices?
AgMarket.Net’s Betsy Jibben reports that planting progress in Ukraine continues despite the Russian occupation. The next big question – will the exported totals shipped this year count for Russia’s or Ukraine’s trade total?
Bryce Knorr is calling it – weather markets are here and bringing price rallies for growers.
Kansas Farmer editor Jennifer Latzke shares the big takeaways from the 2022 Winter Wheat Tour last week.
Morning Ag Commodity Prices – 5/27/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.695
7.61
7.675
0.025
0.33%
SEP ’22 CORN
$ / BSH
7.38
7.305
7.365
0.025
0.34%
DEC ’22 CORN
$ / BSH
7.235
7.1525
7.2275
0.04
0.56%
MAR ’23 CORN
$ / BSH
7.2725
7.1925
7.265
0.0375
0.52%
MAY ’23 CORN
$ / BSH
7.27
7.2
7.2525
0.025
0.35%
JUL ’23 CORN
$ / BSH
7.21
7.1425
7.2025
0.03
0.42%
SEP ’23 CORN
$ / BSH
6.62
6.62
6.62
0.0125
0.19%
JUL ’22 SOYBEANS
$ / BSH
17.345
17.1875
17.285
0.02
0.12%
AUG ’22 SOYBEANS
$ / BSH
16.6525
16.5225
16.5975
0.0025
0.02%
SEP ’22 SOYBEANS
$ / BSH
15.89
15.7675
15.83
-0.015
-0.09%
NOV ’22 SOYBEANS
$ / BSH
15.485
15.36
15.42
-0.0275
-0.18%
JAN ’23 SOYBEANS
$ / BSH
15.5125
15.39
15.4575
-0.0175
-0.11%
MAR ’23 SOYBEANS
$ / BSH
15.44
15.29
15.3725
0.005
0.03%
MAY ’23 SOYBEANS
$ / BSH
15.4325
15.265
15.3625
0.0125
0.08%
JUL ’23 SOYBEANS
$ / BSH
15.415
15.24
15.33
0.005
0.03%
AUG ’23 SOYBEANS
$ / BSH
10.75
#N/A
15.1175
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
80.7
80.13
80.34
-0.18
-0.22%
AUG ’22 SOYBEAN OIL
$ / LB
78.53
77.88
78.01
-0.39
-0.50%
JUL ’22 SOY MEAL
$ / TON
429.4
425.8
426.6
-1.6
-0.37%
AUG ’22 SOY MEAL
$ / TON
423.4
420.5
421
-1.7
-0.40%
SEP ’22 SOY MEAL
$ / TON
417.4
414.6
414.6
-2.4
-0.58%
OCT ’22 SOY MEAL
$ / TON
410.9
408.5
409.2
-2
-0.49%
DEC ’22 SOY MEAL
$ / TON
412.6
409.7
410.6
-1.8
-0.44%
JUL ’22 Chicago SRW
$ / BSH
11.5775
11.335
11.395
-0.0375
-0.33%
SEP ’22 Chicago SRW
$ / BSH
11.66
11.42
11.475
-0.045
-0.39%
DEC ’22 Chicago SRW
$ / BSH
11.7325
11.4925
11.5575
-0.03
-0.26%
MAR ’23 Chicago SRW
$ / BSH
11.7475
11.5325
11.5775
-0.04
-0.34%
MAY ’23 Chicago SRW
$ / BSH
11.575
11.415
11.4425
-0.0525
-0.46%
JUL ’22 Kansas City HRW
$ / BSH
12.36
12.12
12.22
-0.065
-0.53%
SEP ’22 Kansas City HRW
$ / BSH
12.41
12.18
12.2525
-0.0875
-0.71%
DEC ’22 Kansas City HRW
$ / BSH
12.4775
12.245
12.34
-0.065
-0.52%
MAR ’23 Kansas City HRW
$ / BSH
12.4725
12.29
12.3125
-0.1025
-0.83%
MAY ’23 Kansas City HRW
$ / BSH
12.2025
12.045
12.045
-0.13
-1.07%
JUL ’22 MLPS Spring Wheat
$ / BSH
13.0425
12.88
12.9675
0.045
0.35%
SEP ’22 MLPS Spring Wheat
$ / BSH
13.05
12.88
12.9725
0.055
0.43%
DEC ’22 MLPS Spring Wheat
$ / BSH
13
12.855
12.9175
0.04
0.31%
MAR ’23 MLPS Spring Wheat
$ / BSH
12.9175
12.8725
12.8725
0.0125
0.10%
MAY ’23 MLPS Spring Wheat
$ / BSH
12.885
#N/A
12.8
0
0.00%
JUN ’21 ICE Dollar Index
$
101.955
101.455
101.79
-0.068
-0.07%
JU ’21 Light Crude
$ / BBL
114.99
113.15
113.47
-0.62
-0.54%
AU ’21 Light Crude
$ / BBL
112.08
110.28
110.62
-0.63
-0.57%
JUN ’22 ULS Diesel
$ /U GAL
3.9975
3.9329
3.9373
-0.0307
-0.77%
JUL ’22 ULS Diesel
$ /U GAL
3.88
3.8141
3.8286
-0.0219
-0.57%
JUN ’22 Gasoline
$ /U GAL
3.904
3.8591
3.8784
0.001
0.03%
JUL ’22 Gasoline
$ /U GAL
3.8151
3.7675
3.7805
-0.0119
-0.31%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
166.675
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
169.725
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
132.4
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
132.6
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
111.1
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
111.825
0
0.00%
MAY ’22 Class III Milk
$ / CWT
25.18
#N/A
25.19
0
0.00%
JUN ’22 Class III Milk
$ / CWT
24.32
24.31
24.32
0.07
0.29%
JUL ’22 Class III Milk
$ / CWT
24.37
24.37
24.37
0
0.00%
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