Morning report: Worry returns to the markets about potential U.S. corn and soybean yield shortfalls. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 3-8 cents
Soybeans up 6-12 cents; Soymeal up $6.70/ton; Soyoil up $0.29/lb
Chicago wheat up 6-7 cents; Kansas City wheat up 3-4 cents; Minneapolis wheat up 3-4 cents
*Prices as of 6:55am CDT.
Feedback from the Field updates! How does your farm’s crop conditions stack up against other farms around the country? Click this link to take the survey and share updates about your farm’s crop development. 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!
My latest FFTF update column was published to our site a couple days ago. Farmer sentiments about yields in 2022 remain mixed across the country and drought pressure continues to linger high on everyone’s minds. Check out the article (here!) for the latest insights.
Export drama
My colleague, Ben Potter, and I spent a considerable amount of time yesterday trying to decipher USDA-Foreign Ag Service’s (FAS) new export sales reporting system. Only to find out at the end of the day that there had been quality and technical issues with the new system’s implementation and that USDA-FAS would be redacting yesterday’s weekly export sales report.
There was no timeline specified for the corrected data’s release. The markets shrugged off yesterday’s snafu, which allowed corn and soybean markets to close 1-2% lower on other market factors.
I highly recommend checking out Ben Potter’s coverage of yesterday’s misadventures, which featured staggering weekly new crop soybean sales to China that could’ve reversed yesterday’s losses – had the data been accurate!
Inputs
Yesterday’s bi-weekly retail production costs report from the Illinois USDA Ag Market News Service showed that global production pressures have not yet trickled down to the farmgate across the Heartland.
Over the past two weeks, nitrogen retail prices in Illinois dropped between 2.3%-7.9%, continuing the summer slide and creating lucrative pricing opportunities for growers eager to book 2023 nitrogen supplies. Anhydrous prices averaged $1,152.86/ton across the state, which was the lowest price point for anhydrous since mid-October 2021.
However, other input prices began to show signs of price responsiveness to growing global fertilizer supply pressures. DAP prices have fluctuated wildly over the last month but settled at an average of $969.17/ton in yesterday’s report, up 36% from the prior report release two weeks ago. MAP prices also swung higher, gaining $23.33/ton in the past two weeks to average out to $973.33/ton.
Potash prices in Illinois inched higher as well, up 1% to $866.11/ton. That quiet upward slide actually replaced the IL-USDA’s June 30, 2022 quote of $864.44/ton as the most expensive potash premium in the database’s history.
Diesel prices followed price trends in the greater energy complex higher, rising nearly 5% over the past two weeks to settle at an average of $4.32/gallon for a 1,000-gallon quote.
Fuel and fertilizer costs continue to trend even higher than year ago values, posting 28%-67% premiums over late August 2021 prices. For more perspective, these retail input prices in 2022 range between 2.2-2.8 times higher than the same time in 2020.
I’ve hinted at this a lot this week, but I’ll throw it out there again for those in the back: if you can find a screaming deal on nitrogen for 2023, lock in those prices now. This global energy crisis is going to take a couple months to smooth out and it will be more than worth it to have expenses locked in before it escalates further.
Corn
Corn and soybean conditions looked good in Minnesota yesterday, which triggered a selloff in both complexes during yesterday’s trading session. But the overnight trading session renewed concerns about yield losses in the U.S. amid hot and dry weather this summer and markets are bracing for final yield estimates from the crop tour that likely look lower than last year.
Corn prices rose $0.02-$0.07/bushel overnight on the prospects.
“The crop monitoring tour … does not lead us to expect much in the way of good news for this year’s U.S. crop,” Commerzbank analysts said of corn, as reported by Reuters. “The risk of tightening supply should lend support to U.S. prices.”
Soybeans
Drought in China and potential U.S. crop damage due to heat raised the prospects overnight for tighter soybean supplies, sending U.S. futures up $0.10-$0.21/bushel during the overnight trading session. A rally in the energy market also solidified gains in the soybean and corn markets this morning.
Soy’s gains were limited by optimism for a bumper Brazilian soybean crop expected to be planted in the coming weeks.
Wheat
Wheat prices rose on a slightly weaker dollar, gaining $0.03-$0.07/bushel during the overnight trading session. Production losses due to heat damage in the U.S., E.U., and China continue to keep global supplies tight, which led India to implement a wheat flour export ban earlier this week.
Gains were capped by accelerating shipping paces out of Ukrainian Black Sea ports, though those paces continue to fall short of peak Ukrainian loading times prior to the Black Sea conflict.
Ukraine has harvested about 98% of its anticipated 2022 wheat crop, according to the country’s agriculture ministry. So far, 691 bushels of wheat have been harvested, down 43% from last year’s haul due to ongoing military hostilities in the country’s southern and eastern regions between invading Russian military forces.
USDA is forecasting that Ukraine will harvest 716 million bushels of wheat in 2022. Black Sea exporting paces have been gathering momentum since the “Grain Initiative” began on August 1, but only 33 cargo ships carrying 712,386 metric tonnes (MT) of grain and oilseed products have sailed from Ukrainian ports during that time. Ukraine’s shipping capacity during peak export season prior to the Russian invasion was as high as 6 million MT per month.
Weather
Cooler temperatures will return to the Upper Midwest and most of the Eastern Corn Belt today, according to NOAA’s short-range forecasts. The Central Plains will see temperatures rise into the 90s-100s today.
Scattered showers are likely to pepper the Northern Plains through the end of the day, though accumulation will be light. More showers are expected to traverse across the Northern Plains and Upper Midwest through the weekend, with Sunday offering a chance of eastward-moving showers spanning the north and south borders of the country.
The 6-10-day NOAA outlook forecasts (what I hope to be) the last heat wave of the summer for the Northern Plains through the first few days of September. Chances for showers for the Southern Plains and Southeast are above average during that time, which bodes favorably for winter wheat seeding.
Above average heat will continue to persist Corn Belt in the 8-14 day NOAA outlook. Dry conditions will likely continue in the Upper Midwest and Eastern Corn Belt during that time, though the Southern Plains could again have a good chance at showers.
Financials
Federal Reserve chairman Jerome Powell will address the media today following the conclusion of the Fed’s summer outlook meetings at Jackson Hole. Stock markets are not looking forward to those comments, as the S&P 500 slipped 0.40% lower overnight to $4,184.25 in apprehension.
The Fed’s preferred measure of inflation, the personal consumer expenditure (PCE) index, will see data updates today that will provide updated insights about inflationary pressures. Markets are expecting Powell to announce that the Fed will continue its hawkish (aggressive) stance on interest rate hikes while inflationary pressures continue to persist.
“They won’t want to be remembered as the central bank that missed inflation or even spurred inflation higher. He is going to talk tough,” Brian O’Reilly, head of market strategy at Mediolanum International Funds, told the Wall Street Journal this morning.
Market watchers expect that interest rate hikes will continue, but at a slower pace than the May and July hikes, which saw 0.75%-increases to the Federal Funds rate, which was the largest margin of an interest rate increase the Fed has implemented since 1994. Traders are expecting the next hike in September 2022 to only be 0.5% after July 2022 Consumer Price Index (CPI) data showed slightly easing inflationary pressures.
Oil prices bucked concerns about slowing global economic growth overnight, responding instead to rumors that OPEC+ will reduce production at its upcoming meeting. Prices rose because international supplies are already tight in the post-COVID era and as European energy buyers scramble for alternative energy originators amid reduced Russian natural gas purchases.
What else I’m reading this morning on our website, FarmFutures.com:
Naomi Blohm explains why milk prices are at a point of equilibrium and if strong demand can keep a floor under prices.
My latest E-Corn-Omics column dives into the dynamics currently at play in the fertilizer and energy markets. It also features farmer insights about 2023 fertilizer purchases and applications from our August 2022 Farm Futures survey.
Bryce Knorr announces the results from the annual Farm Futures study evaluating grain storage strategies.
AgMarket.Net’s Brian Splitt cautions producers to be wary of potential Labor Day losses in the coming weeks.
Morning Ag Commodity Prices – 8/26/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
6.655
6.5475
6.6475
0.0725
1.10%
DEC ’22 CORN
$ / BSH
6.575
6.4725
6.5725
0.0725
1.12%
MAR ’23 CORN
$ / BSH
6.63
6.5325
6.63
0.07
1.07%
MAY ’23 CORN
$ / BSH
6.64
6.5425
6.635
0.0675
1.03%
JUL ’23 CORN
$ / BSH
6.6025
6.5075
6.595
0.065
1.00%
SEP ’23 CORN
$ / BSH
6.2
6.1475
6.1875
0.0375
0.61%
DEC ’23 CORN
$ / BSH
6.115
6.035
6.085
0.025
0.41%
AR2 ’24 CORN
$ / BSH
6.1825
6.14
6.1475
0.0175
0.29%
MAY ’24 CORN
$ / BSH
6.2125
#N/A
6.1575
0
0.00%
SEP ’22 SOYBEANS
$ / BSH
15.7375
15.52
15.73
0.205
1.32%
NOV ’22 SOYBEANS
$ / BSH
14.4625
14.265
14.4575
0.145
1.01%
JAN ’23 SOYBEANS
$ / BSH
14.5
14.3175
14.495
0.1325
0.92%
MAR ’23 SOYBEANS
$ / BSH
14.505
14.34
14.4975
0.12
0.83%
MAY ’23 SOYBEANS
$ / BSH
14.4925
14.34
14.4875
0.1025
0.71%
JUL ’23 SOYBEANS
$ / BSH
14.4675
14.325
14.4675
0.105
0.73%
AUG ’23 SOYBEANS
$ / BSH
14.2675
#N/A
14.18
0
0.00%
SEP ’23 SOYBEANS
$ / BSH
13.8225
#N/A
13.765
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
13.6575
13.5825
13.6425
0.0425
0.31%
AN2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.6325
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.565
0
0.00%
SEP ’22 SOYBEAN OIL
$ / LB
69.54
68.6
69.46
0.37
0.54%
OCT ’22 SOYBEAN OIL
$ / LB
67.14
66.1
66.84
0.1
0.15%
SEP ’22 SOY MEAL
$ / TON
472
458.2
470.7
12.7
2.77%
OCT ’22 SOY MEAL
$ / TON
425.8
418.4
425.4
6.7
1.60%
DEC ’22 SOY MEAL
$ / TON
420.1
413.7
419.5
5.2
1.26%
JAN ’23 SOY MEAL
$ / TON
416.2
410.6
415.7
4.4
1.07%
MAR ’23 SOY MEAL
$ / TON
409.7
403.7
409
4.3
1.06%
SEP ’22 Chicago SRW
$ / BSH
7.7875
7.64
7.7575
0.06
0.78%
DEC ’22 Chicago SRW
$ / BSH
7.98
7.8325
7.955
0.065
0.82%
MAR ’23 Chicago SRW
$ / BSH
8.125
7.9875
8.1
0.055
0.68%
MAY ’23 Chicago SRW
$ / BSH
8.215
8.0875
8.1875
0.05
0.61%
JUL ’23 Chicago SRW
$ / BSH
8.19
8.095
8.1875
0.0475
0.58%
SEP ’23 Chicago SRW
$ / BSH
8.25
8.1575
8.2275
0.0375
0.46%
DEC ’23 Chicago SRW
$ / BSH
8.32
8.225
8.2975
0.03
0.36%
SEP ’22 Kansas City HRW
$ / BSH
8.7725
8.6175
8.725
0.035
0.40%
DEC ’22 Kansas City HRW
$ / BSH
8.73
8.575
8.7
0.0375
0.43%
MAR ’23 Kansas City HRW
$ / BSH
8.725
8.5975
8.725
0.0625
0.72%
MAY ’23 Kansas City HRW
$ / BSH
8.665
8.605
8.665
0.01
0.12%
JUL ’23 Kansas City HRW
$ / BSH
8.575
8.5375
8.5375
-0.01
-0.12%
SEP ’23 Kansas City HRW
$ / BSH
8.56
#N/A
8.5275
0
0.00%
DEC ’23 Kansas City HRW
$ / BSH
8.605
#N/A
8.5775
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
8.9
8.7825
8.8625
0.035
0.40%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.0325
8.9
8.9925
0.035
0.39%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.1125
9.045
9.1125
0.0325
0.36%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.2025
#N/A
9.16
0
0.00%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.18
#N/A
9.1225
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
8.935
#N/A
8.9325
0
0.00%
DEC ’23 MLPS Spring Wheat
$ / BSH
0
#N/A
9.0275
0
0.00%
SEP ’21 ICE Dollar Index
$
108.71
108.105
108.33
-0.103
-0.09%
OC ’21 Light Crude
$ / BBL
94.02
92.73
93.64
1.12
1.21%
NO ’21 Light Crude
$ / BBL
93.62
92.35
93.31
1.12
1.21%
SEP ’22 ULS Diesel
$ /U GAL
4.0403
3.9491
4.03
0.0809
2.05%
OCT ’22 ULS Diesel
$ /U GAL
3.9728
3.88
3.9591
0.0768
1.98%
SEP ’22 Gasoline
$ /U GAL
2.8581
2.8051
2.8453
0.0332
1.18%
OCT ’22 Gasoline
$ /U GAL
2.6938
2.6397
2.6727
0.0203
0.77%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
184.25
0
0.00%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
185.525
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
141.1
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
143.65
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
91.1
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
82.625
0
0.00%
AUG ’22 Class III Milk
$ / CWT
20.11
#N/A
20.11
0
0.00%
SEP ’22 Class III Milk
$ / CWT
19.99
19.95
19.97
-0.04
-0.20%
OCT ’22 Class III Milk
$ / CWT
20.39
20.39
20.39
0.03
0.15%
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