Morning report: Spring fieldwork remains at a standstill as cool and wet weather prevails across the Midwest. (Comments are updated by 7:30 a.m. Central Time.)
Corn mixed
Soybeans down 2-9 cents; Soymeal down $2.20/ton; Soyoil up $0.20/lb
Chicago wheat down 7-8 cents; Kansas City wheat down 4-10 cents; Minneapolis wheat mixed
*Prices as of 7:10am CDT.
Good morning! Our Feedback from the Field series is live for the 2022 season! Just 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!
Profits steady in corn country
My main focus for much of this year so far has been to report on rising farmgate expenses and its role in impacting 2022 acreage decisions this year. Less than two weeks ago, USDA cited this reasoning as the key driver behind a massive pullback in corn acres across the country and surging soybean and small grain acreage in its place.
Updated crop budgets out of the University of Illinois yesterday highlighted growing pressure from ever-rising input costs this spring. But they also reflected surging commodity prices, finding that even in the era of soaring costs, revenue options have risen faster than expenses to provide corn and soybean growers profitable 2022 margins.
The Farmdoc bulletin only displayed budgets for high-productivity farmland in Central Illinois, which is not necessarily representative of production outlays across the rest of the state. But the Illinois researchers tasked with budget calculations hinted those results were similar for Central Illinois growers with low-productivity soils and Northern Illinois growers as well.
For the full revenue and cost report for Illinois crops, click here.
My redneck math uses a combination of U of I and Purdue crop budgets (no nepotism – just good economics) to derive earnings estimates. No matter how you slice and dice higher input costs in 2022, corn and soybean growers in the heart of the Corn Belt are going to be profitable this year.
Plus – some of these calculations are a bit on the conservative side. Researchers admitted calculations for prices were on the lower side “because some of 2022 production has been forward priced on most farms, likely at lower prices than current fall bids.”
Chicago December 2022 corn futures clawed back losses last night to start the morning off at $7.325/bushel – another new life-of-contract high for 2022 harvest prices.
U of I’s yield estimates were also a bit conservative for my liking. “These are trend yields, representing likely yields under normal growing conditions for 2022,” researchers noted of the 225 bushel-per-acre 2022 corn yield forecast.
I agree with the researchers’ need for a conservative estimate here, but I encourage farmers to use their own estimates when calculating crop budgets. Yields on my family’s dairy farm in Northern Illinois easily surpassed 225 bpa last year, so if you have invested wisely in building a good soil fertility program, make sure that its benefits are captured in your yield estimates and profit expectations this year.
It’s amazing what $7/bushel corn can do. The next challenge – getting it planted!
Corn
Corn planting progress in number two corn producer China could be delayed this spring due to COVID lockdowns. That news, paired with rising energy prices, lifted new crop corn futures $0.01-$0.02/bushel, though old crop futures drifted $0.01-$0.02/bushel lower as profit-takers took the top off yesterday’s five-week price highs.
After a somewhat lackluster outing in last week’s Petroleum Inventory Status report, weekly ethanol production data due out today from the U.S. Energy Information Administration will be poised for something of a comeback following yesterday’s news that the EPA will allow for 15% ethanol blends to be added to gasoline this summer.
Lower cash bids at Midwestern ethanol plants suggest that high corn prices are eroding some of the ethanol producers’ profit margins, which could result in lower output numbers in today’s report. But even if output levels don’t jump back up to last month’s highs in today’s report, there is still optimism for higher output ahead.
Soybeans
Soybean futures edged $0.03-$0.10/bushel lower despite an ongoing truckers strike in Argentina. Lower import volumes from top global soybean buyer China contributed to the bearish price action in the soybean complex this morning.
Slow soybean shipping speeds out of Brazil due to weather delays and slim soybean crush margins in China led China to import fewer soybeans in March 2022 than it did the prior year.
“The world’s top importer of soybeans brought in 233.3 million bushels of the oilseed in March, down 18% from 285.5 million bushels in March 2021, General Administration of Customs data showed,” a Reuters report stated this morning.
At 745.1 million bushels imported between January – March 2022, China’s soybean import rates for the first quarter of 2022 were about 4.2% lower than the same time in 2021.
Argentina’s trucker strike has essentially ground grain flows to a halt in the South American country during the busiest time of year for the country’s grain export markets.
“We will come out of the strike with a new rate schedule. Otherwise we won’t come out of the strike at all,” Pablo Agolanti, vice president of the Federation of Argentine Carriers (FETRA), told Reuters.
While trucking activity is stopped as haulers protest low freight rates in the face of rising inflation, some cargoes are being filled with grain for export thanks to reserve storage at the export loading facilities.
“FETRA is demanding an increase in grain rates that were agreed with the government and agricultural associations at the beginning of February, due to a spike in fuel prices. It also wants assured supply of fuel amid worries over diesel supply,” states a Reuters report published yesterday on the topic.
Soybean and corn harvest in Argentina is currently underway, adding pressure to the situation. Argentina’s supplies are a hot commodity this year as the Black Sea conflict adds further scarcity premiums to the little remaining grain and oilseed supplies available on the global market.
Wheat
Higher forecasts for German wheat production this summer helped take the top off yesterday’s three-day rally in the wheat markets, sending futures $0.01-$0.04/bushel lower this morning. Losses were capped by supply worries from the ongoing Russian-Ukrainian conflict.
“The tightness of grain supply this year is stronger than the decline in demand,” analysts at Zhongzhou Futures in China told Reuters overnight.
Weather
Temperatures in the Central Midwest and Eastern Corn Belt will warm into the 60s and 70s today, according to NOAA’s short-range forecasts. But any hopes for early planting progress will be thwarted by cooler temperatures and showers that are likely to linger over the region over the next couple days. Up to of an inch of rain is expected East of the Mississippi River today.
The Northern Plains will see more heavy snowfall today along with some mixed wintery precipitation. It doesn’t look good for spring wheat planting progress, which was a percentage point above the five-year average this week at 6% complete as of Sunday. It will likely further delay sowing in North Dakota and northern Minnesota.
Financials
Yesterday’s Consumer Price Index (CPI) update pointed to a 8.5% increase in year-over-year prices in March 2022, marking the highest increase in consumer prices since December 1981. The prior month’s price increases – then a forty-year high – came in at 7.9%.
Soaring food and energy costs in the wake of Russia’s unprovoked military invasion into Ukraine and subsequent Western banking sanctions levied on the country were the driving force behind the continued price surge in consumer goods. However, supply chain log jams and post-pandemic spending imbalances continue to fan the flames of inflationary pressures.
Rising COVID lockdowns in China will likely stall any progress made in clearing out supply chain. “Those pose risks that the so-called normalization of supply chains takes longer to materialize,” Blerina Uruci, U.S. economist at T. Rowe Price Group Inc. told the Wall Street Journal yesterday.
While the Federal Reserve typically relies more heavily on the Personal Consumption Expenditure (PCE) index to measure inflation – not due out until the end of the month – the clear runup in prices suggests that it could raise interest rates by a half a percentage point instead of the quarter point at the next Federal Open Market Committee (FOMC) meeting on May 3-4.
It’s one of my favorite times of year – earnings season! Wall Street matched my enthusiasm, with S&P 500 futures drifting 0.61% higher this morning on the corporate earnings optimism to $4,419.75 at last glance.
Energy futures continued higher as Russia doubles down on continuing its “special military operation” in Ukraine. China scaled back some of its COVID lockdown measures, also adding bullish pressure to oil futures this morning.
Also worth a read on our website, FarmFutures.com:
Bryce Knorr explains why winter wheat conditions are more important than ever this year – and what it means for growers. Cutting nitrogen in 2022 could negatively impact yields. Is it worth it? Our team’s latest coverage from last Friday’s WASDE reports.
Plus, my latest E-corn-omics post features potential pricing opportunities from Friday’s reports.
The Brazilian safrinha corn crop is looking better each day, Commstock Investment’s Matthew Kruse writes. What that means for U.S. corn growers in a recent Ag Marketing IQ column.
The March 2022 Farm Futures survey found that fertilizer availability will not be as big of an issue for growers this spring. The bigger issues on farmers’ minds? Chemical and parts availability and, as always, weather.
Morning Ag Commodity Prices – 4/13/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.7525
7.695
7.7375
-0.025
-0.32%
JUL ’22 CORN
$ / BSH
7.72
7.6675
7.7075
-0.0175
-0.23%
SEP ’22 CORN
$ / BSH
7.45
7.3975
7.4375
0
0.00%
DEC ’22 CORN
$ / BSH
7.34
7.2925
7.3275
0.0175
0.24%
MAR ’23 CORN
$ / BSH
7.3625
7.315
7.3475
0.0175
0.24%
MAY ’23 CORN
$ / BSH
7.36
7.32
7.3475
0.0125
0.17%
JUL ’23 CORN
$ / BSH
7.3125
7.2725
7.3
0.01
0.14%
MAY ’22 SOYBEANS
$ / BSH
16.75
16.5875
16.6875
-0.015
-0.09%
JUL ’22 SOYBEANS
$ / BSH
16.64
16.485
16.5825
-0.0225
-0.14%
AUG ’22 SOYBEANS
$ / BSH
16.215
16.08
16.1725
-0.0325
-0.20%
SEP ’22 SOYBEANS
$ / BSH
15.46
15.35
15.425
-0.035
-0.23%
NOV ’22 SOYBEANS
$ / BSH
15.05
14.945
15.03
-0.04
-0.27%
JAN ’23 SOYBEANS
$ / BSH
15.045
14.9475
15.025
-0.04
-0.27%
MAR ’23 SOYBEANS
$ / BSH
14.825
14.7425
14.81
-0.0525
-0.35%
MAY ’23 SOYBEANS
$ / BSH
14.7875
14.735
14.7675
-0.0575
-0.39%
JUL ’23 SOYBEANS
$ / BSH
14.775
14.72
14.775
-0.04
-0.27%
MAY ’22 SOYBEAN OIL
$ / LB
75.79
74.95
75.74
0.31
0.41%
JUL ’22 SOYBEAN OIL
$ / LB
74.32
73.51
74.22
0.2
0.27%
MAY ’22 SOY MEAL
$ / TON
462.9
457.7
458.8
-2.1
-0.46%
JUL ’22 SOY MEAL
$ / TON
459.7
454.2
455.6
-2.1
-0.46%
AUG ’22 SOY MEAL
$ / TON
449.9
445.9
446.7
-2.6
-0.58%
SEP ’22 SOY MEAL
$ / TON
438
434.6
435.8
-2.7
-0.62%
OCT ’22 SOY MEAL
$ / TON
426.9
423.6
424.6
-2.9
-0.68%
MAY ’22 Chicago SRW
$ / BSH
11.11
10.78
10.9925
-0.045
-0.41%
JUL ’22 Chicago SRW
$ / BSH
11.1925
10.8675
11.0825
-0.0425
-0.38%
SEP ’22 Chicago SRW
$ / BSH
11.16
10.845
11.05
-0.04
-0.36%
DEC ’22 Chicago SRW
$ / BSH
11.085
10.79
10.9825
-0.0325
-0.30%
MAR ’23 Chicago SRW
$ / BSH
10.975
10.7325
10.88
-0.025
-0.23%
MAY ’22 Kansas City HRW
$ / BSH
11.6975
11.4075
11.5725
-0.05
-0.43%
JUL ’22 Kansas City HRW
$ / BSH
11.7425
11.445
11.6275
-0.04
-0.34%
SEP ’22 Kansas City HRW
$ / BSH
11.7225
11.4325
11.6075
-0.04
-0.34%
DEC ’22 Kansas City HRW
$ / BSH
11.6775
11.4125
11.615
-0.0025
-0.02%
MAR ’23 Kansas City HRW
$ / BSH
11.565
11.495
11.565
0
0.00%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.585
11.4775
11.555
-0.0075
-0.06%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.5825
11.44
11.56
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
11.39
11.2475
11.365
0.01
0.09%
DEC ’22 MLPS Spring Wheat
$ / BSH
11.3925
11.25
11.38
0.0325
0.29%
MAR ’23 MLPS Spring Wheat
$ / BSH
11.3325
#N/A
11.31
0
0.00%
JUN ’21 ICE Dollar Index
$
100.505
100.195
100.38
0.088
0.09%
MA ’21 Light Crude
$ / BBL
102.89
99.87
101.85
1.25
1.24%
JU ’21 Light Crude
$ / BBL
102.43
99.51
101.42
1.27
1.27%
MAY ’22 ULS Diesel
$ /U GAL
3.5441
3.46
3.5197
0.0553
1.60%
JUN ’22 ULS Diesel
$ /U GAL
3.3943
3.3141
3.3689
0.0409
1.23%
MAY ’22 Gasoline
$ /U GAL
3.214
3.1388
3.1925
0.0387
1.23%
JUN ’22 Gasoline
$ /U GAL
3.1945
3.1218
3.1711
0.0336
1.07%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
157.75
0
0.00%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
160.925
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
139.95
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
136.3
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
99.625
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
112.25
0
0.00%
APR ’22 Class III Milk
$ / CWT
24.17
24.15
24.17
0.07
0.29%
MAY ’22 Class III Milk
$ / CWT
25.01
24.85
25.01
0.2
0.81%
JUN ’22 Class III Milk
$ / CWT
24.98
24.9
24.95
0.12
0.48%
