Morning report: Recession worries loom large. Wheat rises on bargain buying. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 10-20 cents
Soybeans down 27-33 cents; Soymeal down $6.20/ton; Soyoil down $0.02/lb
Chicago wheat down 17-18 cents; Kansas City wheat down 23-24 cents; Minneapolis wheat down 16-18 cents
*Prices as of 7:00am 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!
Corn
Corn prices tumbled $0.09-$0.18/bushel overnight on easing concerns about accessibility to Ukrainian corn and Russian fertilizer stocks after a U.S. official claimed that Russian food and fertilizer shipments were not subject to sanctions (though the financial institutions used to facilitate trade of these products still are under sanctions).
Looming global recession concerns are also taking a toll on the U.S. grain and oilseed markets again this morning, though the energy market looks to have recovered somewhat from yesterday’s selloff. Rains forecast for the Midwest over the weekend bode favorably for crop development.
U.S. State Department Bureau of Economic and Business Affairs Assistant Secretary, Ramin Toloui, reaffirmed the U.S.’s support of U.N. and Turkish efforts to free Ukrainian grain and Russian grain and fertilizer shipments from war conflicts.
“Stymied investor risk appetite amid discussions of a humanitarian export corridor for Ukrainian food exports, downside global growth risks and hand to mouth consumer buying” have kept a lid on prices despite tight global supplies, J.P.Morgan analysts said in a note, according to Reuters.
Soybeans
Soybean futures continued their selloff this morning, falling $0.27-$0.33/bushel lower. New crop November 2022 futures backed away from a late January 2022 low of $14.33/bushel overnight, now hovering around the $14.45/bushel benchmark.
A cool and wet weekend forecast in the Midwest, looming recession fears, and uncertainty stemming from future Chinese demand prospects all contributed to the bearish run on the soybean market this morning.
A Reuters report released overnight found that analysts and traders in China expect that soymeal inventories within the country have tripled over the last three months, dropping soymeal futures on the Dalian Exchange 6% lower overnight.
Mysteel, a Chinese commodities consultancy, estimated last week’s ending soymeal inventories in China at 1.09 million metric tonnes (MMT). It was a 14% boost from the previous week, in addition to three times the volume of March 2022 stocks.
Steady Chinese soybean importing rates have helped to replenish supplies. Easing soybean prices have also helped to pull some hog farmers into the black this month, who have been losing money on hog production due to high soybean prices for the past year. But the newfound profitability is not likely enough to trigger expansion plans for Chinese hog producers.
“Domestically, soymeal inventories have been rising and pressure has been quite massive,” Zou Honglin, analyst with the agriculture section of Mysteel, a China-based commodity consultancy, told Reuters. “After edible oils plunged, the whole market direction has changed.”
This finding is a bit of a mixed bag for U.S. soybean producers. While it reaffirms unseasonably strong export demand this spring amid Brazilian crop shortfalls, it could reduce soy demand from China down the road.
Chicago soybean futures prices are trading 20% lower over the past two weeks on weather improvements in the U.S. If Chinese demand patterns shift away from the U.S. during peak export season during the Fall 2022 harvest, prices could fall even lower.
Wheat
Harvest pressure in the Northern Hemisphere pushed wheat prices $0.15-$0.24/bushel lower overnight. Ongoing negotiations for grain and fertilizer access in Ukraine and Russia showed signs of optimism, which could help ease tight global supply constraints.
Japan purchased 6.2 million bushels of food-quality wheat overnight in a regular tender. The grain is expected to be sourced from the U.S., Canada, and Australia with 2.2 million of those bushels originated from the U.S. Purchased varieties include western white, semi-hard red winter, and dark northern spring wheat.
Plus, ongoing drama from the Black Sea conflict:
Russia & Ukraine
India’s wheat export ban has forced its top buyer, Bangladesh, to turn to Russia for wheat supplies. The Southeast Asian country is slated to be the world’s second-largest buyer of wheat during the 2022/23 marketing year.
Despite financial sanctions imposed by the West, Russian wheat still trades at a discount to alternative suppliers. Following India’s wheat export ban, global suppliers increased Bangladesh’s price for wheat by 15%, fueling inflationary pressures within the country.
“There are many countries who can supply wheat to Bangladesh, but key issue is price. Russia can offer discount over global prices,” a New Delhi-based dealer with a global trading firm told Reuters.
Bangladesh’s wheat stocks are currently at a three-year low. It is likely the country would purchase small volumes from Russia and increase those amounts over time.
Meanwhile, Turkey is investigating Ukrainian claims that a recent Turkish wheat purchase from Russia was originated with stolen Ukrainian grain. Turkish Foreign Minister Mevlut Cavusoglu said overnight that so far, the Turkish investigation has not found evidence of any stolen supplies.
“We took each claim seriously and carried out investigations based on these claims. We saw that the ships’ port of departure and the origin of the goods is Russia on the records, based on the investigations we made after claims were made about Turkey,” Cavusoglu said.
“We are against Ukrainian grains or other goods being taken by Russia or any other nation and then illegitimately, illegally being sold to international markets, and we, as Turkey, will not allow these goods to come to us.”
Weather
Chances for scattered showers will be possible today across the Upper Midwest and Central Plains, according to NOAA’s short-range forecasts. Any precipitation is likely to be light, though portions of the Nebraska-Kansas border could see up to an inch of accumulation.
More showers are likely for the Heartland through the weekend, which bode well for crop development.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending warmer for the Heartland in the short run and heating up within the next two weeks. During that time, chances for moisture across the Heartland are forecast above average.
However, as that time frame moves into the 8- to 14-day forecast, rains will give way to below average chances for moisture in the Eastern Corn Belt. One bright spot – drought-stressed regions of the Western Plains are forecast to receive above average chances for precipitation during that time (yay for my yard!).
Financials
Stock markets edged slightly higher overnight, with the S&P 500 gaining 0.62% to $3,786.25 at last glance. Markets wavered between losses and gains this morning, ahead of Federal Reserve Chairman Jerome Powell’s testimony to Congress today.
Yesterday, Powell warned Congress that the Fed would continue to raise interest rates until inflation could be brought under control and cautioned that high rates could potentially lead to a recession.
“It’s not our intended outcome at all,” Powell tried to assure lawmakers yesterday. “But it’s certainly a possibility.”
“We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential” to thwart inflation rates currently notching 40-year highs.
Powell has scaled back his hopes for a “soft landing” in his comments over the past 10 days as supply chain issues and high commodity prices continue to persist.
“Inflation is at the center of all this but there is also fading growth and interest rates are going up. All of that together is a horrible cocktail and you just need to step aside and wait for that to work itself out,” Hani Redha, a portfolio manager at PineBridge Investments, told the Wall Street Journal this morning.
What else I’m reading this morning on our website, FarmFutures.com:
AgMarket.Net’s Bill Biedermann explains why cooler and wetter forecasts are tanking markets and how to prepare for potential upside.
The Senate advanced two cattle market reform bills to the Senate floor for consideration. Jacqui Fatka breaks down what it means for farmers.
A bearish turn on Wall Street has trickled over into the commodity space. Bryce Knorr analyzes the murky impacts of the stock market’s downturn on grain markets.
Matthew Kruse analyzes how much heat corn can tolerate – and what that means for grain prices if the mercury stays high this summer.
Roger Wright explains how to calculate the time value of an option.
Morning Ag Commodity Prices – 6/23/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.6725
7.525
7.59
-0.09
-1.17%
SEP ’22 CORN
$ / BSH
7.0075
6.8
6.865
-0.155
-2.21%
DEC ’22 CORN
$ / BSH
6.9275
6.7
6.76
-0.1775
-2.56%
MAR ’23 CORN
$ / BSH
6.975
6.755
6.81
-0.18
-2.58%
MAY ’23 CORN
$ / BSH
6.9725
6.7825
6.84
-0.165
-2.36%
JUL ’23 CORN
$ / BSH
6.935
6.7375
6.795
-0.17
-2.44%
SEP ’23 CORN
$ / BSH
6.415
6.32
6.34
-0.14
-2.16%
JUL ’22 SOYBEANS
$ / BSH
16.555
16.105
16.2175
-0.31
-1.88%
AUG ’22 SOYBEANS
$ / BSH
15.66
15.185
15.3175
-0.3225
-2.06%
SEP ’22 SOYBEANS
$ / BSH
14.9375
14.4875
14.615
-0.3175
-2.13%
NOV ’22 SOYBEANS
$ / BSH
14.785
14.3175
14.44
-0.325
-2.20%
JAN ’23 SOYBEANS
$ / BSH
14.83
14.3825
14.485
-0.325
-2.19%
MAR ’23 SOYBEANS
$ / BSH
14.78
14.35
14.445
-0.31
-2.10%
MAY ’23 SOYBEANS
$ / BSH
14.77
14.3625
14.4625
-0.29
-1.97%
JUL ’23 SOYBEANS
$ / BSH
14.7125
14.3575
14.4525
-0.2775
-1.88%
AUG ’23 SOYBEANS
$ / BSH
10.75
#N/A
14.53
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
71.12
69.05
70.54
-0.12
-0.17%
AUG ’22 SOYBEAN OIL
$ / LB
69.26
67.25
68.72
-0.16
-0.23%
JUL ’22 SOY MEAL
$ / TON
434.6
423.7
425.7
-6.7
-1.55%
AUG ’22 SOY MEAL
$ / TON
416.5
405
407.5
-7.8
-1.88%
SEP ’22 SOY MEAL
$ / TON
403.8
393.1
394.2
-10
-2.47%
OCT ’22 SOY MEAL
$ / TON
397.9
386.5
387.4
-10.5
-2.64%
DEC ’22 SOY MEAL
$ / TON
400.1
388.3
390
-9.9
-2.48%
JUL ’22 Chicago SRW
$ / BSH
9.745
9.47
9.61
-0.155
-1.59%
SEP ’22 Chicago SRW
$ / BSH
9.87
9.6075
9.7425
-0.145
-1.47%
DEC ’22 Chicago SRW
$ / BSH
10.0225
9.77
9.905
-0.1375
-1.37%
MAR ’23 Chicago SRW
$ / BSH
10.1225
9.8775
10
-0.15
-1.48%
MAY ’23 Chicago SRW
$ / BSH
10.16
9.925
10.0475
-0.14
-1.37%
JUL ’22 Kansas City HRW
$ / BSH
10.3775
10.0775
10.1825
-0.21
-2.02%
SEP ’22 Kansas City HRW
$ / BSH
10.44
10.145
10.2475
-0.21
-2.01%
DEC ’22 Kansas City HRW
$ / BSH
10.54
10.25
10.345
-0.21
-1.99%
MAR ’23 Kansas City HRW
$ / BSH
10.595
10.3175
10.415
-0.205
-1.93%
MAY ’23 Kansas City HRW
$ / BSH
10.335
10.335
10.335
-0.2225
-2.11%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.06
10.79
10.9025
-0.1575
-1.42%
SEP ’22 MLPS Spring Wheat
$ / BSH
11.0525
10.78
10.925
-0.1325
-1.20%
DEC ’22 MLPS Spring Wheat
$ / BSH
11.135
10.86
10.955
-0.1775
-1.59%
MAR ’23 MLPS Spring Wheat
$ / BSH
11.2175
10.9575
11.0525
-0.165
-1.47%
MAY ’23 MLPS Spring Wheat
$ / BSH
11.245
11.245
11.245
-0.0025
-0.02%
SEP ’21 ICE Dollar Index
$
104.545
103.84
104.295
0.314
0.30%
AU ’21 Light Crude
$ / BBL
106.32
102.32
106.31
0.12
0.11%
SE ’21 Light Crude
$ / BBL
103.97
100.24
103.93
-0.06
-0.06%
JUL ’22 ULS Diesel
$ /U GAL
4.415
4.3278
4.41
0.0054
0.12%
AUG ’22 ULS Diesel
$ /U GAL
4.2973
4.2032
4.2888
0.008
0.19%
JUL ’22 Gasoline
$ /U GAL
3.8539
3.7464
3.8473
0.0132
0.34%
AUG ’22 Gasoline
$ /U GAL
3.7459
3.6419
3.7405
0.0107
0.29%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
173.15
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
175.3
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
136.125
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
134.925
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
111.85
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
108.325
0
0.00%
JUN ’22 Class III Milk
$ / CWT
24.28
#N/A
24.31
0
0.00%
JUL ’22 Class III Milk
$ / CWT
23.48
#N/A
23.55
0
0.00%
AUG ’22 Class III Milk
$ / CWT
24.01
#N/A
24.12
0
0.00%
Get our top content delivered right to your inbox. Subscribe to our morning and afternoon newsletters!
