Afternoon report: Wheat suffers moderate setback, with corn lightly mixed on Monday
Following a holiday-shortened week to celebrate Thanksgiving, grain markets returned to a full day of trading on Monday, with mixed results. Soybeans were the biggest benefactors, tracking nearly 1.5% higher today. Wheat prices were not so fortunate, trending 1% to 2.5% lower following a round of technical selling. Corn failed to move the needle much in either direction, finishing with lightly mixed results.
Variable rain and snow will be possible for parts of the Midwest and Plains between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. The eastern Corn Belt has the best chance to see the largest totals during this time. NOAA’s new 8-to-14-day outlook predicts seasonally wet weather possible for most of the U.S. between December 5 and December 11, with cooler-than-normal temperatures sweeping across the Plains and into the Midwest next week.
Protests against Covid-related lockdowns in China put Wall St. on edge to start the week, with the Dow sinking 459 points lower in afternoon trading to 33,899. Energy futures were mixed, meantime, with crude oil up 1.5% this afternoon to $77 per barrel. Gasoline firmed 0.5%, while diesel retreated 0.25% lower. The U.S. Dollar firmed moderately.
Last Friday, commodity funds were net buyers of corn (+2,000) contracts but were net sellers of soybeans (-1,000), soymeal (-500), soyoil (-1,000) and CBOT wheat (-7,000).
Corn
Corn prices suffered a minor technical setback overnight but managed to finish Monday’s session lightly mixed following some uneven technical maneuvering today. December futures picked up 0.75 cents to $6.6875, while March futures eased 0.25 cents lower to $6.71.
Corn basis bids were mostly steady across the central U.S. on Monday but did tilt 7 cents lower at an Iowa processor today.
USDA releases its next crop progress report this afternoon, but the agency probably won’t be updating its corn and soybean harvest data. Through November 13, 96% of both crops had been harvest and are considered virtually complete at this time.
Corn export inspections were disappointing for the week ending November 24 after only reaching 11.9 million bushels. That was below the entire range of trade estimates, which came in between 15.7 million and 33.5 million bushels. Mexico accounted for the majority of that total, with 8.2 million bushels. Cumulative totals for the 2022/23 marketing year are still trending moderately behind last year’s pace, with 228.6 million bushels.
Mexico’s president, Andres Manuel Lopez Obrador, is meeting with U.S. Secretary of Agriculture Tom Vilsack today to discuss the country’s plans to ban GMO corn imports starting in 2024. That move will be catastrophic for U.S. export prospects to Mexico – it could cut sales to Mexico in half, if enacted. The U.S. may have grounds to challenge the ban under current USMCA trade rules.
South Korea purchased 5.4 million bushels of animal feed corn sourced from optional origins in an international tender that closed earlier today. The grain is for arrival by the beginning of March.
Preliminary volume estimates were for 358,849 contracts, trending significantly higher than Friday’s final count of 179,145.
Soybeans
Soybean prices shook off modest overnight losses after a new flash sale and a solid round of export inspection data triggered a round of technical buying on Monday. January futures rose 20.25 cents to $14.5650, with March futures up 19.5 cents to $14.6175.
Soybean basis bids held steady across the central U.S. on Monday.
Private exporters announced to USDA the sale of 4.0 million bushels of soybeans for delivery to unknown destinations during the 2022/23 marketing year, which began September 1.
Soybean export inspections were robust last week, with 74.3 million bushels. That was near the middle of trade estimates, which ranged between 66.1 million and 82.7 million bushels. China accounted for nearly three-fourths of that total, with 55.0 million bushels. Cumulative totals for the 2022/23 marketing year are still tracking slightly behind last year’s pace, with 707.3 million bushels.
Brazilian consultancy AgRural reported that the country has planted 87% of its intended 2022/23 soybean acres so far. Total plantings could reach 106.2 million acres, and AgRural is predicting a record-breaking harvest of 5.530 billion bushels this season. AgRural also reported some “erratic” rains this past week, which raises concerns “in areas that have been dry for longer, especially as temperatures are on the rise.”
Will corn and soybean prices have “room to run” in 2023? Grain market analyst Bryce Knorr sees some positive potential this coming year. “November 2023 soybean futures have been stuck in a trading range all fall, but that’s par for the course,” he notes. “Futures tend to rally on average through the spring and into June, even in years of normal production. And in bullish years gains can keep going, sometimes into the end of summer or beyond.” Knorr offers additional analysis in today’s Ag Marketing IQ blog – click here to learn more.
China’s recent struggles with Covid-19 could lead to across-the-board demand headwinds heading into 2023. Bloomberg did some recent reporting on the unfolding situation – click here to learn more.
Preliminary volume estimates were for 167,692 contracts, which more than doubled Friday’s final count of 70,549.
Wheat
Wheat prices suffered variable losses following a round of technical selling on Monday on general demand concerns coupled with an uptick in competition from the Black Sea region. December Chicago SRW futures fell 19.25 cents to $7.5625, December Kansas City HRW futures dropped 18.75 cents to $9.0325, and December MGEX spring wheat futures faded 7.5 cents to $9.4975.
Ahead of the next USDA crop progress report, out Monday afternoon and covering the week through November 27, analysts expect the agency to increase winter wheat quality ratings by a point, with 33% of the crop in good-to-excellent condition. Individual trade guesses ranged between 32% and 35%.
Wheat export inspections were largely lackluster after only reaching 7.3 million bushels last week. That was on the very low end of trade estimates, which ranged between 7.3 million and 14.7 million bushels. Mexico was the No. 1 destination, with 2.3 million bushels. Cumulative totals for the 2022/23 marketing year are slightly below last year’s pace so far, with 385.4 million bushels.
Ukraine’s 2022/23 grain exports are down 32% from last year’s pace so far amid as the country continues to deal with the Russian invasion. Total exports so far includes wheat sales totaling 242.5 million bushels, plus 358.3 million bushels of corn sales and 64.3 million bushels of barley sales. Ukraine is among the world’s top exporters of each of these commodities.
Russian consultancy Sovecon estimates that the country’s wheat exports will reach 161.7 million bushels in November. That will be slightly above October’s tally, and it will be the highest monthly total in more than a year, if realized.
China sold 1.5 million bushels of its state reserves of imported wheat in an auction held on November 23, which was 100% of the total available for sale. China has offered a series of similarly sized auctions earlier this fall in an attempt to boost local supplies.
Preliminary volume estimates were for 138,598 CBOT contracts, which was well above Friday’s final count of 58,217.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
cents/bu
22-Dec
670
661
668.75
0.75
23-Mar
672.5
664
671.25
-0.25
Soybeans
23-Jan
1461.75
1424
1457.25
20.25
23-Mar
1465.75
1430
1462.75
19.5
Soymeal $/ton
23-Jan
413.9
403.3
411.7
4.9
Soyoil cents/lb
23-Jan
73.4
70.27
73.12
1.39
Wheat $/bushel
22-Dec
774.25
750.25
756.75
-19.25
23-Mar
796.25
773.25
780.75
-16.75
KC Wheat
22-Dec
924.75
898.25
904.75
-18.75
23-Mar
913.25
888
895
-18.5
MPLS Wheat
22-Dec
970.5
947.75
951.25
-7.5
23-Mar
961
937
939.75
-10
Live Cattle cents/lb
22-Dec
153.35
152.3
152.525
-0.55
Feeder Cattle cents/lb
23-Mar
182.35
180.275
180.575
-0.975
Lean Hogs cents/lb
23-Feb
88.15
84.575
85.075
-3.425
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Dec
77.84
73.6
77.23
0.95
Diesel
22-Dec
3.272
3.178
3.2146
-0.0245
Unleaded Gasoline $/gallon
22-Dec
2.3709
2.2782
2.3347
0.0065
Natural Gas
23-Jan
7.375
6.929
7.336
0.006
U.S. Dollar Index
22-Dec
106.555
105.255
106.545
0.628
Gold $/ounce
23-Jan
1770.9
1746.6
1739.3
-14.7
Copper
22-Nov
3.6095
3.5785
3.6095
-0.017
Fertilizer Swaps
(as of 11/18)
DAP Tampa-index
692.0
-8
DAP-New Orleans
630.0
0
Urea-New Orleans
512.5
0
Urea-Middle East
556.5
-31
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
535.0
0
