Morning report: Wheat stages a comeback on a round of bargain buying. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 6-12 cents
Soybeans up 7-12 cents; Soymeal down $0.10/ton; Soyoil up $1.31/lb
Chicago wheat up 20-21 cents; Kansas City wheat up 11-12 cents; Minneapolis wheat up 1-2 cents
*Prices as of 6:50am CDT.
Feedback from the Field updates!
My latest FFTF column showcases growers’ increasing worries about heat stress, which was reflected in Tuesday’s weekly Crop Progress report from USDA.
“We had too much rain at the end of May,” explained a Central Kansas corn grower who reported local corn crops to be in fair condition. “Then it turned hot and dry due to a flash drought. Corn standing 3-4 feet is starting to tassel.”
Is heat stress a concern on your operation? 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!
Also worth a read
Hedge funds have played an important role in pushing commodity prices higher over the past two years, but the funds are not playing their usual games, according to a Reuters report published overnight.
“For all that hedge funds are supposed to be quick-thinking, nimble operators with the freedom and flexibility to go short as well as long – they are the smartest guys in the room, after all – the reality is rather different,” writes Reuters’ Jamie McGeever.
“Many are trend-spotting momentum players, betting on an asset appreciating in value and running with it. This approach is not all that different from any conventional buy-and-hold, long-only fund.”
Commodity funds are typically viewed as momentum traders (never shorting enough since they are typically long on commodities) while hedge funds were previously thought to be a steadier influence on pricing, buying and holding at the maximum long.
“Hedge funds have chased performance, chased commodities higher. They have absolutely crushed it. But this last move down has really shaken some funds,” Thomas Thornton, founder of research firm Hedge Fund Telemetry, told Reuters, noting that hedge funds were caught as unaware as producers by last week’s price decline across the commodity market.
This means that grain and oilseed markets may be more susceptible to volatility in the coming weeks. As we’ve observed over the past couple weeks, commodity markets are increasingly more responsive to the global recession fears looming over financial markets following the Federal Reserve’s latest interest rate hikes.
While this isn’t a typical market trend ag producers are probably used to seeing, there is a good chance as we move into increasingly uncertain economic times that it is a trend that could continue while the Fed raises interest rates and fights inflation.
Remember – inflation benefits commodity prices as these assets are largely viewed by the wider financial markets as a safe haven to protect earnings from falling victim to inflationary pressures. But if the Fed can halt inflationary pressures, that could take a leg away from the bullish run commodities have been on for the past two years.
“Worries about growth and with that demand for commodities helped trigger long liquidation in energy and grains together with additional short selling in copper,” Saxo Bank’s commodity analysts wrote in a note yesterday.
Inputs
Another great Reuters report published yesterday takes a look at “off the charts” chemical shortages faced by U.S. farmers during peak crop protection season.
“U.S. farmers have cut back on using common weedkillers, hunted for substitutes to popular fungicides and changed planting plans over persistent shortages of agricultural chemicals that threaten to trim harvests,” writes Reuters’ Tom Polansek.
Production shortfalls at BASF have been the primary driver for the shortages, though price upcharges have turned into record profits for the company.
Also, for the second time in the past week, Bayer has lost another Supreme Court appeal to dismiss allegations that its Roundup herbicide causes cancer. Last week’s case left in place a lower court ruling that awarded $25 million in damages from Bayer to a California-based plaintiff.
I also suggest checking out those articles, linked above. If the Supreme Court takes a harsh stance on glyphosate herbicides, it could have damaging long-term impacts for U.S. row crop producers.
Corn
Lower-than-expected corn condition ratings in yesterday’s Crop Progress report sent corn prices $0.06-$0.12/bushel higher this morning.
“These figures are below traders’ expectations and are supporting Chicago pre-opening prices,” consultancy Agritel told Reuters.
Corn prices also derived some strength from outside financial and energy markets, which were taking a bullish run of their own as China eased traveling restrictions on its COVID-19 policies overnight, signaling that the world’s second-largest economy is warming to the idea of the pandemic moving into an endemic phase. That is a bright prospect for global demand, though the optimism may be limited as supply chain issues continue to imbalance supply and demand across the globe.
Corn condition ratings fell more than expected in yesterday’s Crop Progress report, dipping 3% from last week to 67% good to excellent as last week’s heat wave and dry weather inflicted some stress on the young crop.
Pre-report analyst estimates came in at a range of 67%-70% with an average guess of 69%. The lower-than-expected reading from USDA sent corn futures in Chicago climbing this morning $0.07-$0.12/bushel higher.
Yesterday’s report also marked the first time this season that USDA reported silking progress for corn, as peak reproduction stages for the crop cycle approach. Heat stress has led to early tasseling in areas that have been dealing with persistent drought, according to Feedback from the Field respondents.
USDA found 4% of anticipated 2022 corn acres had reached the silking phase, largely in Southern states where planting was finished early this year. The total was in line with the five-year average.
Soybeans
China’s easing COVID-19 travelling policies were also a bullish omen for soybean prices this morning, which rose $0.11-$0.18/bushel on the sentiment. Higher soybean prices were also supported by larger than expected ratings decreases for the U.S. soybean crop.
Even though last week’s heat didn’t do the corn crop any favors, for soybean growers finishing up planting on double crop soybean and winter wheat rotations, last week’s heat wave was warmly welcomed (pun intended).
Soybean planting progress rose 4% on the week to 98% complete, pulling in front of the five-year average for the same reporting period by a percentage point and matching trade expectations for the weekly metric. This week marks the last week that USDA will report on soybean planting progress.
Emergence rates held steady with the five-year average at 91%, up 8% from the previous week. USDA started reporting blooming progress for soybeans this week, with 7% of anticipated 2022 acres blooming already. That volume is down 4% from the five-year average, due in part to recent heat stress but also because of delayed planting.
Last week’s heat wave also took a big bite out of soybean condition ratings yesterday. Analysts were expecting ratings to hold steady at 68% good to excellent, but USDA slashed three points from the metric on the week, dropping it to 65% good to excellent.
The surprise downgrade breathed new life into soybean markets this morning, raising prices $0.11-$0.19/bushel in the early morning hours.
Wheat
Wheat prices in Chicago dropped to a four-month low in yesterday’s trading session. But winter wheat prices traded up $0.11-$0.21/bushel at last glance on a round of bargain buying and short-covering. Some optimism from the financial markets trickled over into the wheat complex, though gains and losses continue to be limited by uncertainty in the Black Sea.
“If the negotiations went well, prices will keep falling. Otherwise, they would fluctuate at high levels,” a China-based trader told Reuters of ongoing negotiations between Russia and Ukraine to allow for safe passage of Ukrainian grain cargoes amid the Russian naval blockade in the Black Sea.
The heat wave wasn’t all bad for winter wheat farmers last week, as it allowed producers to continue accelerating harvest progress across the country. Through the week ending June 26, 41% of U.S. winter wheat crops had been harvested, up a staggering 16% from the previous week on the favorable harvest conditions.
The reading was better than markets were expecting, as average pre-report analyst estimates totaled 40% for the same time period. The week’s harvest progress was also 6% higher than the five-year average after untimely rains a couple weeks ago threatened to slow harvest paces in the U.S.
Winter wheat condition ratings held steady at 30% good to excellent for a second straight week. Analysts had been hoping for a 1% improvement on the week but to no avail.
USDA reported spring wheat heading progress for the first time in the 2022 growing cycle in yesterday’s Crop Progress report. Through June 26, only 8% of the anticipated 2022 spring wheat crop had reached the heading phase. The five-year average for the same reporting period stands at 34%, reflecting the severe planting delays experienced earlier this spring in the Northern Plains.
Condition ratings for spring wheat held steady at 60% good to excellent for a second consecutive week. That value matched exactly with analyst estimates ahead of yesterday’s Crop Progress report.
Weather
Today is slated to host another day of mostly clear skies across the Heartland, according to NOAA’s short-range forecasts. The Upper Midwest and Great Lakes region could see a chance of showers this evening, but expected precipitation over the next 24 hours for the area is not likely to top 0.75 inches.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending on the warm side for the Heartland during the first week of July. But both forecasts are showing above average chances for moisture during that time, which should help to advance crop development over the next couple weeks.
And that’s so fitting because we almost finished installing the sprinkler system in our yard, so of course that’s when it finally starts to rain on the Colorado Front Range. But also – you’re welcome!
What else I’m reading this morning on our website, FarmFutures.com:
Bryce Knorr ponders the end of corn’s bullish run and what the market needs to go higher following last week’s selloff in the grain markets.
Last week, the Commerce Department found that UAN imports from Russia and Trinidad and Tobago were dumped onto the market at unfairly subsidized rates. However, the Commerce Department will not announce if duties will be placed on these imports until later this summer.
Independence Day is this weekend and cookout costs are 17% higher than last year due in large part to higher burger prices.
Do you spend all day putting out fires? Darren Frye has three actions to more efficiently utilize your time.
Naomi Blohm previews this week’s June 30 USDA Acreage and Quarterly Grain Stocks report, noting that amid historical stocks, next week’s report will likely set the price tone for the summer.
Morning Ag Commodity Prices – 6/28/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.5675
7.4425
7.55
0.1075
1.44%
SEP ’22 CORN
$ / BSH
6.73
6.6225
6.6975
0.085
1.29%
DEC ’22 CORN
$ / BSH
6.66
6.5525
6.6275
0.0975
1.49%
MAR ’23 CORN
$ / BSH
6.7175
6.615
6.6875
0.0975
1.48%
MAY ’23 CORN
$ / BSH
6.74
6.64
6.7125
0.095
1.44%
JUL ’23 CORN
$ / BSH
6.7025
6.61
6.6825
0.095
1.44%
SEP ’23 CORN
$ / BSH
6.2975
6.22
6.2975
0.1025
1.65%
JUL ’22 SOYBEANS
$ / BSH
16.51
16.335
16.475
0.17
1.04%
AUG ’22 SOYBEANS
$ / BSH
15.5225
15.3175
15.4275
0.1325
0.87%
SEP ’22 SOYBEANS
$ / BSH
14.7275
14.5525
14.66
0.14
0.96%
NOV ’22 SOYBEANS
$ / BSH
14.545
14.36
14.48
0.1525
1.06%
JAN ’23 SOYBEANS
$ / BSH
14.58
14.3975
14.52
0.1525
1.06%
MAR ’23 SOYBEANS
$ / BSH
14.475
14.3275
14.44
0.14
0.98%
MAY ’23 SOYBEANS
$ / BSH
14.4425
14.3075
14.405
0.1175
0.82%
JUL ’23 SOYBEANS
$ / BSH
14.4
14.3175
14.3675
0.1125
0.79%
AUG ’23 SOYBEANS
$ / BSH
12.5
#N/A
14.0325
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
72.23
70.78
72.15
1.33
1.88%
AUG ’22 SOYBEAN OIL
$ / LB
69.3
67.7
69.18
1.33
1.96%
JUL ’22 SOY MEAL
$ / TON
447.7
441
446
3.3
0.75%
AUG ’22 SOY MEAL
$ / TON
418.1
411.5
413.8
-0.8
-0.19%
SEP ’22 SOY MEAL
$ / TON
403.9
397.8
399.6
-0.6
-0.15%
OCT ’22 SOY MEAL
$ / TON
395.2
390.5
391.6
-0.8
-0.20%
DEC ’22 SOY MEAL
$ / TON
397.5
391.6
393.3
-0.9
-0.23%
JUL ’22 Chicago SRW
$ / BSH
9.2875
9.0725
9.25
0.21
2.32%
SEP ’22 Chicago SRW
$ / BSH
9.43
9.21
9.39
0.215
2.34%
DEC ’22 Chicago SRW
$ / BSH
9.57
9.365
9.5375
0.2075
2.22%
MAR ’23 Chicago SRW
$ / BSH
9.65
9.4675
9.625
0.1925
2.04%
MAY ’23 Chicago SRW
$ / BSH
9.6875
9.5
9.6625
0.19
2.01%
JUL ’22 Kansas City HRW
$ / BSH
9.885
9.7275
9.84
0.1125
1.16%
SEP ’22 Kansas City HRW
$ / BSH
9.95
9.7875
9.905
0.1175
1.20%
DEC ’22 Kansas City HRW
$ / BSH
10.0475
9.885
10.0025
0.115
1.16%
MAR ’23 Kansas City HRW
$ / BSH
10.115
9.9525
10.065
0.1075
1.08%
MAY ’23 Kansas City HRW
$ / BSH
10.0475
9.9025
10.015
0.1075
1.09%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.48
10.375
10.41
-0.005
-0.05%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.5125
10.3975
10.4425
-0.0025
-0.02%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.59
10.475
10.515
-0.0025
-0.02%
MAR ’23 MLPS Spring Wheat
$ / BSH
10.6825
10.6
10.6275
-0.01
-0.09%
MAY ’23 MLPS Spring Wheat
$ / BSH
10.69
10.69
10.69
0.0125
0.12%
SEP ’21 ICE Dollar Index
$
103.835
103.505
103.815
0.137
0.13%
AU ’21 Light Crude
$ / BBL
111.72
109.79
111.17
1.6
1.46%
SE ’21 Light Crude
$ / BBL
108.58
106.59
108.11
1.73
1.63%
JUL ’22 ULS Diesel
$ /U GAL
4.333
4.21
4.22
-0.0102
-0.24%
AUG ’22 ULS Diesel
$ /U GAL
4.221
4.0948
4.106
-0.0132
-0.32%
JUL ’22 Gasoline
$ /U GAL
3.904
3.8501
3.8919
0.0547
1.43%
AUG ’22 Gasoline
$ /U GAL
3.8184
3.7542
3.7964
0.0565
1.51%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
174.125
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
176.8
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
136.25
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
133.475
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
110.175
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
104.875
0
0.00%
JUN ’22 Class III Milk
$ / CWT
24.33
#N/A
24.33
0
0.00%
JUL ’22 Class III Milk
$ / CWT
22.54
22.46
22.5
0.07
0.31%
AUG ’22 Class III Milk
$ / CWT
23.08
23.08
23.08
0
0.00%
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