Afternoon report: Corn, soybeans and some wheat contracts trend lower to start the week
Much-needed rains have made their way to Argentina, which caused corn and soybean prices to slump on Monday. It was also a friendly reminder that during the frigid winter months, South American weather is often a market mover. Corn prices dropped 0.75%, with soybeans down around 1.25%. Wheat prices were mixed but mostly higher after some uneven technical maneuvering today.
Winter weather is expected over a large portion of the Midwest and Plains later this week – nearly all of the regions will receive at least some measurable moisture between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s new 8-to-14-day outlook predicts more seasonally wet weather for the central U.S. between December 26 and January 1, with near-normal conditions for the eastern half of the country during that time.
On Wall St., the Dow dropped 292 points to 32,628, further crushing hopes for a year-end rally (a semi-common occurrence some refer to as the “Santa Claus Rally”). Lingering concerns about high inflation, rising interest rates and a possible looming recession continue to apply downward pressure. Energy futures were mixed. Crude oil rose nearly 2% higher this afternoon to $75 per barrel, with gasoline climbing 2.5% higher. In contrast, diesel dropped 1.5% today. The U.S. Dollar eased slightly lower.
On Friday, commodity funds were net buyers of soybeans (+3,500) and soymeal (+3,000) contracts but were net sellers of corn (-1,000), soyoil (-1,500) and CBOT wheat (-1,500).
Corn
Corn prices faced several headwinds on Monday, including favorable South American forecasts and lingering concerns that the economy is heading for a recession. Spillover weakness from soybeans applied additional downward pressure today. March futures dropped 5.5 cents to $6.4750, with May futures down 5 cents to $6.4850.
Corn basis bids were steady to firm after improving 1 to 10 cents across four Midwestern locations on Monday.
Private exporters reported to USDA the sale of 5.6 million bushels of corn for delivery to Mexico during the 2022/23 marketing year, which began September 1.
Corn export inspections moved moderately above week-ago totals to 29.3 million bushels. That was also toward the higher end of trade guesses, which ranged between 17.7 million and 35.4 million bushels. China was the top destination, with 16.4 million bushels. Cumulative totals for the 2022/23 marketing year remain moderately below last year’s pace so far, with 311.1 million bushels.
Officials from the United States and Mexico have been holding discussions in an attempt to address an upcoming Mexican ban on GMO corn imports, which will be implemented beginning in 2024 if no changes to the current plan are made. Mexico currently imports around 669 million bushels of corn from the U.S., the vast majority of which is genetically modified. An amended agreement is expected to be reached by January.
European Union lobby group Coceral expects 2022/23 EU corn production to rebound significantly, increasing more than 27% year-over-year to 2.539 billion bushels. Yields are expected to rebound in multiple countries that suffered widespread hot, dry conditions in 2021/22.
Chinese corn imports for November came in at 29.1 million bushels, which was a year-over-year decline of 5.8%, according to newly available customs data. Year-to-date corn imports are down nearly 27% compared to 2021, with 777.5 million bushels.
The 2021 and 2022 seasons may end up being the best two-year stretch that some farms will ever see, notes Matt Bennett, commodity analyst with AgMarket.net. “One of the big problems with such hefty profit margins is how hard it becomes for producers to accept margins that are more meager in scope,” he adds. Bennett explored the situation in greater depth in a recent Ag Marketing IQ blog – click here to learn more.
Live events are back! If you missed the Farm Progress Show and/or Husker Harvest Days this summer, you could still make plans to attend the 2023 Farm Futures Business Summit, coming up in just a few short weeks. Click here to catch a glimpse of what’s in store and learn how to register.
Preliminary volume estimates were for 126,424 contracts, which was moderately above Friday’s final count of 97,511.
Soybeans
Soybean prices slid 1.25% lower after rains in Argentina and recession fears in the U.S. spurred some technical selling on Monday. January futures lost 18.25 cents to $14.6175, with March futures down 19.25 cents to $14.6450.
Soybean basis bids were largely unchanged across the central U.S. on Monday.
Private exporters reported to USDA the sale of 4.9 million bushels of soybeans for delivery to unknown destinations during the 2022/23 marketing year, which began September 1.
Soybean export inspections shifted moderately lower week-over-week but were still robust, with 59.5 million bushels. Still, analysts were generally expecting a bigger haul, with trade guesses ranging between 55.1 million and 77.9 million bushels. China was by far the top destination, with 40.8 million bushels. Cumulative totals for the 2022/23 marketing year are moderately below last year’s pace so far, with 919.9 million bushels.
Interested in learning more about South American production and what it might mean for your bottom line in 2023? Farm Progress is offering a special session featuring Cesar Cruz, director of research with Advance Trading on December 22. Additional sessions this week will cover diesel trends and maximizing winter shop time. Click here to learn more about this free, seasonal content.
Preliminary volume estimates were for 193,978 contracts, trending moderately higher than Friday’s final count of 149,127.
Wheat
Wheat prices were mixed but mostly higher amid some uneven technical maneuvering on Monday. Prices failed to move much in either direction today, however. March Chicago SRW futures dropped 5 cents to $7.4850, March Kansas City HRW futures added 1.75 cents to $8.4575, and March MGEX spring wheat futures picked up 1.25 cents to $9.1075.
Wheat export inspections were fairly pedestrian but did improve moderately week-over-week to reach 11.2 million bushels. That was still toward the lower end of trade estimates, which ranged between 7.3 million and 22.0 million bushels. South Korea was the No. 1 destination, with 3.1 million bushels. Cumulative totals for the 2022/23 marketing year are slightly below last year’s pace, with 420.4 million bushels.
European Union lobby group Coceral offered its first estimates for 2022/23 EU soft wheat production, at 5.262 billion bushels. That would be a year-over-year increase of 1.8%, if realized. Expected increases in France and Germany should more than compensate for likely decreases in Romania and the United Kingdom.
Russian consultancy Sovecon estimates that the country’s wheat exports will 143.3 million bushels in December. That would be a monthly decrease of 9.3%, if realized. Russia is the world’s No. 1 wheat exporter.
Chinese wheat imports climbed to 37.1 million bushels in November, a year-over-year increase of more than 35%. Year-to-date wheat imports are 0.6% ahead of 2021’s pace, with 326.3 million bushels.
Egypt, the world’s No. 1 wheat importer, announced it has strategic reserves that are sufficient for the next 4.8 months, per a recent statement from its supply ministry.
Preliminary volume estimates were for 61,006 CBOT contracts, shifting 19% above Friday’s final count of 51,309.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
23-Mar
650.75
644
647.25
-5.5
23-May
651.25
644.75
648
-5.5
Soybeans
23-Jan
1476
1460
1460.75
-18.25
23-Mar
1478.75
1462.75
1463.5
-19.25
Soymeal $/ton
23-Mar
458.1
443.4
446.1
-14
Soyoil cents/lb
23-Mar
63.54
61.92
63.41
0.98
Wheat $/bushel
23-Mar
759.75
738.75
748.5
-5
23-May
767.75
747.25
756.75
-4
KC Wheat
23-Mar
849
830.75
843.5
1.75
23-May
842.25
825
837.5
0.25
MPLS Wheat
23-Mar
913
900.75
909.5
1.25
23-May
907
896.75
904.75
-1
Live Cattle cents/lb
22-Dec
155.4
155.15
155.175
0.125
Feeder Cattle cents/lb
23-Mar
185.3
183.575
184.025
-0.675
Lean Hogs cents/lb
23-Apr
93.425
92.1
93
0.275
Crude Oil $/barrel
*Energy prices may not represent final settlements
23-Jan
76.41
73.81
75.25
0.96
Diesel
23-Jan
3.1712
3.0503
3.0598
-0.0601
Unleaded Gasoline $/gallon
23-Jan
2.1952
2.1312
2.1731
0.0408
Natural Gas
23-Feb
6.085
5.64
5.66
-0.643
U.S. Dollar Index
22-Dec
104.655
104.15
104.65
-0.011
Gold $/ounce
23-Jan
1801.4
1788.6
1789.9
-0.1
Copper
22-Dec
3.811
3.752
3.752
-0.0095
Fertilizer Swaps
(as of 12/16)
DAP Tampa-index
692.0
0
DAP-New Orleans
705.5
75.48
Urea-New Orleans
515.9
3.38
Urea-Middle East
562.5
6
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
589.7
54.74
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