Morning report: Following yesterday’s market nose-dive, calming global markets help grains to recover some of yesterday’s losses. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 4-6 cents
Soybeans up 14-21 cents; Soymeal up $4.80/ton; Soyoil down $0.52/lb
Chicago wheat up 18-19 cents; Kansas City wheat up 14-15 cents; Minneapolis wheat up 3-5 cents
*Prices as of 6:50am 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 MyMap, so farmers can see others’ responses from across the country – or even across the county!
For fun
Forget a corn or wheat shortage – I’m worried about an impending chickpea shortage! The Global Pulse Confederation estimates that global chickpea supplies could drop as much as 20% this year due to – of course – the Black Sea Conflict.
“When the Russia-Ukraine war broke out, the demand boomed,” Jeff Van Pevenage, chief executive officer of Columbia Grain International, grain and pulse merchandiser and supplier, headquartered in Portland, Oregon, told Reuters. “We saw strong demand from China, then it was calls from customers in Pakistan and Bangladesh.”
Russia and Ukraine are typically substantial exporters of chickpeas, but with those markets unavailable. Growers in the Northern Plains – where the crop is typically harvested in the U.S. – opted for other crops with more lucrative earnings potential this year as the high-protein pulse crop is disease-prone and reliant on fungicide applications, which are more expensive and less available this year.
For more, check out this Reuters report. Roasted chickpeas (Bake at 400 for 20-30 min and toss with olive oil and a Mediterranean or North African spice mix) have become one of my favorite snacks (so crispy, so delicious) over the past year, so I’ll be sobbing into my hummus dip and running to the grocery store to stockpile in the meantime!
Corn
Larger than expected ratings cuts on the U.S. crop and a round of bargain buying helped raise corn futures $0.01-0.03/bushel this morning following yesterday’s selloff in the overarching commodities markets. West Texas Intermediate oil futures prices inched back above the $100/barrel benchmark overnight, though gains are likely limited as a new COVID variant begins to spread and second crop corn harvest in Brazil ramps up, with a third of the crop already picked in the country’s center-south region.
“In addition, there is the risk of a new wave of Covid spreading, prompting all players to reduce their exposure to market risks. The tightening of monetary policies is adding to the pressure on the markets, while global demand for cereals remains strong,” Argus’ agriculture consultancy Agritel said.
Yesterday’s Crop Progress report saw corn ratings take a larger than expected tumble in USDA’s weekly update as dry conditions across the Eastern Corn Belt keep yield concerns alive and well despite all of the recent rains across the Heartland.
Markets had been expecting ratings results to range between 63%-67% good to excellent prior to the report’s release, with an average guess of 65%. But USDA slashed three points from the weekly metric, dropping it down to 64% good to excellent as of July 3.
Last month’s heat wave and dry weather across the Heartland are doing few favors for the nation’s corn crop, which has dropped a staggering six percentage points in condition ratings over the past two weeks. And while condition ratings tend to edge lower during the growing season, such a staggering change over such a short amount of time may be indicative of yield troubles.
If this past week’s rains do not help improve ratings substantially in next week’s report, I expect that market volatility will increase with regards to impending weather forecasts. Last week’s Acreage Report from USDA did find around 400k extra acres of 2022 corn planted this spring, but if trendline yields can’t be reached, then tight supply situations are going to continue to prop up market prices for likely another year.
Corn silking process was starting to gain momentum in the Corn Belt as of this weekend, though progress is already peaking in Southern states. Through July 3, 7% of anticipated 2022 corn crops had reached the silking phase, up 3% from the previous week. But that value was 11% lower than the five-year average benchmark, reflecting planting delays and heat stress.
Cash corn bids widened at ethanol plants in the Corn Belt yesterday, propped up by healthy profit margins. Basis weakened at export terminals on the Illinois and Mississippi Rivers but held mostly steady to slightly firmer at interior processing plants. Farmer sales were slow following the morning’s corn market selloff, according to an Iowa originator.
The dealer noted that “the sharp drop in the futures market was not convincing farmers they had to clear what was left of last year’s crop from their storage bins out in case prices do not rebound before harvest.”
Soybeans
Soybean prices rose $0.15-$0.21/bushel overnight on larger than expected cuts to U.S. soybean crops in yesterday’s Crop Progress report and a round of bargain buying.
Palm oil prices closed the overnight trading session at a one-year low following yesterday’s global commodities’ selloff amid worldwide recession fears. “We are entering into peak production months with worries of end-stocks bulging towards 2 million tonnes by September,” Paramalingam Supramaniam, director of Selangor-based brokerage Pelindung Bestari, told Reuters overnight.
The improving production forecast, top exporter Indonesia’s rising export quota, and hedge fund selling all triggered a fourth consecutive day of losses for Malaysian palm oil futures, which in turn weighed soil prices in Chicago lower overnight.
Soybean ratings also a larger than expected hit in yesterday’s Crop Progress report, dropping 2% on the week to end the week of July 3 with 63% of the crop in good to excellent condition. While the trade had been expecting a range between 62%-65%, the average pre-report guess of 64% meant that the price reaction to yesterday’s report was largely bullish for soybean prices this morning.
Crop development continues to nip at the heels of the five-year average benchmarks as the soybean crop battles heat stress and dry weather following a slower than expected start to the season. Plants are beginning to enter peak reproductive stages, with 16% of the crop blooming as of July 3, up 9% from the previous week, but still 6% behind the five-year average.
USDA reported pod setting progress for the first time in the crop year in yesterday’s report, finding 3% of the crop to have already set pods as of Sunday, perfectly in line with the five-year average. States in the Mississippi River Delta continue to take the lead in crop development, though it appears later planted crops in the Midwest are not far behind.
Soy crushers weakened their cash bids across the Midwest yesterday along with river terminals. The lower futures market prices deterred any new cash sales from farmers who may need to start clearing out bins ahead of harvest.
Wheat
Wheat prices also rebounded from yesterday’s losses, even in the shadow of a rising dollar. Favorable spring wheat conditions and larger than expected Canadian spring wheat acreage published yesterday kept a lid on the rally for Minneapolis spring wheat futures, though Chicago and Kansas City futures enjoyed a nice $0.14-$0.19/bushel price bump.
Winter wheat growers across the country are not taking dry weather for granted when it comes to harvest progress this year, even if their other crops could use a good drink ahead of peak reproductive phases. Through the week ending July 3, 54% of the nation’s winter wheat crop had been harvested, up 13% from the previous week and 6% ahead of the five-year average for the same reporting period.
With the exception of the Northern Plains, the Pacific Northwest, California, and North Carolina, winter wheat harvest progress is substantially ahead historical paces across the interior of the country. The markets were expecting yesterday’s report to show more advanced progress, however.
The pre-report analyst range pegged the total at 53%-61% with an average estimate of 57%. USDA’s reading came in three points below that value, contributing to some of the winter wheat market’s price appreciation this morning.
The analysts had forecast weekly spring wheat condition ratings at 56%-62% good to excellent with an average guess of 59% good to excellent through the week ending July 3. USDA reported spring wheat conditions in the Northern Plains to be at 66% good to excellent – a massive 7% improvement from last week’s report and far exceeding the pre-report estimations.
That is a key reason why spring wheat prices are not trading near as high as its winter wheat counterparts in Chicago and Kansas City this morning.
Weather
More rains and some cooler temperatures are forecast for the Heartland today, according to NOAA’s short-range forecasts. Once again, heavy showers and thunderstorms will continue to stretch from the Plains through the Eastern Corn Belt, dropping up to an inch of precipitation along the way over the next 24 hours. Regions of Eastern Nebraska and Western Iowa could see rainfall totals up to 2 inches during that time. The system is not likely to dissipate until the weekend, providing heat-stressed crops a favorable reprieve just ahead of peak reproductive season.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday continue to trend on the warm side for the Heartland during the second week of July. While pockets of the West are anticipating above average probability for rainfall, chances of rain in the Upper Midwest are growing increasingly slim.
But that’s not all bad news – that is right around the time that corn pollination will begin so the dry weather will actually be a welcome weather event for corn growers across the country. Of course, that condition will only be met if the Midwest receives substantial rainfall this week and no other unfortunate weather events during peak pollination.
Financials
Yesterday’s recession fears took a breather overnight as markets await further guidance from the Federal Reserve expected today when the Fed releases its most recent Federal Open Market Committee (FOMC) meeting minutes.
“Over the last couple of days, markets priced out some of the hawkishness that they were expecting for the Fed. What’s going to be interesting is to see whether the Fed in the short term will try to push back,” Gergely Majoros, a portfolio adviser at Carmignac, told the Wall Street Journal this morning. “At least for the foreseeable future, it’s all about inflation.”
S&P 500 futures edged 0.37% lower to $3,819.75 as inflationary concerns continue to overshadow the broader economic outlook.
What else I’m reading this morning on our website, FarmFutures.com:
Are you playing the grain market blame game? Bryce Knorr has helpful insights for farmers who may have been surprised by higher corn acres in last week’s USDA report.
The latest Purdue University-CME Ag Economy Barometer finds that farmers’ expectations of the future are weakening amid rising input costs and uncertainty about the future.
Looking to expand your farm? Darren Frye has three questions farmers should answer before they pull the trigger on expansion plans.
Commstock’s Matthew Kruse expects yield will become a more critical factor in determining ending stocks in the future, limiting any potential U.S. acreage expansion in the future.
Naomi Blohm has the latest insights on how to manage price volatility this summer.
Our team’s coverage of Thursday’s USDA Acreage and Quarterly Grain Stocks reports!
Morning Ag Commodity Prices – 7/6/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.61
7.3925
7.61
0.25
3.40%
SEP ’22 CORN
$ / BSH
5.965
5.8575
5.93
0.0075
0.13%
DEC ’22 CORN
$ / BSH
5.83
5.7175
5.8
0.015
0.26%
MAR ’23 CORN
$ / BSH
5.8975
5.7875
5.8675
0.0175
0.30%
MAY ’23 CORN
$ / BSH
5.9375
5.8375
5.915
0.0225
0.38%
JUL ’23 CORN
$ / BSH
5.9375
5.8375
5.9125
0.0225
0.38%
SEP ’23 CORN
$ / BSH
5.6225
5.5825
5.595
-0.0275
-0.49%
DEC ’23 CORN
$ / BSH
5.545
5.4925
5.54
0.0225
0.41%
MAR ’24 CORN
$ / BSH
5.6125
5.6
5.6
0.0075
0.13%
JUL ’22 SOYBEANS
$ / BSH
15.9
15.64
15.9
0.1475
0.94%
AUG ’22 SOYBEANS
$ / BSH
14.575
14.2425
14.5425
0.15
1.04%
SEP ’22 SOYBEANS
$ / BSH
13.56
13.2375
13.51
0.14
1.05%
NOV ’22 SOYBEANS
$ / BSH
13.3425
13.06
13.32
0.16
1.22%
JAN ’23 SOYBEANS
$ / BSH
13.43
13.115
13.3725
0.1525
1.15%
MAR ’23 SOYBEANS
$ / BSH
13.41
13.0975
13.3625
0.1625
1.23%
MAY ’23 SOYBEANS
$ / BSH
13.435
13.12
13.3775
0.16
1.21%
JUL ’23 SOYBEANS
$ / BSH
13.42
13.11
13.3825
0.18
1.36%
AUG ’23 SOYBEANS
$ / BSH
12.5
#N/A
13
0
0.00%
SEP ’23 SOYBEANS
$ / BSH
12.5
#N/A
12.5675
0
0.00%
NOV ’23 SOYBEANS
$ / BSH
12.48
12.335
12.48
0.0975
0.79%
JUL ’22 SOYBEAN OIL
$ / LB
60
59.24
60
-0.52
-0.86%
AUG ’22 SOYBEAN OIL
$ / LB
60.3
57.62
59.84
0.22
0.37%
JUL ’22 SOY MEAL
$ / TON
458.8
457.6
457.6
4.8
1.06%
AUG ’22 SOY MEAL
$ / TON
415.4
411.2
415.3
4.9
1.19%
SEP ’22 SOY MEAL
$ / TON
394
390
393.4
4.1
1.05%
OCT ’22 SOY MEAL
$ / TON
382.4
378.1
381.7
4.6
1.22%
DEC ’22 SOY MEAL
$ / TON
383.1
378.4
381.8
4.2
1.11%
JUL ’22 Chicago SRW
$ / BSH
7.91
7.91
7.91
-0.0275
-0.35%
SEP ’22 Chicago SRW
$ / BSH
8.2975
8.0075
8.255
0.185
2.29%
DEC ’22 Chicago SRW
$ / BSH
8.4575
8.1725
8.42
0.18
2.18%
MAR ’23 Chicago SRW
$ / BSH
8.6025
8.325
8.5675
0.175
2.09%
MAY ’23 Chicago SRW
$ / BSH
8.6825
8.405
8.6625
0.185
2.18%
JUL ’23 Chicago SRW
$ / BSH
8.5725
8.3175
8.56
0.1775
2.12%
SEP ’23 Chicago SRW
$ / BSH
8.4975
8.2525
8.4975
0.175
2.10%
JUL ’22 Kansas City HRW
$ / BSH
8.605
8.58
8.58
-0.0225
-0.26%
SEP ’22 Kansas City HRW
$ / BSH
8.7925
8.545
8.7475
0.1275
1.48%
DEC ’22 Kansas City HRW
$ / BSH
8.8675
8.6325
8.83
0.125
1.44%
MAR ’23 Kansas City HRW
$ / BSH
8.925
8.71
8.9075
0.14
1.60%
MAY ’23 Kansas City HRW
$ / BSH
8.915
8.76
8.915
0.13
1.48%
JUL ’23 Kansas City HRW
$ / BSH
8.7475
8.555
8.7225
0.105
1.22%
SEP ’23 Kansas City HRW
$ / BSH
8.645
#N/A
8.51
0
0.00%
JUL ’22 MLPS Spring Wheat
$ / BSH
8.8
#N/A
9.0375
0
0.00%
SEP ’22 MLPS Spring Wheat
$ / BSH
8.9825
8.755
8.955
0.055
0.62%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.135
8.905
9.105
0.0375
0.41%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.26
9.065
9.24
0.03
0.33%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.315
9.28
9.315
0.015
0.16%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.355
9.32
9.355
0.005
0.05%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.12
9.12
9.12
-0.0175
-0.19%
SEP ’21 ICE Dollar Index
$
106.835
106.135
106.79
0.47
0.44%
AU ’21 Light Crude
$ / BBL
102.14
99.03
100.14
0.64
0.64%
SE ’21 Light Crude
$ / BBL
99.11
96.03
97.29
0.77
0.80%
AUG ’22 ULS Diesel
$ /U GAL
3.662
3.5209
3.5577
-0.0439
-1.22%
SEP ’22 ULS Diesel
$ /U GAL
3.5989
3.4589
3.5015
-0.0395
-1.12%
AUG ’22 Gasoline
$ /U GAL
3.4015
3.3005
3.353
0.024
0.72%
SEP ’22 Gasoline
$ /U GAL
3.2506
3.158
3.2049
0.0143
0.45%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
172.7
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
176.1
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
132.925
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
138.475
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
112.15
0
0.00%
AUG ’22 Live Hogs
$ / CWT
0
#N/A
105.95
0
0.00%
JUL ’22 Class III Milk
$ / CWT
22.05
22.05
22.05
-0.05
-0.23%
AUG ’22 Class III Milk
$ / CWT
21.62
21.6
21.6
-0.08
-0.37%
SEP ’22 Class III Milk
$ / CWT
21.83
21.75
21.79
-0.16
-0.73%
