Afternoon report: A variety of factors led to big gains again on Thursday.
Wheat prices made another round of impressive inroads today, with July contracts for Chicago, Kansas City and Minneapolis sitting above the rarely seen $11 per bushel benchmark. From war in Ukraine to poor crop quality in the U.S. and a strengthening drought in France, there are plenty of reasons for traders to continue operating in a bullish environment. Corn and soybean prices followed suit, picking up modest gains of 0.25% to 0.5%.
Per the latest updates to the U.S. Drought Monitor, out Thursday morning and covering the week through May 3, drought’s footprint is steadily being erased in the Midwest, with just 11.3% of the region now affected. Compare that with three months ago, when 43.2% was affected. Some improvements were also noted in the High Plains, although 84.1% of the region is still affected.
NOAA’s latest 8-to-14-day outlook expects seasonally wet weather to extend through the Northern and Central Plains, along with much of the upper Midwest, between May 12 and May 18. Expect seasonally warm weather for the eastern half of the U.S. during this time.
Wall St. continues to show extreme volatility this week. The Dow shot up 932 points yesterday, only to face a major selloff today, tumbling 1,200 points lower in afternoon trading to 32,860. “Having the kind of day we had yesterday and then seeing it 100% reversed within half a day is just truly extraordinary,” Randy Frederick with the Schwab Center for Financial Research told CNBC.
Energy futures were mixed. Crude oil firmed another 0.5% to reach $108 per barrel. Gasoline was also up around 0.5%, while nearby diesel contracts eroded 3.5% lower. The U.S. Dollar strengthened significantly, and safe haven gold firmed 2%.
On Wednesday, commodity funds were net buyers of corn (+500), soybeans (+6,500), soyoil (+5,500) and CBOT wheat (+13,500) contracts but were net sellers of soymeal (-2,500).
Corn
Corn prices moved modestly higher after some technical selling spurred by spillover strength from wheat and a solid set of export sales data from USDA this morning. Traders are also eagerly watching weather forecasts to see whether a round of hotter-than-usual weather next week can quickly dry out waterlogged fields and speed up planting progress. May futures added 5 cents to $8.0350, with July futures up 2 cents to $7.9625.
Corn basis bids were steady to firm on Thursday after moving 2 to 8 cents higher across four Midwestern locations today.
Old crop corn sales were down 10% week-over-week, with 30.8 million bushels. New crop sales added another 29.0 million bushels, for a total of 59.8 million bushels. That was toward the lower end of trade estimates, which ranged between 47.2 million and 94.5 million bushels. Cumulative totals for the 2021/22 marketing year are now at 1.576 billion bushels, versus year-ago totals of 1.713 billion bushels.
Corn export shipments notched a new marketing-year high, with 75.0 million bushels. China was the No. 1 destination, with 18.3 million bushels.
Corn, soybean and wheat prices have been in a consolidation pattern for the last two weeks, according to Naomi Blohm, senior market adviser with Stewart Peterson. Will next week’s WASDE report from USDA offer a breakout opportunity that’s “fierce, fast and ferocious?” Blohm walks through some factors to focus on in today’s Ag Marketing IQ blog – click here to learn more.
USDA announced it has accepted more than 2 million acres through its Conservation Reserve Program general signup, the first of several occurring this year. Submitting and accepting is just the start of the process, notes Farm Futures policy editor Jacqui Fatka. Producers still have to develop a conservation plan prior to October 1. Click here for details.
Preliminary volume estimates were for 179,497 contracts, fading moderately below Wednesday’s final count of 211,343.
Soybeans
Soybean prices firmed moderately after some technical buying in a sometimes-choppy session today. A slower-than-normal start to planting and tight global supplies are doing a lot to keep the current bullish environment alive. May futures added 8.75 cents to $16.7850, with July futures up 5.75 cents to $16.4625.
Soybean basis bids were largely steady across the central U.S. on Thursday but did erode 22 cents lower at an Illinois river terminal while firming 11 cents higher at an Iowa river terminal today.
Old crop soybean sales tracked 28% above the prior four-week average, with 27.0 million bushels. New crop sales added another 15.0 million bushels, for a total of 42.0 million bushels. That was near the middle of trade guesses, which ranged between 22.0 million and 59.7 million bushels. Cumulative totals for the 2021/22 marketing year are 332 million bushels below last year’s pace, with 1.738 billion bushels.
Soybean export shipments slumped 30% below the prior four-week average, with 20.7 million bushels. China (6.5 million bushels) and Egypt (6.4 million bushels) were the top two destinations.
Governmental data shows Brazil exported more than 425 million bushels of soybeans in April, which was a year-over-year decline of 28%. Brazil also exported 27.7 million bushels of corn last month.
Thanks to an increase in domestic crushing capacity, Egypt’s 2022/23 soybean imports are likely to rise to nearly 147 million bushels, which would be a year-over-year increase of 11.1%, if realized. The country’s main suppliers include Argentina, Brazil, Paraguay, Uruguay, Ukraine and the United States.
Preliminary volume estimates were for 123,842 contracts, firming slightly above Wednesday’s final count of 118,096.
Wheat
Wheat prices jumped higher today on a wave of technical buying spurred largely by overseas challenges (Ukraine war, France drought, etc.) as well as lingering worries over poor U.S. crop quality. Traders largely shrugged off a lackluster set of export sales data, pushing some contracts more than 4% higher by the close. July Chicago SRW futures gained 27.25 cents to $11.0375, July Kansas City HRW futures climbed 49 cents to $11.7225, and July MGEX spring wheat futures rose 31 cents to $12.0825.
Wheat exports were lackluster last week, with 4.4 million bushels in old crop sales and 1.6 million bushels in new crop sales for a total haul of 6.0 million bushels. That was on the low end of trade guesses, which ranged between 3.7 million and 16.5 million bushels. Cumulative totals for the 2021/22 marketing year remain moderately behind last year’s pace, with 634.7 million bushels.
Wheat export shipments shifted 8% higher than the prior four-week average, with 13.9 million bushels. Mexico was the No. 1 destination, with 3.2 million bushels.
According to UN World Food Programme director Martin Frick, as much as 4.5 million metric tons of grain are stuck in closed, occupied Ukrainian ports. “None of the grain can be used right now,” he said. “It’s just sitting there. Ukrainian president Volodymyr Zelenskyy also alleges that Russia has targeted agricultural warehouses holding grain and fertilizer.
Tunisia likely purchased 3.7 million bushels of soft wheat and 3.4 million bushels of animal feed barley from optional origins in an international tender that closed earlier today. The grain is for shipment in June and July.
Preliminary volume estimates were for 83,011 CBOT contracts, which was slightly higher than Wednesday’s final count of 81,088.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-May
804.75
796
803.75
5
22-Jul
802
791
797.5
2
Soybeans
22-May
1699.5
1674.5
1678.5
8.75
22-Jul
1667
1640
1647
5.75
Soymeal $/ton
22-Jul
426.4
418.4
419.9
1.8
Soyoil cents/lb
22-Jul
83.78
81.17
81.85
-0.66
Wheat $/bushel
22-May
1087.25
1084.5
1096
30
22-Jul
1121.75
1077.25
1106.5
27.25
KC Wheat
22-May
1161.25
ERR
1165.75
22-Jul
1180
1123.25
1177
49
MPLS Wheat
22-May
1001
ERR
1204.25
22-Jul
1210.5
1176.25
1209.75
31
Live Cattle cents/lb
22-Apr
135.25
133.65
133.775
-1.05
Feeder Cattle cents/lb
22-May
175.55
173.65
174.425
-1.775
Lean Hogs cents/lb
22-Jun
107.525
105.325
107.075
1.975
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Jun
111.37
106.45
108.37
0.56
Diesel
22-May
4.2455
4.02
4.0617
-0.1353
Unleaded Gasoline $/gallon
22-May
3.7222
3.5938
3.6683
0.016
Natural Gas
22-Jul
8.866
8.178
8.781
0.309
U.S. Dollar Index
22-Jun
103.97
102.375
103.74
1.146
Gold $/ounce
22-Jun
1910.7
1872.3
1904.3
37.3
Copper
22-May
4.42
4.2785
4.284
-0.0445
Fertilizer Swaps
(as of 04/29)
DAP Tampa-index
1,175.0
-7.5
DAP-New Orleans
989.3
-52.36
Urea-New Orleans
738.6
-99.21
Urea-Middle East
810.0
-140
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
694.5
0
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