Morning report: Economic sanctions’ impact on fertilizers and global food security. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 4-8 cents
Soybeans down 11-19 cents; Soymeal down $5.20/ton; Soyoil down $1.11/lb
Chicago wheat down 17-24 cents; Kansas City wheat down 7-9 cents; Minneapolis wheat down 7-12 cents
*Prices as of 6:50am CST.
Editor’s note: Farm Futures is conducting its March 2022 survey to project 2022 acreage estimates ahead of USDA’s March 31 Prospective Plantings report. We will release the survey results ahead of USDA’s numbers so farmers can adjust grain marketing plans accordingly.
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Good morning! I want to give a special shout-out to the Scales Mound Hornets boys’ basketball team on their Class 1A third place finish in the Illinois state basketball tourney last night! With an average enrollment of 70.5 students, Scales Mound was by far the smallest school at state (you know I’m channeling Hoosiers vibes this morning) but definitely had the BEST crowd!
I may have been a Warren Warrior, but Scales Mound was a second home growing up. It hosted multiple generations of Hollands – and counting – now flung across both coasts (the family group chat was LIT yesterday!). That hometown pride in the sports teams’ successes was an important part of my younger life and I’m so happy those boys and the town can celebrate that a little extra today!
Inputs
Russian’s announcement yesterday that it would ban agricultural commodities from being exported in retaliation against Western economic sanctions imposed on the country after its invasion into Ukraine.
Six South American countries banded together overnight to convince the Kremlin to keep fertilizer exports off the list of agricultural products that Russian is now banning from export. Brazilian agricultural minister Tereza Cristina Dias rounded up agreements with Argentina, Bolivia, Chile, Paraguay and Uruguay to submit to the U.N.’s Food and Agriculture Organization (FAO) that outline the products that would severely impact the region should Moscow’s bans be strictly enforced.
“Global food inflation is something that should worry all countries,” Dias said in a recent interview, noting that a potential fertilizer shortage in South America could also be hazardous for global food security efforts.
The U.N.’s FAO warned overnight that global food and feed prices are likely to rise by 20% over the next year, triggering potential famine outbreaks as Ukrainian crop production forecasts remain unclear.
“The likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally,” FAO Director General Qu Dongyu said in a statement.
“Worryingly, the resulting global supply gap could push up international food and feed prices by 8 to 22% above their already elevated levels,” said the FAO, noting that the global volume of undernourished persons could increase by a staggering 8 million to 13 million people in 2022/23.
Brazil is the world’s largest fertilizer importer, relying on international purchases for 85% of its fertilizer requirements. Over one-fifth of its nitrogen fertilizers, 15% of its phosphate supplies, and over a quarter of its potash imports for fertilizer consumption come from Russia.
The U.S. is not likely to be immune to escalating conflicts between Russia as far as fertilizer dependence goes. The U.S. sources a mere 6% of its potash from Russia, with another 6% originating from Russia’s ally, Belarus. Going forward, trade flows between top potash supplier Canada will need to remain largely unhindered to ensure U.S. farmers are able to affordably produce 2022 crops.
Overnight, large global fertilizer producer Yara announced it has ended its purchases of inputs from sanctioned Russian companies and individuals. Yara announced earlier this week it was cutting production at two ammonia fertilizer plants in France and Italy as a result of soaring natural gas prices and supply shortfalls amid Western sanctions from the Russian military conflict in Ukraine.
“Yara is currently reviewing the detailed scope and impact of the sanctions,” the company said in a statement. “However, Yara repeats its concern for global food security and calls on government action to protect food supply chains and decrease dependency on Russia.”
The takeaway: Maintaining strong relationships between global entities has allowed U.S. farmers to farm at profitable rates over the past decade. But as those alliances deteriorate amid the Russian-Ukrainian conflict, a new era of higher production prices and more competitive – and potentially hostile – trade relationships may be on the horizon.
Corn
Corn prices tumbled on overnight showers across Brazil, boosting crop conditions for the freshly planted safrinha corn crop. The overnight losses follow bullish price prospects earlier this week from trimmed South American forecasts and increased potential for U.S. corn exports amid the ongoing Black Sea conflict.
A bullish weekly export report for corn yesterday helped support some positive late night price action for old crop prices. Old crop export sale volumes nearly tripled from the previous week to a staggering 92.5 million bushels booked between February 25 – March 3 as global buyers scrambled to snap up the available corn surplus in the U.S.
It was the largest volume of weekly old crop export sales recorded in the 2021/22 marketing year. Unknown buyers accounted for nearly a third of those new purchases, with details about the buyers’ identities likely to be more widely known as the cargoes are loaded for shipping.
That dynamic triggered weekly export shipping volumes to 69.4 million bushels through March 3 – the second largest weekly loading volume following the marketing year high of 74.3 million bushels set two weeks ago. China (21.9M bu.) was the top destination for U.S. corn shipped over the past week.
Soybeans
Soybean prices saw late-night support on rising U.S. export forecasts, but those gains turned to losses quickly this morning as showers in Argentina continue to benefit crop development.
Old crop soybean export sales more than doubled to 84.1 million bushels for the week ending March 3 as shortfalls in South American soybean crops and exportable supplies led buyers to panic order shipments of U.S. soybeans. Unknown buyers currently account for the lions’ share of the new sales with heavy suspicion that China may be leading the charge on the buying spree as global supplies tighten.
USDA cut a combined 356 million bushels of 2021/22 soybean production from Brazil, Argentina, and Paraguay in Wednesday’s WASDE report from prior February 2022 estimates. That represents a 5% decrease from February 2022 South American production volumes.
Just to quantify the scale of the South American crop losses, since early December 2021, nearly 1.04 billion bushels of combined Brazilian, Argentine, and Paraguayan soybean production for the 2021/22 has been erased – a 13.6% loss in three months.
Wheat
After rejecting all offers on a tender earlier this week, lower wheat prices brought Tunisia back to the buying table overnight on a tender issued for soft wheat and feed barely.
Tensions are easing in the wheat market as recent price hikes level off. The wheat complex is on pace for its biggest weekly decline in 8 years as global trade flows realign and speculative buyers shift their investment capital to equity markets.
“The primary action in the (wheat) market continues to be the rapid erosion of the premium in U.S. basis,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters overnight.
“The scramble for prompt wheat has clearly passed. And the U.S. market is somewhat disappointed that more export sales have not been reported.”
While yesterday’s weekly export report showed bullish prospects for U.S. corn and soybean exports, the same did not hold true for wheat. Even with surplus available wheat supplies for export, high prices and freight costs are not likely to make U.S. wheat an attractive alternative for Black Sea buyers.
May 2022 Chicago SRW futures contracts have dropped just over $3/bushel since Tuesday (22%), to $10.60/bushel and change as markets have calmed down following Russia’s unprovoked military invasion into Ukraine a couple weeks ago.
In that timespan, May 2022 Minneapolis futures have shed $1.465/bushel (12%) to land this morning at $10.535/bushel. The May 2022 Kansas City HRW contract has lost $2.215/bushel since Monday (17%), settling around $10.5725/bushel at last glance.
While volatility seems to be the only constant in market forecasting over the past two weeks, Wednesday’s WASDE report and more reactionary efforts to market chaos amid the Black Sea conflict becoming more widely known have helped markets to somewhat stabilize. At least, that is, for this morning’s trading session.
Weather
Cooler temperatures will persist across the Heartland again today, according to NOAA’s short-range forecasts. Snow and a wintry precipitation mix will dust the Southern Plains and Eastern Corn Belt today. Skies are forecast to clear across the Heartland by tomorrow afternoon.
Financials
Yesterday’s consumer price index (CPI) reading on prices surged in February 2022 on higher energy prices from the Russian-Ukrainian conflict. Consumer prices have increase 7.9% from a year ago, the highest inflationary reading in 40 years.
On Wall Street, stocks traded higher in hopes of a potential ceasefire agreement between Russia and Ukraine though volatility seems to be the only constant in the markets these days.
Oil prices soared again this morning, with the nearby Brent contract trading just over $111/barrel at last glance. Overnight, world powers ended efforts to revive the 2015 nuclear accord with Iran. President Biden is expected to call for an end to normal trading relations with Russia overnight, a day after Moscow issued its own export bans in retaliation against Western sanctions.
Also worth a read on our website, FarmFutures.com
Our team’s coverage of the March 2022 WASDE report from USDA.
Crop budgets have shifted significantly over the past few weeks. Here is your guide to calculating the most accurate budget for your farm.
Bryce Knorr points out that fertilizer decisions – especially for nitrogen – will factor heavily into 2022 acreage.
Three European fertilizer producers, Yara, Hungarian-based Nitrogenmuvex, and Borealis, are cutting fertilizer production due to surging natural gas prices and limited supplies. That will likely add to growing risks of rising global food inflation.
These four links can help you monitor drought across the country this spring.
The Farm Progress group held several live events virtually last week to examine the market impacts from the Russian invasion into Ukraine. You can access recordings of those events here.
Mike Wilson interviews a U.S. farmer who owns land in Ukraine. “We plan to plant this spring,” Roger Denhart reassures Wilson, despite the ongoing Russian invasion.
Morning Ag Commodity Prices – 3/11/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
7.6425
7.58
7.5925
0.015
0.20%
MAY ’22 CORN
$ / BSH
7.645
7.4725
7.4825
-0.075
-0.99%
JUL ’22 CORN
$ / BSH
7.2975
7.16
7.1725
-0.0875
-1.21%
SEP ’22 CORN
$ / BSH
6.775
6.6725
6.685
-0.09
-1.33%
DEC ’22 CORN
$ / BSH
6.5275
6.4275
6.4375
-0.08
-1.23%
MAR ’23 CORN
$ / BSH
6.505
6.415
6.4275
-0.0625
-0.96%
MAY ’23 CORN
$ / BSH
6.4825
6.3975
6.3975
-0.07
-1.08%
MAR ’22 SOYBEANS
$ / BSH
17.0725
16.87
16.87
-0.13
-0.76%
MAY ’22 SOYBEANS
$ / BSH
16.9575
16.71
16.73
-0.1325
-0.79%
JUL ’22 SOYBEANS
$ / BSH
16.675
16.425
16.445
-0.15
-0.90%
AUG ’22 SOYBEANS
$ / BSH
16.1975
15.9425
15.9725
-0.155
-0.96%
SEP ’22 SOYBEANS
$ / BSH
15.405
15.2175
15.23
-0.135
-0.88%
NOV ’22 SOYBEANS
$ / BSH
14.9525
14.7675
14.7775
-0.145
-0.97%
JAN ’23 SOYBEANS
$ / BSH
14.7775
14.61
14.625
-0.135
-0.91%
MAR ’23 SOYBEANS
$ / BSH
14.285
14.1475
14.1675
-0.1225
-0.86%
MAY ’23 SOYBEANS
$ / BSH
14.125
13.99
14.015
-0.115
-0.81%
MAR ’22 SOYBEAN OIL
$ / LB
79.42
#N/A
80.85
0
0.00%
MAY ’22 SOYBEAN OIL
$ / LB
74.81
73.16
73.66
-1.02
-1.37%
MAR ’22 SOY MEAL
$ / TON
0
#N/A
506.8
0
0.00%
MAY ’22 SOY MEAL
$ / TON
485.7
478
478.3
-5.4
-1.12%
JUL ’22 SOY MEAL
$ / TON
471.2
463.9
464.7
-4.5
-0.96%
AUG ’22 SOY MEAL
$ / TON
456.6
451.9
452.4
-4
-0.88%
SEP ’22 SOY MEAL
$ / TON
444.5
441
441.7
-2.7
-0.61%
MAR ’22 Chicago SRW
$ / BSH
0
#N/A
10.7375
0
0.00%
MAY ’22 Chicago SRW
$ / BSH
11.2625
10.5275
10.64
-0.23
-2.12%
JUL ’22 Chicago SRW
$ / BSH
10.88
10.185
10.3
-0.1525
-1.46%
SEP ’22 Chicago SRW
$ / BSH
10.4075
9.8025
9.9325
-0.1575
-1.56%
DEC ’22 Chicago SRW
$ / BSH
10
9.4625
9.6225
-0.1475
-1.51%
MAR ’22 Kansas City HRW
$ / BSH
0
#N/A
10.5225
0
0.00%
MAY ’22 Kansas City HRW
$ / BSH
11.0525
10.48
10.585
-0.0725
-0.68%
JUL ’22 Kansas City HRW
$ / BSH
10.97
10.38
10.46
-0.0825
-0.78%
SEP ’22 Kansas City HRW
$ / BSH
10.835
10.295
10.3975
-0.0575
-0.55%
DEC ’22 Kansas City HRW
$ / BSH
10.73
10.1975
10.235
-0.1425
-1.37%
MAR ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
11.0825
0
0.00%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.02
10.475
10.475
-0.075
-0.71%
JUL ’22 MLPS Spring Wheat
$ / BSH
10.7575
10.2475
10.2475
-0.105
-1.01%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.4575
10
10
-0.11
-1.09%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.4025
9.98
9.98
-0.0725
-0.72%
MAR ’21 ICE Dollar Index
$
98.82
98.26
98.405
-0.099
-0.10%
AP ’21 Light Crude
$ / BBL
110.25
104.48
107.15
1.13
1.07%
MA ’21 Light Crude
$ / BBL
107.17
101.27
104.13
1.14
1.11%
APR ’22 ULS Diesel
$ /U GAL
3.5229
3.1699
3.403
0.1068
3.24%
MAY ’22 ULS Diesel
$ /U GAL
3.3941
3.0714
3.2808
0.0851
2.66%
APR ’22 Gasoline
$ /U GAL
3.3
3.0874
3.2673
0.1106
3.50%
MAY ’22 Gasoline
$ /U GAL
3.2746
3.0639
3.2322
0.098
3.13%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
151.65
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
156.25
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
135.9
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
132.45
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
100.1
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
107.375
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.41
22.4
22.4
-0.02
-0.09%
APR ’22 Class III Milk
$ / CWT
23.89
23.88
23.89
0
0.00%
MAY ’22 Class III Milk
$ / CWT
23.77
#N/A
23.88
0
0.00%
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