Morning report: But we are not looking at a selloff in the markets this morning. Here’s what you can expect from the latest news out of the Black Sea. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 11-18 cents
Soybeans down 28-36 cents; Soymeal down $3.60/ton; Soyoil down $2.13/lb
Chicago wheat down 21-22 cents; Kansas City wheat down 21-23 cents; Minneapolis wheat down 15-20 cents
*Prices as of 6:55am CDT.
Feedback from the Field updates! How does your farm’s crop conditions stack up against other farms around the country? Click this link to take the survey and share updates about your farm’s crop development. I review and upload results daily to the FFTF Google(TM) MyMap, so farmers can see others’ responses from across the country – or even across the county!
Good morning! After months of agonizing news reports about the “growing global food crisis” and following weeks of speculation about a potential deal to free trapped Ukrainian grain supplies, Ukraine finally shipped its first cargo of grain following Russia’s invasion into the country on February 24, 2022.
The ship, named Razoni and flying under a Sierra Leone flag, departed from the Odessa port in the Black Sea overnight and is destined for Lebanon. Turkish officials expect that the ship will anchor just off of Istanbul, Turkey tomorrow so that it can be inspected by Ukrainian, Russian, Turkish, and United Nations officials for any signs of foul play.
“It will then continue as long as no problems arise,” Turkish Defence Minister Hulusi Akar explained overnight.
The Razoni contains 26,000 metric tonnes (MT), or 1.0 million bushels, of corn.
Government officials in Ukraine have alluded to the fact that there are another 17 ships currently docked at ports across the Black Sea awaiting safe transport allowances amid the ongoing Russian naval blockade, totaling up to 600,000MT of grain.
“Unlocking the ports will provide at least $1 billion in foreign exchange revenue for the economy and an opportunity for the agricultural sector to plan next year’s sowing season,” Ukrainian Infrastructure Minister Oleksandr Kubrakov announced overnight on Twitter. “Today Ukraine, together with its partners, makes another step to prevent world hunger.”
The Turkish and U.N.-brokered deal to free Ukrainian grain and return Russian grain and fertilizer exports to the market is slated to allow for free passage for cargo ships out of the Black Sea terminals of Odessa, Chornomorsk, and Pivdennyi so that up to 18 million MT of grain can be made accessible to international buyers.
But these volumes pale compared to pre-war export loading paces for Ukraine. Ukraine shipped around 3 million MT of grain during July, primarily via railways or rivers according to the Ukrainian Club of Agrarian Business Associations (UCAB). While it marked a 21% monthly volume increase from June 2022 volumes, it was still far below the 6 million MT Ukraine formerly had the capacity to ship per month, prior to the Russian invasion.
The overnight cargo shipment will reduce some of the supply pressure on the grain markets due to Ukraine’s absence from the markets over the last six months, but it is far from a cure-all from high prices.
The country has shifted its crop rotations in response to storage issues and domestic needs resulting from the war. Ukrainian farmers – as well as key exporting terminal, Odessa – continue to battle Russian attacks, particularly in Eastern Ukraine where most of the country’s wheat production is centered.
With those considerations, USDA only expects Ukraine will export 30.6 million MT of grain and oilseed products during the 2022/23 marketing year, nearly half of its year-ago volumes. That is a primary reason why corn and wheat prices are only trading at a $0.11-$0.16/bushel loss this morning – global grain supplies are still tight without the full and unadulterated Ukrainian presence on the global grain and oilseed market.
If Russia issues more attacks on the Ukrainian ports at Odessa, Chornomorsk, or Pivdennyi this week while other cargoes are loading, there could be potential for this morning’s price losses to reverse into gains.
But global supplies are tight enough – and demand is showing few signs of relenting – that the subsequent shipments are not likely to cause a sudden drop in market prices as much as a gradual decline in prices as the cargoes pass safely through the Russian naval blockade. There’s more potential for market volatility this week due to the ongoing situation, and it should lead farmers to begin implementing marketing strategies that could lock in current pricing before it declines further.
Corn
Corn prices dropped $0.12-$0.18/bushel this morning following the overnight news of Ukraine’s corn shipment.
“Wheat and corn are being weakened today by the news that the first ship has sailed from Ukraine with grain exports using the safe shipping corridor raising the likelihood that we could see larger supplies of wheat and corn from Ukraine in the world market,” Matt Ammermann, StoneX commodity risk manager, told Reuters this morning.
“The safe shipping corridor has been under negotiation for some weeks and the first ship has actually sailed despite a lot of doubt that an agreement would be reached, so this is an important step forward.”
“Naturally the owners of ships trapped in Ukraine since February will want to get them out,” Ammermann said. “The next question is whether vessel owners will be willing to sail back into Ukraine to pick up grain shipments.”
But there are other factors still at play in these markets this morning besides the Ukrainian corn shipment. The first half of August continues to show hot and dry forecasts for the Heartland, which could threaten yield health for both corn but especially soybean crops.
The ongoing heat wave in Europe led the European Commission to slash its 2022 corn harvest forecast by 8% overnight, lowering it to 2.59 billion bushels. The European Union is not typically a significant corn producer, but it is the world’s third largest corn buyer.
The bloc raised its import estimates to just shy of 650 million bushels, similar to last year’s estimates. USDA currently expects the E.U. to import 629.9 million bushels of corn during the 2022/23 marketing year, though it is likely to raise that forecast in next week’s WASDE report.
Soybeans
Soybeans also took a hit on the announcement of the Ukrainian grain shipment overnight, but there were more significant factors at play in the oilseed market this morning that contributed to its losses. Prices traded $0.26-$0.33/bushel lower on a round of profit-taking following last week’s gains.
Lower crude oil prices and relaxing Indonesian palm oil export quota policies sunk soyoil futures by over 2% overnight. Speculation that Indonesia will lower its palm oil export target prices and encourage higher export volumes also weighed on the global edible oils market this morning.
Wheat
Wheat prices took a $0.15-$0.23/bushel hit in overnight trading following the news that Ukraine had resumed shipping grain cargoes. Some profit-taking was likely also at play following last week’s late-week rallies. A weaker dollar helped curb some of the losses and strong global demand also limited the morning’s losses.
The European Commission also cut its outlook for 2022/23 European wheat exports overnight following the news that grain is once again flowing from Ukrainian ports in the Black Sea. Europe has been the supplier of choice for the wheat market this summer amid the Black Sea port closures and is slated to said through the 2022/23 marketing year as the world’s second largest wheat exporter.
The European Commission’s new 2022/23 wheat export forecasts are set at 1.07 billion bushels. USDA’s latest forecast for E.U. wheat exports was projected at 1.30 billion bushels in early July 2022.
Meanwhile, Russian weekly wheat shipments are trending higher as harvest activity accelerates. Black Sea consultancy SovEcon reported the country had shipped 23.9 million bushels of wheat last week, up from 19.8 million bushels the week prior. Russian prices trended higher with global benchmarks, which closed up last week on heat stress and resultant yield concerns across the Northern Hemisphere.
SovEcon also cited favorable spring wheat conditions due to recent rains, which had the opposite effect on winter wheat crops. “There was too much rain for winter wheat at this stage which hits the quality – as farmers typically say, ‘gluten and protein have been washed away’. However, it is improving the set-up for spring crops, including spring wheat,” SovEcon director Andrey Sizov said in a report.
Russia is expected to harvest a record-setting wheat crop this year. The country primarily supplies North African and Middle Eastern wheat buyers.
Weather
Scattered showers are possible across patches of the Corn Belt today with the highest chance for accumulation centered in the Eastern Corn Belt, according to NOAA’s short-range forecasts. The prospects bode well for soybean reproductive development in the region.
More chances for scattered showers are possible across the Heartland over the coming days, which is welcome news for crop development as 41.5% of the Midwest is reportedly in abnormally dry to exceptional drought condition as of a week ago.
Above average temperatures continue to plague NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday. The persistent dryness in the Heartland is expected to continue through the first half of August.
What else I’m reading this morning on our website, FarmFutures.com:
Naomi Blohm predicts dairy prices will continue trading sideways for the time being as supply builds and demand softens.
Commstock Investment’s Matthew Kruse notes that we are entering perhaps the most ambiguous period of this growing season, as the trade attempts to determine if there will be enough moisture to get crops through August.
Leading up to USDA’s release of August yield results next week, my latest E-corn-omics column focuses on evaluating the significance of those findings.
Ed Usset’s latest marketing character, Hank Holder, holds onto grain until the week before harvest when room is needed for the new crop. Does this strategy work?
AgMarket.Net’s Jim McCormick explains how to price in weather risks from the U.S., South America, and Europe into current commodity market pricing.
Morning Ag Commodity Prices – 8/1/2022
Contract
Units
High
Low
Last
Net Change
% Change
SEP ’22 CORN
$ / BSH
6.215
5.9875
5.9925
-0.17
-2.76%
DEC ’22 CORN
$ / BSH
6.25
6.01
6.0175
-0.1825
-2.94%
MAR ’23 CORN
$ / BSH
6.31
6.08
6.0825
-0.18
-2.87%
MAY ’23 CORN
$ / BSH
6.3475
6.12
6.1225
-0.1775
-2.82%
JUL ’23 CORN
$ / BSH
6.355
6.1275
6.1275
-0.1775
-2.82%
SEP ’23 CORN
$ / BSH
5.95
5.8
5.8
-0.1475
-2.48%
DEC ’23 CORN
$ / BSH
5.8125
5.6825
5.6825
-0.12
-2.07%
AR2 ’24 CORN
$ / BSH
5.8225
5.7675
5.7675
-0.11
-1.87%
MAY ’24 CORN
$ / BSH
0
#N/A
5.9125
0
0.00%
AUG ’22 SOYBEANS
$ / BSH
16.5
16.09
16.09
-0.28
-1.71%
SEP ’22 SOYBEANS
$ / BSH
15.04
14.535
14.54
-0.3325
-2.24%
NOV ’22 SOYBEANS
$ / BSH
14.81
14.3225
14.335
-0.35
-2.38%
JAN ’23 SOYBEANS
$ / BSH
14.87
14.395
14.4025
-0.3475
-2.36%
MAR ’23 SOYBEANS
$ / BSH
14.815
14.365
14.3875
-0.3025
-2.06%
MAY ’23 SOYBEANS
$ / BSH
14.75
14.3325
14.3475
-0.295
-2.01%
JUL ’23 SOYBEANS
$ / BSH
14.6925
14.2825
14.31
-0.2725
-1.87%
AUG ’23 SOYBEANS
$ / BSH
14.3125
14.2975
14.2975
0.015
0.11%
SEP ’23 SOYBEANS
$ / BSH
12
#N/A
13.745
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
13.56
13.26
13.27
-0.2275
-1.69%
AN2 ’24 SOYBEANS
$ / BSH
0
#N/A
13.5275
0
0.00%
AUG ’22 SOYBEAN OIL
$ / LB
68.6
68.6
68.6
0
0.00%
SEP ’22 SOYBEAN OIL
$ / LB
66.8
64.81
64.9
-1.6
-2.41%
AUG ’22 SOY MEAL
$ / TON
501.1
495
495
-0.3
-0.06%
SEP ’22 SOY MEAL
$ / TON
446
437.5
438.5
-3.9
-0.88%
OCT ’22 SOY MEAL
$ / TON
423.6
411.9
411.9
-8.8
-2.09%
DEC ’22 SOY MEAL
$ / TON
421.4
409.5
409.8
-8.7
-2.08%
JAN ’23 SOY MEAL
$ / TON
419.2
407.8
407.8
-8.9
-2.14%
SEP ’22 Chicago SRW
$ / BSH
8.2025
7.8725
7.89
-0.1875
-2.32%
DEC ’22 Chicago SRW
$ / BSH
8.3825
8.0525
8.0675
-0.19
-2.30%
MAR ’23 Chicago SRW
$ / BSH
8.54
8.2275
8.2425
-0.1875
-2.22%
MAY ’23 Chicago SRW
$ / BSH
8.6325
8.31
8.33
-0.1875
-2.20%
JUL ’23 Chicago SRW
$ / BSH
8.5825
8.27
8.285
-0.19
-2.24%
SEP ’23 Chicago SRW
$ / BSH
8.55
8.285
8.285
-0.1975
-2.33%
DEC ’23 Chicago SRW
$ / BSH
8.5025
8.3175
8.3175
-0.195
-2.29%
SEP ’22 Kansas City HRW
$ / BSH
8.865
8.535
8.55
-0.195
-2.23%
DEC ’22 Kansas City HRW
$ / BSH
8.93
8.605
8.6175
-0.1975
-2.24%
MAR ’23 Kansas City HRW
$ / BSH
8.95
8.6575
8.6575
-0.205
-2.31%
MAY ’23 Kansas City HRW
$ / BSH
8.955
8.69
8.69
-0.1875
-2.11%
JUL ’23 Kansas City HRW
$ / BSH
8.7975
8.695
8.695
-0.0625
-0.71%
SEP ’23 Kansas City HRW
$ / BSH
8.7225
8.635
8.635
-0.07
-0.80%
DEC ’23 Kansas City HRW
$ / BSH
0
#N/A
8.705
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
9.1375
8.89
8.905
-0.155
-1.71%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.23
9.02
9.02
-0.165
-1.80%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.3125
9.1475
9.1475
-0.1525
-1.64%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.335
9.2725
9.2725
-0.1175
-1.25%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.31
9.31
9.31
-0.1125
-1.19%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.0975
#N/A
9.1075
0
0.00%
DEC ’23 MLPS Spring Wheat
$ / BSH
0
#N/A
9.18
0
0.00%
SEP ’21 ICE Dollar Index
$
105.92
105.18
105.45
-0.329
-0.31%
SE ’21 Light Crude
$ / BBL
98.65
96.13
96.54
-2.08
-2.11%
OC ’21 Light Crude
$ / BBL
96.68
94.45
94.86
-1.89
-1.95%
SEP ’22 ULS Diesel
$ /U GAL
3.5584
3.4729
3.4987
-0.0503
-1.42%
OCT ’22 ULS Diesel
$ /U GAL
3.5103
3.425
3.4489
-0.0498
-1.42%
SEP ’22 Gasoline
$ /U GAL
3.1133
3.034
3.0739
-0.0393
-1.26%
OCT ’22 Gasoline
$ /U GAL
2.8637
2.8026
2.8291
-0.0361
-1.26%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
178.575
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
181.55
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
136.45
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
142.225
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
120.65
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
97.225
0
0.00%
JUL ’22 Class III Milk
$ / CWT
22.53
22.53
22.53
0.01
0.04%
AUG ’22 Class III Milk
$ / CWT
20.59
20.18
20.47
0.06
0.29%
SEP ’22 Class III Milk
$ / CWT
20.82
20.27
20.55
0.24
1.18%
