Soy rallies to 7-month high on South America crop, global edible oil concerns. (Comments are updated by 7:30 a.m. Central Time.)
Grain prices test moderate gains heading into Friday’s session
Corn up 1-7 cents
Soybeans up 11-16 cents; Soymeal up $4.10/ton; Soyoil up $0.71/lb
Chicago wheat up 1-2 cents; Kansas City wheat up 4-5 cents; Minneapolis wheat up 3-12 cents
*Prices as of 6:50am CST.
Corn
Corn prices moved $0.02-$0.07/bushel higher this morning, with new crop futures seeing the largest price appreciation. Nearby futures hit $6.385/bushel – matching a six-and-a-half month high as markets grow increasingly concerned about the fate of Brazil’s second corn crop and potential export volumes this year.
“Soybeans and corn are again being supported today by the continued fear that recent dry weather has damaged South American crops, especially in Brazil and Argentina,” Matt Ammermann, StoneX commodity risk manager, told Reuters this morning. “With harvesting in South America now starting we are experiencing increased concern that crops could have suffered more from dryness than previously expected.”
Soybeans
Despite a larger competing rapeseed crop forecasted in Europe this summer by Strategie Grains, bullish demand factors in the global soy market and yield concerns in South America helped prop up futures price gains overnight. Soybean futures traded $0.12-$0.18/bushel higher on the sentiments, hitting a seven-month high.
Indonesia announced last Thursday it would drastically reduce palm oil export volumes to ease rising domestic food prices. But Indonesia controls 20% of global palm oil exports, which means that palm oil will likely move to the most expensive edible oil in the globe on the shortened supply outlook as opposed to its current place as the cheapest.
Rivaling soyoil and sunflower oil markets can expect to see a boost in buying interest in the coming days as traditional Indonesian palm oil buyers, including India, China, Pakistan, and several African countries, shift orders to snap up the cheaper edible oil substitutes to palm oil for delivery in February and March.
“Indonesia’s exports curbs have changed market dynamics,” Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage and consultancy firm based in Mumbai, India, told Reuters overnight. “Already, the edible oil market was disrupted by weather and labour issues. Government policies have now added to the uncertainty.”
Palm oil is typically traded at a discount to sunflower and soy oils. But the recent rally due to Indonesia’s export curbs could drive buyers out of the market. “Palm’s rally is doing demand destruction. Prices need to come down or it will lose market share,” a Mumbai-based palm oil dealer shared with Reuters.
For global soybean markets, this is a bullish revelation. Global soyoil stocks are currently at their tightest volume since 1976. Global sunflower oil stocks are also in short supply and sensitive to the ongoing Russian-Ukrainian conflict, as Ukraine is a top producer of sunflowers.
“Sunflower oil supplies are not certain as tensions are rising between Russia and Ukraine,” a Singapore based dealer told Reuters.
The U.S.-based National Oilseed Processors Association (NOPA) found that December 2021 crush volumes soared to a new monthly high as global demand for soyoil continues to rise. With the new Indonesian palm oil export policy, economic incentives for U.S. soyoil production are sending strong and clear signals for future expansion.
For U.S. growers with soybeans still sitting in storage, the next couple months could provide some lucrative basis opportunities at local crush plants as the global dynamics trickle down to Main Street.
Brazilian ag consultancy AgRural issued updated the country’s 2021/22 soybean production forecasts overnight. Lingering heat stress and drought in Brazil’s southern regions is already pointing to lower yields in those areas, which trail Mato Grosso in the north as the country’s top soybean producing states.
AgRural shaved over 180 million bushels from its previous forecast, leaving 2021/22 Brazilian soybean production at 4.72 billion bushels. USDA’s current estimate for 2021/22 Brazilian soybean output stands at 5.11 billion bushels as of early January 2022, which represented a 184-million-bushel cut from prior forecasts.
The continued cuts to the Brazilian crop on poor weather in the south continues to add bullish price pressure to the soybean market and raises the chances of higher late summer soybean exports for the U.S. if the Brazilian crop falls short of fulfilling expected export orders.
Wheat
Wheat prices capitalized on a weaker dollar overnight and ongoing tensions in the Black Sea to surge $0.02-$0.05/bushel higher this morning. July 2022 Minneapolis spring wheat contracts posted a $0.12/bushel gain this morning.
“Wheat continues to be underpinned by political risk from the Russia/Ukraine crisis,” Ammermann said.
“There were signs last week that the situation in the Black Sea could be cooling down, but the crisis news flow continues and it has certainly not been solved yet. This also leads to concern a conflict could disrupt Russian and Ukrainian wheat exports in some way, either by fighting or sanctions.”
Weather
Warm temperatures are forecast across the country today though highs in the Plains could reach into the 70s today, according to NOAA’s short-range forecasts. Mostly clear skies are expected across the Heartland today.
A winter storm system is expected to shift east along the U.S.-Canadian border late tonight. Rains could pop up in the Central Plains tomorrow morning and move East into the Corn Belt by tomorrow afternoon.
The Colorado Rockies are getting snow tomorrow and Wednesday. Sadly, I was forced to leave the mountains yesterday and won’t be able to enjoy skiing in the fresh powder (cries a little. Then cries a lot).
But my husband and I enjoyed several days of glorious bluebird skies over our long weekend. We hit the slopes hard and had a great time skiing at Crested Butte, which I highly recommend if you are an avid skier. We also did a bit of snowshoeing in the Rockies and enjoyed relaxing in the mountain air.
And of course, we did a bit of elk scouting on both drives. Because for my husband, every season is elk season!
Financials
Brace yourselves for another week of volatile trading on Wall Street as investors brace for more fallout from tightening Federal Reserve monetary policies and ongoing inflationary concerns. Corporate earnings season heats up this week and will provide the best hope for higher stock movement.
“The only thing money managers are certain about for the year is greater volatility,” Bloomberg reporter Srinivasan Sivabalan wrote this morning.
What else I’m reading today – this is not exactly corn/soybean/wheat-related, but rather a flashback to my previous career in the poultry production industry. A proposed merger between Sanderson Farms (owned by Cargill) and Wayne Farms (owned by Continental Grain Co.) is facing tight scrutiny amid rising inflationary pressures in the food market and growing anti-trust sentiment in the Biden Administration’s Justice Department.
Following ongoing legal battles surrounding an alleged price-fixing scandal at competitor Pilgrim’s Pride, there may be too much evidence of a concentrated market in the poultry industry to allow this merger to be finalized. For more details, check out the Reuters report here.
Also worth a read on our website, FarmFutures.com
Will corn rally to $7/bushel? Naomi Blohm weighs the odds.
Farmland prices have been hot over the past year. Our own Rachel Schutte spills the tea on why land prices are soaring.
Roger Wright weighs technical vs. fundamental analysis for grain marketing decisions and helps you decide which measure is best for your farm’s marketing plan.
Planting is still six to eight weeks away, but Indiana farmer Kyle Stackhouse is already working on the planter.
Morning Ag Commodity Prices – 1/31/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
6.425
6.345
6.385
0.025
0.39%
MAY ’22 CORN
$ / BSH
6.405
6.3175
6.3675
0.035
0.55%
JUL ’22 CORN
$ / BSH
6.3425
6.245
6.31
0.0475
0.76%
SEP ’22 CORN
$ / BSH
5.915
5.83
5.9025
0.06
1.03%
DEC ’22 CORN
$ / BSH
5.77
5.68
5.7575
0.0625
1.10%
MAR ’23 CORN
$ / BSH
5.845
5.7575
5.83
0.06
1.04%
MAY ’23 CORN
$ / BSH
5.875
5.7925
5.87
0.07
1.21%
MAR ’22 SOYBEANS
$ / BSH
14.9675
14.735
14.875
0.175
1.19%
MAY ’22 SOYBEANS
$ / BSH
15.015
14.79
14.9275
0.175
1.19%
JUL ’22 SOYBEANS
$ / BSH
14.9825
14.77
14.9125
0.1775
1.20%
AUG ’22 SOYBEANS
$ / BSH
14.64
14.48
14.6
0.165
1.14%
SEP ’22 SOYBEANS
$ / BSH
14.0225
13.8775
14
0.155
1.12%
NOV ’22 SOYBEANS
$ / BSH
13.6925
13.515
13.65
0.135
1.00%
JAN ’23 SOYBEANS
$ / BSH
13.675
13.4975
13.615
0.125
0.93%
MAR ’23 SOYBEANS
$ / BSH
13.45
13.35
13.3975
0.1225
0.92%
MAY ’23 SOYBEANS
$ / BSH
13.3525
13.2975
13.3275
0.115
0.87%
MAR ’22 SOYBEAN OIL
$ / LB
66.77
65.51
66.03
0.76
1.16%
MAY ’22 SOYBEAN OIL
$ / LB
66.67
65.47
65.97
0.73
1.12%
MAR ’22 SOY MEAL
$ / TON
417.9
412.2
415.8
4.6
1.12%
MAY ’22 SOY MEAL
$ / TON
416.4
410.8
414.3
4.3
1.05%
JUL ’22 SOY MEAL
$ / TON
414
409
412.6
4.4
1.08%
AUG ’22 SOY MEAL
$ / TON
405.8
401.6
404.9
4.1
1.02%
SEP ’22 SOY MEAL
$ / TON
394.3
391.4
394
3.4
0.87%
MAR ’22 Chicago SRW
$ / BSH
7.985
7.87
7.89
0.0275
0.35%
MAY ’22 Chicago SRW
$ / BSH
8.035
7.9175
7.945
0.035
0.44%
JUL ’22 Chicago SRW
$ / BSH
7.9425
7.835
7.8475
0.0275
0.35%
SEP ’22 Chicago SRW
$ / BSH
7.9375
7.835
7.8475
0.0275
0.35%
DEC ’22 Chicago SRW
$ / BSH
7.9775
7.8375
7.89
0.025
0.32%
MAR ’22 Kansas City HRW
$ / BSH
8.17
8.0525
8.075
0.0525
0.65%
MAY ’22 Kansas City HRW
$ / BSH
8.2
8.085
8.1
0.0475
0.59%
JUL ’22 Kansas City HRW
$ / BSH
8.185
8.08
8.085
0.04
0.50%
SEP ’22 Kansas City HRW
$ / BSH
8.21
8.1175
8.1175
0.0375
0.46%
DEC ’22 Kansas City HRW
$ / BSH
8.2825
8.2125
8.2275
0.07
0.86%
MAR ’22 MLPS Spring Wheat
$ / BSH
9.3475
9.2225
9.2375
0.035
0.38%
MAY ’22 MLPS Spring Wheat
$ / BSH
9.305
9.18
9.2025
0.03
0.33%
JUL ’22 MLPS Spring Wheat
$ / BSH
9.2375
9.16
9.2375
0.1225
1.34%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.035
8.92
8.94
0.02
0.22%
DEC ’22 MLPS Spring Wheat
$ / BSH
8.9275
8.8575
8.86
0.02
0.23%
MAR ’21 ICE Dollar Index
$
97.3
96.965
97.2
-0.066
-0.07%
MA ’21 Light Crude
$ / BBL
88.16
86.81
87.32
0.5
0.58%
AP ’21 Light Crude
$ / BBL
86.66
85.42
85.9
0.47
0.55%
FEB ’22 ULS Diesel
$ /U GAL
2.816
2.7991
2.8035
0.018
0.65%
MAR ’22 ULS Diesel
$ /U GAL
2.7573
2.7239
2.7384
0.026
0.96%
FEB ’22 Gasoline
$ /U GAL
2.5694
2.549
2.5694
0.0271
1.07%
MAR ’22 Gasoline
$ /U GAL
2.5841
2.5452
2.575
0.0371
1.46%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
159.625
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
165.3
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
138.7
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
143.1
0
0.00%
FEB ’22 Live Hogs
$ / CWT
0
#N/A
87.925
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
94.925
0
0.00%
JAN ’22 Class III Milk
$ / CWT
20.36
#N/A
20.36
0
0.00%
FEB ’22 Class III Milk
$ / CWT
20.28
20.19
20.28
0.09
0.45%
MAR ’22 Class III Milk
$ / CWT
21.4
21.4
21.4
0.02
0.09%
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