“Without a doubt, there will be more volatility,” an economist told me a few days ago when I was working on my latest round of Russia/Ukraine coverage. It seemed like a good take at the time, and I was reminded of it again today watching grain prices make another big shift. Unfortunately, today’s shift was not a positive one as prices spilled back into the red, despite continued heavy combat in parts of Ukraine, which is putting both grain exports and spring plantings in danger there. Wheat prices saw the biggest declines, with some contracts down more than 3%. Corn prices suffered a more moderate setback, while soybeans eased slightly lower.
Looking at the latest updates to the U.S. Drought Monitor, “drought creep” has been extremely slow but steady, moving from about 72% of the country affected at the start of 2022 up to 74% through March 15. Regional differences are significant. For example, 90% of the High Plains is experiencing some level of drought right now, while only 43% of the Midwest is currently affected.
On Wall St., the Dow moved modestly higher, picking up 56 points in afternoon trading to 34,536, while the S&P 500 was on pace for its best week since November 2020. Investors continue to have shaky “risk appetite” amid rising interest rates, high inflation and war in eastern Europe. Energy prices moved higher, with crude oil up 1.25% in afternoon trading to $104 per barrel. Diesel jumped 3.5% higher, with gasoline up around 0.5%. The U.S. Dollar firmed moderately.
On Thursday, commodity funds were net buyers of corn (+20,000), soybeans (+11,500), soyoil (+5,500) and CBOT wheat (+10,500) contracts but were net sellers of soymeal (-3,000).
Corn
Corn prices fell 1% to 2% lower on a round of technical selling Friday as volatility remains high amid the uncertainty stirred up by Russia’s invasion of Ukraine. Today, May futures fell 13.25 cents to $7.4125, with July futures down 6.75 cents to $7.12.
Corn basis bids were mostly steady to firm on Friday after rising 2 to 15 cents higher across five Midwestern locations today. An Ohio elevator bucked the overall trend, slipping a penny lower.
The U.S. EPA reported yesterday that the United States generated 1.07 ethanol blending credits in February, which was moderately below January’s tally of 1.21 billion. The U.S. also generated 395 million biodiesel credits last month, versus 355 million in January.
Argentina’s 2021/22 corn harvest is now 7% complete, per the latest report from the Buenos Aires grains exchange, which estimates production will reach 2.008 billion bushels. Drought conditions have plagued the crop for much of the season.
Meantime, the Rosario grains exchange is concerned that Argentine farmers may have to suffer through a third consecutive season with La Nina conditions present in 2022/23. The group noted that it has been two decades since farmers have dealt with three straight La Ninas. “The problem with these scenarios is that month by month a water shortage that becomes structural worsens,” according to the exchange. “The deep soil levels are severely dehydrated.”
Customs data shows Chinese corn imports during January and February totaled 184.2 million bushels, a year-over-year decrease of 2.3%. Chinese wheat imports in the first two months of 2022 fell 11.6% below year-ago totals, to 80.5 million bushels.
Preliminary volume estimates were for 157,085 contracts, slipping slightly below Thursday’s final count of 168,525.
Soybeans
Soybean prices followed corn and wheat lower on Friday, but losses were mostly kept in check with more bearish sentiment over South American production potential as combines begin to roll there. May futures dipped 2.25 cents to $16.6625, with July futures down 3.75 cents to $16.4350.
Soybean basis bids trended 4 to 10 cents higher at two interior river terminal and dropped 2 cents lower at an Ohio elevator while holding steady elsewhere across the central U.S. on Friday.
Brazil’s Agroconsult recently completed a field survey and estimates that the country’s 2021/22 soybean production will reach 4.578 billion bushels. That will be a year-over-year reduction of 10.6% from a year ago, if realized. The consultancy noted severe drought in Parana and Rio Grande do Sul, in particular.
Yesterday, the Buenos Aires grains exchange said Argentina’s soybean production potential this season is currently around 1.543 billion bushels and warns that this number could face more cuts if current harvest trends continue. Initial harvest yields are below the prior five-year average.
If it’s been a while since you’ve visited FarmFutures.com, why not read our Friday feature “7 ag stories you might have missed” and quickly catch up on the ag industry’s top headlines? The latest batch of content includes stories about a looming railway strike in Canada, preparations ahead of the 2023 Farm Bill, an important question about Russian fertilizers and more. Click here to get started.
Preliminary volume estimates were for 114,033 contracts, which was slightly higher than Thursday’s final count of 106,296.
Wheat
Wheat prices saw significant cuts Friday, despite continued concerns about the lack of exports coming out of the Black Sea region right now. Still, prices remain at historically high levels and may be dissuading some overseas buyers for now. May Chicago SRW futures lost 38 cents to $10.60, May Kansas City HRW futures fell 24.25 cents to $10.68, and May MGEX spring wheat futures dropped 21.25 cents to $10.5775.
French farm office FranceAgriMer reports that the country’s soft wheat ratings are steady from a week ago, with 92% in good-to-excellent condition through March 14. That’s also five points above year-ago ratings of 87%.
Algeria, a major wheat buyer in northern Africa, has strategic reserves through August, according to its agriculture minister. Countries that depend on significant grain imports have faced the tough decision in recent weeks over whether to purchase commodities at historically high prices or wait and see if they cool off over the next few months.
Turkey provisionally plans to purchase 9.6 million bushels of wheat in a tender that closed earlier today. The sales are still subject to final confirmation and can still be reduced or cancelled. The grain is for delivery between March 28 and April 22.
Preliminary volume estimates were for 47,622 CBOT contracts, trending moderately below Thursday’s final count of 75,457.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-May
755
736.5
741.75
-13.25
22-Jul
719
704.5
712.5
-6.75
Soybeans
22-May
1689
1651.5
1668
-2.25
22-Jul
1667
1632.75
1645.75
-3.75
Soymeal $/ton
22-Jul
470
463.6
468
2.2
Soyoil cents/lb
22-Jul
71.47
68.8
69.65
-1.11
Wheat $/bushel
22-May
1106
1055.75
1063.75
-38
22-Jul
1086.5
1036.5
1044.75
-35
KC Wheat
22-May
1097.25
1055.75
1070.5
-24.25
22-Jul
1090
1050
1062
-25.25
MPLS Wheat
22-May
1087.75
1050.75
1060.25
-21.25
22-Jul
1076.25
1045
1054.75
-14.5
Live Cattle cents/lb
22-Apr
140.8
139.25
140.775
1.3
Feeder Cattle cents/lb
22-Apr
163.15
161.15
162.9
1.8
Lean Hogs cents/lb
22-May
108.225
106.85
107.275
-0.725
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Apr
106.28
102.3
104.82
1.84
Diesel
22-Apr
3.618
3.4365
3.6143
0.1269
Unleaded Gasoline $/gallon
22-Apr
3.2711
3.1559
3.2401
0.0235
Natural Gas
22-May
4.989
4.849
4.926
-0.095
U.S. Dollar Index
22-Jun
98.635
97.845
98.21
0.235
Gold $/ounce
22-Jun
1946.2
1920.5
1935.6
-6.5
Copper
22-Mar
4.7275
4.686
4.721
0.0305
Fertilizer Swaps
(as of 03/18)
DAP Tampa-index
1,017.5
122
DAP-New Orleans
1,083.0
35.83
Urea-New Orleans
983.3
82.12
Urea-Middle East
1,120.0
117
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
661.4
0
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Afternoon report: Corn, soybeans and wheat all close Friday’s session with losses.
