Morning report: Cool forecasts point to larger 2022 U.S. soy acres, triggering losses. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 4-5 cents
Soybeans down 6-10 cents; Soymeal up $0.30/ton; Soyoil down $0.93/lb
Chicago wheat up 12-14 cents; Kansas City wheat up 13-16 cents; Minneapolis wheat up 6-8 cents
*Prices as of 6:55am CDT.
Good morning! Our Feedback from the Field series is live for the 2022 season! Just click this link to take the survey and share updates about your farm’s spring progress. 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!
WASDE hangover?
No problem – we’ve got you covered. I sprinkled in insights from last Friday’s reports in today’s newsletter. Check out my latest E-corn-omics column for my full analysis of the April 2022 WASDE reports.
Corn
Corn prices continued their upward charge this morning, rising $0.04-$0.05/bushel on continued worries about Ukrainian export capacity amid the ongoing war in the region.
“Wheat and corn are again being supported today by the concern about the continuing war in Ukraine, with no real signs that a peaceful settlement could be found soon which could bring a rapid re-start to Ukraine’s wheat and corn exports,” Matt Ammermann, StoneX commodity risk manager, told Reuters this morning. “Markets are again adding a war risk premium today.”
USDA’s second weekly Crop Progress report of the season is due out today. Feedback from the Field respondents in the Corn Belt have yet to report starting the 2022 planting season as soil temperatures hover between 30-40 degrees.
With more cool and wet weather on the way, it seems unlikely that corn planting will start off on an early note. But it is still too early to abandon the crop just yet. Planting speeds are much more rapid than those of harvesting, so as soon as that narrow planting window opens, expect growers to make the most of it.
Fast planting increases the odds of higher corn acres. If you are in the camp that thinks that planting could be delayed, you may be toying with the idea of pushing back sales decisions. But the December 2022 corn futures contract is on pace for another record high today, so maybe it is time to capitalize on high prices regardless of how #Plant22 may shake out.
WASDE thoughts – corn’s domestic holdup
Corn pared some gains in the immediate aftermath of the report’s release for lack of increased domestic export forecasts, higher Brazilian production, and easing import demand from top global grains buyer, China. But the market bought much of the losses back after as the overall outlook for global corn availability going forward remains constrained amid the ongoing crisis in the Black Sea.
It was a bit of a surprise that USDA was only bullish on ethanol consumption rates and not export paces. To be sure, corn consumption rates for ethanol are strengthening as fuel prices remain high, but after China booked the largest daily flash sales of corn exports since May 2021 this week, I was expecting more of a boost for export paces.
Peak corn export season is about to ramp up, so my hopes may be too premature for April. I was not at all shocked at USDA’s downward revision for feed and residual usage for corn – it’s not easy feeding cattle at $7/bushel especially at a time when interactions with meat processors continue to be contentious and unpredictable.
USDA’s chairman of the World Agricultural Outlook Board, Mark Jekanowski, explained in USDA’s inaugural livestream briefing that there are more dynamics at play in the cattle market right now that are impacting projected corn usage rates for feed. “This is a little bit of a complicated story,” Jekanowski prefaced.
Drought on the Plains is causing producers to pull more cattle off pastures and into feedlots early this spring. Slaughter rates for cow herds were high over the past month, suggesting that a smaller breeding herd will likely shrink the overall production capacity for the cattle industry in the months ahead.
The anticipated constriction in the cattle industry will likely keep livestock corn consumption capped in the coming months, especially if corn prices remain at record levels. From an economist’s point of view, the fact that one of the country’s largest consumers of corn is poised to scale back demand but corn prices are still rising (thank you, ethanol and exports) is a pretty wild concept to wrap my brain around.
As December 2022 corn futures continue to rise to new contract highs ($7.2125/bushel at last glance), the market is desperate for additional 2022 acreage after last week’s Prospective Plantings report signaled a mere 89.5 million acres of corn likely to be planted this spring. Cool and wet weather continues to plague the regions of the Midwest that are prime for adding corn acreage this spring and the longer it lasts, the further the probability of adding corn acres falls.
Soybeans
Soybean futures took a $0.06-$0.10/bushel loss this morning as cool and wet weather forecasts in the Midwest narrow the window for corn planting and increase the odds of a larger soybean crop this year. Losses in the energy complex also limited soy’s gains this morning.
“There is concern cold weather in parts of the United States is slowing corn plantings, which is also supportive to corn today,” Ammermann said. “It looks increasingly doubtful that the U.S. will achieve an early corn planting completion.”
“This is also weakening soybeans today, as if U.S. farmers do not plant all the corn they want they might plant more soybeans as the U.S. plantings report on March 31 has already suggested.”
WASDE thoughts – South American crops and Chinese imports
Revisions to South American crops were among the most widely watched items in today’s report. Corn production (4.57B bu.) in Brazil is now only 26 million bushels smaller than the soybean harvest (4.59B bu.), thanks to favorable winter weather for Brazil’s corn crops.
It is the most even both crops have been relative to one another since 2013. In fact, 2012 was the last time that Brazil harvested more corn than soybean bushels so the narrow gap this year is certainly something to watch.
While USDA left Argentine corn and soy crops alone in today’s reports, it took another 114 million bushels of combined soybean production away from Brazil in Paraguay. Since the December 2021 WASDE report, USDA has erased over 1.1 billion bushels of soybean production from Brazil, Argentina, and Paraguay’s combined soybean harvests for the year.
USDA’s cuts to Brazil’s soybean export forecasts were even more aggressive than its cuts to harvest totals. The USDA eliminated 101 million bushels of Brazil’s 2021/22 soybean exports, dropping the total volume to 3.04 billion bushels – just a hair above 2020/21 volumes.
To that end, USDA also slashed Chinese corn and soybean imports for the 2021/22 season. While a USDA attache report released last week suggests that China’s feed grain demand for livestock will increase in 2022/23, it seems that the country is attempting to ward off high prices as long as possible for the time being.
About 118 million bushels of corn imports and 110 million bushels of soybean imports were cut from China’s forecasts for the remainder of the year. The reduction in corn import volume was a direct reflection of shuttered Ukrainian export terminals, as Ukrainian corn was previously a staple for Chinese buyers.
Rapid U.S. soybean export loading volumes to China over the past eight weeks led USDA to increase soybean export forecasts today for the second time in the past two months. Prior to that, USDA had left soybean export estimates largely ignored through much of the peak soybean export season last fall.
But the boost is more than warranted now. During the last eight weeks, soybean export loading paces to top buyer China have risen 121% over volumes from the same time last year. This is significant because the time period typically represents peak Brazilian exporting periods – and downtime for U.S. soybean exports.
Domestic usage appears to be largely limited by high prices at the moment. September through February 2022 soy crush rates are trending fractionally below (0.4%) year-ago rates, so I’m inclined to believe that growers are going to need to rely on export markets for any hopes of further spring and summer rallies for the soybean market.
Wheat
Wheat prices rose $0.06-$0.15/bushel this morning as the Russian-Ukrainian war continues to amplify global supply concerns. Russia continues to ship wheat exports, though at a reduced volume compared to a year ago.
“If Ukraine’s exports remain all but halted and Russia’s stay reduced, the focus is likely to remain on the alternative global supplies. This could make markets very sensitive to any adverse weather in exporters like the United States which could reduce supplies available to the world market,” Ammermann told Reuters.
Wet and cool spring weather could help boost winter wheat conditions in today’s weekly Crop Progress report. But there is still a long way for the U.S. winter wheat crop to go before markets are less concerned with future supply constraints.
Last week’s report found only 30% of the nation’s crop to be in good to excellent condition. Drought on the Plains and in the West continues to be the largest factor working against U.S. wheat crops, so any sign of improvement this week could trigger bearish price signals for the wheat market this afternoon.
The World Bank expects that Ukraine’s GDP will fall by over 45% this year due to Russia’s unprovoked military invasion into the country. Russia’s GDP is expected to shrink 11% due to economic sanctions levied against it by Western countries.
Over the weekend, it appeared that Russian forces are regrouping to focus on strengthening its presence in Eastern Ukraine. Ukrainian growers continue to struggle adequate fertilizer and fuel supplies to continue planting. Russian missile strikes are increasingly inflicting damage to these farms, raising doubts about Ukraine’s ability to plant – and even harvest – 2022 grain and oilseed crops.
Weather
Winter fun never ends, it seems. The Northern Plains will fend off more wintry precipitation mixes today, according to NOAA’s short-range forecasts, which could further delay spring wheat planting in the region.
Winds will continue to batter western regions of the Plains while rain stretches from East Texas across the Eastern Corn Belt today, dropping about an inch of rain on the region over the next 24 hours.
Financials
U.S. stock markets edged lower this morning as a global bond selloff continues amid growing concerns about central bank interest rate hikes. That means more expensive costs for borrowing money – particularly for land and homeowners.
“A move this profound from a corner of markets that has such pervasive effects — from pricing of credit to the determination of ‘risk free returns’ is a cause for major risk re-pricing, one would suspect,” Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd, told Bloomberg this morning. “I think the impact of such sustained and strong moves in Treasury yields will be hard to dodge for anyone.”
Also worth a read on our website, FarmFutures.com
Our team’s latest coverage from last Friday’s WASDE reports.
The Brazilian safrinha corn crop is looking better each day, Commstock Investment’s Matthew Kruse writes. What that means for U.S. corn growers in a recent Ag Marketing IQ column.
The March 2022 Farm Futures survey found that fertilizer availability will not be as big of an issue for growers this spring. The bigger issues on farmers’ minds? Chemical and parts availability and, as always, weather.
Even with high input costs, farmer profits are expected to remain comfortable this year. Bill Biedermann shares tips on how to maximize revenue opportunities so farmers can minimize the pain of higher inputs.
Morning Ag Commodity Prices – 4/11/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAY ’22 CORN
$ / BSH
7.75
7.6575
7.72
0.0325
0.42%
JUL ’22 CORN
$ / BSH
7.6875
7.5775
7.655
0.0475
0.62%
SEP ’22 CORN
$ / BSH
7.35
7.25
7.3225
0.0475
0.65%
DEC ’22 CORN
$ / BSH
7.2325
7.135
7.205
0.045
0.63%
MAR ’23 CORN
$ / BSH
7.235
7.1475
7.21
0.045
0.63%
MAY ’23 CORN
$ / BSH
7.23
7.15
7.215
0.05
0.70%
JUL ’23 CORN
$ / BSH
7.195
7.1125
7.1775
0.05
0.70%
MAY ’22 SOYBEANS
$ / BSH
16.975
16.7375
16.7875
-0.1025
-0.61%
JUL ’22 SOYBEANS
$ / BSH
16.765
16.55
16.6
-0.08
-0.48%
AUG ’22 SOYBEANS
$ / BSH
16.265
16.1
16.13
-0.07
-0.43%
SEP ’22 SOYBEANS
$ / BSH
15.4275
15.2625
15.3175
-0.06
-0.39%
NOV ’22 SOYBEANS
$ / BSH
15.02
14.8375
14.895
-0.06
-0.40%
JAN ’23 SOYBEANS
$ / BSH
14.9975
14.83
14.8775
-0.0625
-0.42%
MAR ’23 SOYBEANS
$ / BSH
14.77
14.6375
14.6975
-0.0475
-0.32%
MAY ’23 SOYBEANS
$ / BSH
14.73
14.63
14.66
-0.055
-0.37%
JUL ’23 SOYBEANS
$ / BSH
14.71
14.6775
14.6775
-0.035
-0.24%
MAY ’22 SOYBEAN OIL
$ / LB
75.6
74.05
74.11
-1.01
-1.34%
JUL ’22 SOYBEAN OIL
$ / LB
74.07
72.46
72.64
-0.83
-1.13%
MAY ’22 SOY MEAL
$ / TON
471.3
466.3
470.2
2
0.43%
JUL ’22 SOY MEAL
$ / TON
465.7
460.9
464.7
2.1
0.45%
AUG ’22 SOY MEAL
$ / TON
454.3
451.5
452.2
0
0.00%
SEP ’22 SOY MEAL
$ / TON
439
437.3
438.9
0.7
0.16%
OCT ’22 SOY MEAL
$ / TON
426.2
423.7
425.9
1.2
0.28%
MAY ’22 Chicago SRW
$ / BSH
10.7975
10.55
10.63
0.115
1.09%
JUL ’22 Chicago SRW
$ / BSH
10.8625
10.6125
10.6975
0.115
1.09%
SEP ’22 Chicago SRW
$ / BSH
10.8275
10.595
10.66
0.095
0.90%
DEC ’22 Chicago SRW
$ / BSH
10.7725
10.56
10.59
0.0625
0.59%
MAR ’23 Chicago SRW
$ / BSH
10.655
10.4675
10.5
0.0675
0.65%
MAY ’22 Kansas City HRW
$ / BSH
11.3075
11.0925
11.1825
0.115
1.04%
JUL ’22 Kansas City HRW
$ / BSH
11.355
11.1225
11.2175
0.1175
1.06%
SEP ’22 Kansas City HRW
$ / BSH
11.33
11.1
11.185
0.0925
0.83%
DEC ’22 Kansas City HRW
$ / BSH
11.3125
11.1
11.1525
0.0675
0.61%
MAR ’23 Kansas City HRW
$ / BSH
11.2475
11.0975
11.1425
0.1125
1.02%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.3975
11.2375
11.3925
0.12
1.06%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.39
11.22
11.3425
0.075
0.67%
SEP ’22 MLPS Spring Wheat
$ / BSH
11.18
11
11.125
0.07
0.63%
DEC ’22 MLPS Spring Wheat
$ / BSH
11.1625
11.01
11.11
0.0725
0.66%
MAR ’23 MLPS Spring Wheat
$ / BSH
11.11
11.0775
11.09
0.0875
0.80%
JUN ’21 ICE Dollar Index
$
100.02
99.61
99.865
0.112
0.11%
MA ’21 Light Crude
$ / BBL
98.52
93.48
93.68
-4.58
-4.66%
JU ’21 Light Crude
$ / BBL
97.95
93.13
93.29
-4.44
-4.54%
MAY ’22 ULS Diesel
$ /U GAL
3.3586
3.2364
3.2384
-0.0792
-2.39%
JUN ’22 ULS Diesel
$ /U GAL
3.2267
3.1134
3.1179
-0.0806
-2.52%
MAY ’22 Gasoline
$ /U GAL
3.1284
3.0107
3.0129
-0.1187
-3.79%
JUN ’22 Gasoline
$ /U GAL
3.105
2.9892
2.9892
-0.1199
-3.86%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
156.55
0
0.00%
MAY ’22 Feeder Cattle
$ / CWT
0
#N/A
159.375
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
137.825
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
133.825
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
99.025
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
108.425
0
0.00%
APR ’22 Class III Milk
$ / CWT
24.23
24.18
24.23
0.05
0.21%
MAY ’22 Class III Milk
$ / CWT
24.93
24.85
24.91
0.06
0.24%
JUN ’22 Class III Milk
$ / CWT
24.8
24.77
24.8
0.16
0.65%
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