Morning report: Soybeans, wheat fall on easing global supply worries. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 1-2 cents
Soybeans down 1-4 cents, Soymeal up $0.60/ton, Soyoil down $0.42/lb
Chicago wheat down 4-5 cents, Kansas City wheat down 5 cents, Minneapolis wheat down 1-3 cents
*Prices as of 6:55am CST.
Happy early Thanksgiving! I hope you and yours have a happy and healthy Thanksgiving! And for those of you running a Turkey Trot race tomorrow – good luck and treat yoself to an extra slice of pie at dinner!
Remember – a lot of traders are out of the office for the holiday this week, so that can leave a lot of the price variation throughout the week dependent upon algo trading and low volumes.
Which is just a fancy way of saying that while Mom and Dad are away, the quants play! And that there might be some price activity this week that seems erratic and not easily explained. Don’t expect the markets to make or break your 2022 (or 2023) this week but remember that trading will revert back to normal(ish) conditions when everyone returns to the office next week.
Corn
Corn prices edged $0.01-$0.02/bushel higher this morning. There was little new news to support any further significant price action for higher corn prices this morning. But perhaps some strength was derived from a weaker dollar and bargain buying after yesterday’s losses due to a potential rail strike.
Brazilian trade group, Anec, expects that Brazil will export up to 1.97 billion bushels of corn next year, provided that La Ni?a weather conditions do not cause a yield-crushing drought in the coming months in Brazil.
Brazil recently implemented a new trade agreement with China that will increase Brazilian corn export sales to China. Anec officials expect that up to 197 million of those Brazilian corn bushels will be shipped to China, which would make Brazilian corn more competitive with U.S. supplies as China seeks to diversify its grain originators.
Cash corn prices showed some signs of strengthening at an Ohio elevator, an Eastern Iowa processor, an Indiana ethanol plant, and on the Illinois River yesterday. Cash prices continue to be offered at a premium in the Western Corn Belt and at a discount in the East.
Processors continue to offer premium cash prices for corn across the Midwest. Ethanol plants in most areas of the Corn Belt have reverted back to offering wide basis bids after earlier production slowdowns this fall. Meanwhile, cash bids at river locations remain at a $0.15-$0.40/bushel discount to nearby December 2022 futures prices.
On Monday night, an unlikely group of allies pushed the U.S. Congress to expand E15 blending. The American Petroleum Institute (API for short. AKA Big Oil), Renewable Fuels Association, and the National Farmers Union banded together to urge Congress to eliminate restrictions on E15 sales.
API’s reversal began earlier this year after the U.S. EPA eased some restrictions on E15 sales in corn-producing states across the Midwest this summer to reduce tight domestic fuel supplies. This summer’s EPA ruling, albeit temporary, created too much variation in fuel markets that is not likely sustainable for energy companies.
“A state-by-state approach would create a boutique fuel market in the Midwest and may negatively impact the reliability of gasoline supply to the region,” Will Hupman, API’s vice president of downstream policy, told Reuters last summer. “We urge Congress to pass legislation that allows for the year-round sale of E15 nationwide, cancels the pending requests from the Midwest states, and preserves access to lower ethanol gasoline blends.”
If Congress – and eventually the EPA – agree to scale back these restrictions, it would be a rare win-win situation for Big Oil and Big Ag, two groups who have traditionally been adversaries in these types of political discussions. It would boost ethanol output at a time when export prospects for U.S. corn are struggling and the cattle herd continues to shrink.
“By ensuring uniformity across the nation’s fuel supply chain, federal legislation will provide more flexibility and result in more consistent outcomes than a state-by-state regulatory landscape,” the groups said in a letter viewed by reporters at Reuters.
Soybeans
Soybean futures drifted $0.01-$0.04/bushel lower this morning primarily on worries about Chinese demand amid a surge in COVID-19 cases around the country, which could sharply reduce China’s export purchases from the U.S.
Soybean prices continue to hold at a price floor as markets remain uncertain about the fate of the Brazilian soybean crop during a third consecutive La Ni?a year. And while Brazil has received beneficial rains in recent weeks, its southern neighbor, Argentina, has not, research firm Hightower noted in a memo, as reported by Reuters.
Argentina’s crops are facing severe yield shortfalls as dry weather persists. “The situation in Argentina remains catastrophic as a result of the continuing drought. After having impacted wheat production, corn and soybean sowings are well behind a normal year,” consultancy Agritel told Reuters this morning.
Brazil is the world’s largest soybean exporter, while Argentina ranks as the third largest. Brazil and Argentina are the world’s second and third, respectively, largest corn exporters.
Cash soybean prices strengthened at an Ohio elevator location yesterday as well as at an Indiana and Iowa crush facility. Cash bids at processing locations around the Midwest range between $0.00-$0.65/bushel, with the higher premiums being offered in the Western Corn Belt. However, cash bids at river terminals destined for the U.S. Gulf remain at a discount to futures prices, varying between $0.00-$0.61/bushel below January 2023 futures prices.
Soymeal futures and cash prices drifted lower yesterday on soft end user demand ahead of the Thanksgiving holiday. Many feed buyers booked soymeal purchases in advance of the holiday, slowing end user orders even as crush margins are profitable and soymeal supplies are accumulating. Spot bids at the U.S. Gulf for export shipments also softened.
Soyoil prices rose over 1% in yesterday’s trading session. The gains followed higher Malaysian palm oil futures prices due to some bargain buying and favorable results from Indonesian biodiesel blending trials, which support higher usage of palm oil.
Some support was also derived from gains in the energy market after OPEC+ stood by its decision to keep planned output reductions in place going forward, which could constrain global energy supplies.
Wheat
Wheat prices fell $0.01-$0.05/bushel this morning as European wheat supplies remain more competitively priced on the global market. “Ideas that some European wheat ‘pencils in’ to being exported to the U.S. East Coast helped to pressure the market,” market research firm Hightower told Reuters.
Plus, additional bearish undertones were added by Russia’s massive crop, which had finally enjoyed a couple weeks of dominance on the global market until European supplies took back the lead this week.
Inputs
In an overnight televised meeting with Russian fertilizer industry leaders (including the oligarch Dmitry Mazepin who formerly controlled Uralchem-Uralkali – and a stake in Haas’s F1 team), Russian President Vladimir Putin reassured the leaders that Russian fertilizer supplies would soon begin flowing freely on the international market again.
“The main problem was probably the fact that quite a lot of fertilizer was frozen in European ports,” Mazepin said, dancing around accountability regarding the international banking sanctions that had been enforced on his business holdings following Russia’s unprovoked military invasion into Ukraine.
Russia has been losing ground in its Ukrainian campaign after illegally (by international laws, mind you) annexing four Ukrainian territories. And Putin is suddenly taking a more agreeable tone with international organizations regarding the war, following Moscow’s agreement to extend the Black Sea Grains Initiative.
“We will also work with the U.N., with our colleagues from the organization. We will see what comes of it,” Putin said following Mazepin’s disgruntled comments that the recent Black Sea Grains Initiative extension had not yet benefited Mazepin’s Uralchem-Uralkali fertilizer operation.
It will be interest to see going forward if Putin continues to take such a diplomatic tone on matters of war and commerce regarding Ukraine, especially as his inner circle clearly remains unhappy with the ongoing effects of international banking sanctions. The West is likely going to be unrelenting in their willingness to repeal the sanctions while Russian forces remain in Ukraine.
And as pressure at home mounts, it finally appears that Putin may have something to lose in this war after all.
Weather
Happy Thanksgiving week! Mostly clear skies are forecasted for the Heartland today, according to NOAA’s short-term forecasts. Thanksgiving Day is likely to see snow edge into the Northern and Central Plains while a much-needed rain system will develop over the Southern Plains. Snow accumulation will be very light over the next 24 hours, but areas of the Southern Plains could see up to an inch of rain during that time.
NOAA’s 6-10-day forecasts are now trending warmer and wetter for the end of the month. Higher than average temperature prospects are at play for the Southern and Central Plains and Eastern Corn Belt through the end of November, but cooler chances are prevailing for the West and Northern Plains in that time period. Chances for rain will be above average for the North and Central Plains and entire Midwest during that time while the Southern Plains remain dry.
Those trends will stay consistent in the 8-10-day outlook with only slight shifts expected. Temperature forecasts will remain warmer than usual for the Southeastern half of the country, but cooler temperatures will start to shift into the Upper Midwest during that time. The above average chances for rain will recede slightly from the Central Plains during that period and leave more dryness in its wake, but the higher chances for moisture will continue to linger over the Northern Plains, Great Lakes Region, and Eastern Corn Belt.
Financials
It’s been a quiet trading week on Wall Street. Despite global economic worries due to China’s tightening policies following its largest surge in COVID-19 cases since this spring, S&P 500 futures edged 0.18% higher to $4,017.75. Energy prices took a hit on worries about China’s demand prospects. Asian and European indices rose overnight due in large part to yesterday’s gains in the U.S. stock markets.
What else I’m reading this morning on our website, FarmFutures.com:
The second to last Crop Progress report of the 2022 growing season.
Advance Trading’s Brady Huck tells farmers the four necessary steps to take to become a better grain marketer.
Bryce Knorr has calculated out crop budgets for the 2023 growing season and all signs point to profits as 2022 comes to a close.
Is another rail strike on the horizon? This Bloomberg article reports how farmers will be impacted by a railway shutdown.
The last Feedback from the Field column from the 2022 growing season, which features a yard update!
My latest E-corn-omics column features a recap of the top highlights from last Tuesday’s USDA Data Users’ Meeting.
Morning Ag Commodity Prices – 11/23/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.6125
6.57
6.5725
0.005
0.08%
MAR ’23 CORN
$ / BSH
6.6375
6.5925
6.6025
0.01
0.15%
MAY ’23 CORN
$ / BSH
6.625
6.585
6.595
0.0075
0.11%
JUL ’23 CORN
$ / BSH
6.575
6.535
6.545
0.0075
0.11%
SEP ’23 CORN
$ / BSH
6.1825
6.1575
6.165
0.005
0.08%
DEC ’23 CORN
$ / BSH
6.0675
6.04
6.0525
0
0.00%
AR2 ’24 CORN
$ / BSH
6.1225
6.11
6.1225
0.0025
0.04%
AY2 ’24 CORN
$ / BSH
6.1575
6.135
6.15
0
0.00%
JUL ’24 CORN
$ / BSH
6.15
6.125
6.15
0.0125
0.20%
JAN ’23 SOYBEANS
$ / BSH
14.385
14.255
14.275
-0.0225
-0.16%
MAR ’23 SOYBEANS
$ / BSH
14.445
14.3175
14.34
-0.025
-0.17%
MAY ’23 SOYBEANS
$ / BSH
14.515
14.39
14.4075
-0.0275
-0.19%
JUL ’23 SOYBEANS
$ / BSH
14.5375
14.4175
14.43
-0.03
-0.21%
AUG ’23 SOYBEANS
$ / BSH
14.3675
14.2575
14.2725
-0.035
-0.24%
SEP ’23 SOYBEANS
$ / BSH
13.9825
13.89
13.905
-0.0425
-0.30%
NOV ’23 SOYBEANS
$ / BSH
13.8
13.715
13.7225
-0.04
-0.29%
AN2 ’24 SOYBEANS
$ / BSH
13.815
13.74
13.74
-0.04
-0.29%
AR2 ’24 SOYBEANS
$ / BSH
13.72
13.645
13.645
-0.0375
-0.27%
AY2 ’24 SOYBEANS
$ / BSH
13.6675
#N/A
13.6375
0
0.00%
UL2 ’24 SOYBEANS
$ / BSH
13.64
13.64
13.64
0
0.00%
DEC ’22 SOYBEAN OIL
$ / LB
74.25
73.24
73.46
-0.38
-0.51%
JAN ’23 SOYBEAN OIL
$ / LB
71.84
70.79
71.03
-0.41
-0.57%
DEC ’22 SOY MEAL
$ / TON
410.5
408
408.5
-0.1
-0.02%
JAN ’23 SOY MEAL
$ / TON
406.9
404.6
405
0
0.00%
MAR ’23 SOY MEAL
$ / TON
404
401.7
402.1
0.5
0.12%
MAY ’23 SOY MEAL
$ / TON
400.7
398.4
399.1
0.7
0.18%
JUL ’23 SOY MEAL
$ / TON
399.7
397.4
398.1
0.8
0.20%
DEC ’22 Chicago SRW
$ / BSH
7.975
7.8475
7.86
-0.055
-0.69%
MAR ’23 Chicago SRW
$ / BSH
8.17
8.04
8.055
-0.05
-0.62%
MAY ’23 Chicago SRW
$ / BSH
8.26
8.135
8.1425
-0.0575
-0.70%
JUL ’23 Chicago SRW
$ / BSH
8.275
8.1625
8.1775
-0.0475
-0.58%
SEP ’23 Chicago SRW
$ / BSH
8.325
8.22
8.2275
-0.0525
-0.63%
DEC ’23 Chicago SRW
$ / BSH
8.405
8.3075
8.33
-0.035
-0.42%
AR2 ’24 Chicago SRW
$ / BSH
8.385
8.3375
8.36
-0.04
-0.48%
DEC ’22 Kansas City HRW
$ / BSH
9.2925
9.18
9.2025
-0.0525
-0.57%
MAR ’23 Kansas City HRW
$ / BSH
9.1875
9.05
9.0675
-0.0525
-0.58%
MAY ’23 Kansas City HRW
$ / BSH
9.1075
8.9775
9.0025
-0.055
-0.61%
JUL ’23 Kansas City HRW
$ / BSH
9.0025
8.89
8.9
-0.0675
-0.75%
SEP ’23 Kansas City HRW
$ / BSH
8.9875
8.88
8.89
-0.0675
-0.75%
DEC ’23 Kansas City HRW
$ / BSH
9.02
8.9
8.9225
-0.0625
-0.70%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
8.9325
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.4975
9.45
9.4575
-0.0025
-0.03%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.53
9.47
9.4825
-0.02
-0.21%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.5475
9.5
9.51
-0.025
-0.26%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.5375
9.5
9.5
-0.0175
-0.18%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.32
9.25
9.25
-0.055
-0.59%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.305
#N/A
9.33
0
0.00%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
9.2875
0
0.00%
DEC ’21 ICE Dollar Index
$
107.135
106.71
106.925
-0.19
-0.18%
JA ’21 Light Crude
$ / BBL
81.95
78.38
78.8
-2.15
-2.66%
FE ’21 Light Crude
$ / BBL
81.7
78.34
78.72
-2.01
-2.49%
DEC ’22 ULS Diesel
$ /U GAL
3.5097
3.4213
3.4327
-0.0386
-1.11%
JAN ’23 ULS Diesel
$ /U GAL
3.3982
3.3092
3.32
-0.0464
-1.38%
DEC ’22 Gasoline
$ /U GAL
2.56
2.4596
2.4655
-0.075
-2.95%
JAN ’23 Gasoline
$ /U GAL
2.4543
2.3685
2.3763
-0.0675
-2.76%
JAN ’23 Feeder Cattle
$ / CWT
0
#N/A
181.675
0
0.00%
MAR ’23 Feeder Cattle
$ / CWT
0
#N/A
184.575
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
153.8
0
0.00%
FE ’21 Live Cattle
$ / CWT
0
#N/A
156.425
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
84.25
0
0.00%
FEB ’23 Live Hogs
$ / CWT
0
#N/A
90.075
0
0.00%
NOV ’22 Class III Milk
$ / CWT
21.02
#N/A
21.03
0
0.00%
DEC ’22 Class III Milk
$ / CWT
21
#N/A
21
0
0.00%
JAN ’23 Class III Milk
$ / CWT
20.44
20.3
20.44
0
0.00%
