Morning report: Grain prices lightly mixed overnight as traders eye a variety of factors. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Down 4 to 5 cents
Soybeans: Up 4 to 5 cents
Wheat: Up 1 to 2 cents
On Tuesday, a Wall St. selloff negatively affected corn and soybean prices after a round of technical selling. Wheat stayed firm yesterday due to ongoing concerns coming out of Ukraine. Will those trends hold again today? Overnight gains suggest traders may feel slightly bullish today as they reconsider USDA’s latest yield estimates. (On Monday, the agency slashed corn yields by 2.9 bushels per acre and soybean yields by 1.0 bpa.) As harvest continues to progress, we’ll continue to get a clearer picture of this season’s true production potential.
Overseas stock markets were all in the red. Asian markets closed with losses ranging between 0.75% and 2.75%. European markets saw moderate declines in midday trading. On Wall St., the Dow tested 73-point gains overnight, moving to 31,284, after suffering the worst single-day session in more than two years on Tuesday. Investors remain highly skittish amid high inflation trends and the likely Federal Reserve response to continue raising interest rates later this year.
Energy futures were mixed overnight. Crude oil trended 0.5% higher to just under $88 per barrel. Gasoline also firmed 0.5%, but diesel tumbled nearly 5% lower. The U.S. Dollar softened moderately.
The latest 72-hour precipitation map from NOAA shows rains returning to the Plains and upper Midwest between today and Saturday, with drier conditions more prevalent in the eastern Corn Belt during this time. Official 6-to-10-day forecasts show drier-than-normal conditions remaining in the eastern Corn Belt between September 19 and September 23, with warmer-than-normal conditions likely for the entire central U.S.
On Tuesday, commodity funds were net buyers of soyoil (+1,500) and CBOT wheat (+1,000) contracts but were net sellers of corn (-4,000), soybeans (-4,500) and soymeal (-4,500).
Corn
Corn prices eased slightly lower ahead of Wednesday’s session as harvest pressure begins to mount. On the more bullish side of things, USDA did cut average yield estimates to 172.5 bushels per acre, but that move was largely expected and markets have already reacted to it. Overnight losses came in around 0.4%.
Corn basis bids were mostly steady to weak across the central U.S. after spilling 5 to 15 cents low at four Midwestern locations on Tuesday. An Iowa processor bucked the overall trend after climbing 20 cents higher yesterday.
A nationwide rail worker strike may be imminent, as union officials are meeting with U.S. Department of Labor Secretary Marty Walsh later today to discuss the issues at hand. The would-be strike could involve some 60,000 union members and cost the U.S. economy more than $2 billion per day if it goes into effect, causing a severe pinch on already-stressed supply chains. It would also hamper interior grain movement – nearly 800,000 carloads of grain have been shipped via rail so far in 2022.
Also worth watching today is the next round of ethanol production data from the U.S. Energy Information Administration. Production has been in a bit of a slump lately, failing to reach the 1-million-barrel-per-day benchmark for the past four consecutive weeks. Production saw a seasonal peak in mid-July and has been waning since that time.
Brazil’s Anec expects the country’s corn exports to reach 310.2 million bushels in September. That forecast is up 24.9% from Anec’s prior estimate made a week earlier.
Taiwan purchased 2.6 million bushels of animal feed corn, likely sourced from Brazil, in an international tender that closed earlier today. The grain is for shipment in November.
The preliminary report from the CBOT showed daily futures volume fell to 235,052, with open interest firming by 10,754. Options volume faded to 86,643 and still favors calls (46,578) over puts (40,065). Implied volatility for near-the-money December contracts fell to 26.8% and don’t expire for another 72 days.
Soybeans
Soybean prices are facing a similar bull-and-bear push as corn in recent sessions. USDA’s yield estimates came in below analyst expectations earlier this week, but harvest pressure will soon begin to mount. Additionally, governmental agencies and private consultancies are already calling for a record-breaking 2022/23 crop in Brazil. Overnight gains were modest, at around 0.3%.
Soybean basis bids tumbled 30 cents lower at an Ohio river terminal and fell 3 cents at an Ohio elevator while holding steady elsewhere across the central U.S. on Tuesday.
A rail strike would be particularly hard on U.S. chicken producers, who use around 27 million bushels of corn and 11 million bushels of soymeal each week. Most of that grain is transported by rail. “Any disruption of service could negatively impact the welfare of the birds, and ultimately impact production at a time when Americans are already dealing with record food inflation,” according to National Chicken Council spokesperson Tom Super.
Brazil’s Anec expects the country’s soybean exports to reach 164.3 million bushels in September, which is 14% above its prior projection from a week ago. Anec also sees Brazilian soymeal exports trending higher, with an estimated 2.115 million metric tons this month.
How do your farm’s crop conditions stack up against other operations in the U.S.? Click this link to take the survey and share updates about your farm’s crop development. Farm Futures grain market analyst Jacqueline Holland regularly reviews and uploads results to the FFTF Google MyMap, so farmers can peer anecdotes from around the country.
When it comes to timing grain sales this fall, it’s a good idea to stick to your marketing plan, advises Cat Sullivan, ag risk management advisor with Advance Trading. “Acting on hunches and guesses could prove to be one of the biggest errors you can make,” she notes. “Second to that could be the act of doing nothing regardless of the outcome of those hunches and guesses.” Sullivan took a closer look at some of the biggest factors that are in play in yesterday’s Ag Marketing IQ blog – click here to learn more.
The preliminary report from CBOT showed daily futures volume fading to 250,906, with open interest trending 11,337 higher. Options volume fell to 82,618 and still slightly favors puts (43,174) over calls (39,444). Implied volatility for near-the-money November contracts eased to 24.1% and expire in another 36 days.
Wheat
Wheat prices were mixed but mostly higher overnight after trending modestly higher in Tuesday’s session. Will another round of technical buying be in store today? It’s certainly possible, especially as Ukraine continues to face severe production and export challenges. Traders will also have another round of export sales data to digest first thing tomorrow morning.
Ukraine recently recaptured a significant area in the northeastern and southern regions of the country. Because of that, a deputy agriculture minister reported today that they may increase their forecasts for planted acres of winter crops, including winter wheat, winter barley, canola and rye. Currently, Ukraine expects planted acres of winter crops to fall 35% this season due to the ongoing Russian invasion.
Farm office FranceAgriMer trimmed its estimates for 2022/23 French soft wheat exports outside of the European Union to 367.4 million bushels. The country has seen an uptick in initial sales due to better competition amid Black Sea disruptions, but exports will be limited by production problems from this year’s drought-stressed crop. France is Europe’s top grain producer.
The preliminary report from CBOT showed daily SRW volume at 88,693, with open interest trending 641 lower. Options volume fell to 15,352 and continues to favor calls (9,476) over puts (5,876). Implied volatility for December near-the-money options moved to 39.3% and expires in 72 days.
Volume in HRW wheat fell to 25,804, with open interest trending 508 higher. Options volume fell to 1,615 and slightly favors puts (879) over calls (736).
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