Morning report: Plus – exciting news from the inputs sector and a preview of today’s WASDE report. (Comments are updated by 7:30 a.m. Central Time.)
Corn down 1-3 cents
Soybeans down 1-7 cents; Soymeal up $1.10/ton; Soyoil down $0.53/lb
Chicago wheat down 7-8 cents; Kansas City wheat down 6-8 cents; Minneapolis wheat down 1-8 cents
*Prices as of 6:55am CDT.
Feedback from the Field updates! It’s the busiest time of year across the Heartland as farmers finish up planting spring 2022 crops and begin crop protection activities over the next few weeks. While our FFTF responses have trended lower over the past week, we are still receiving valuable insights from farm country. Here are the highlights:
“Will need a small amount of replant,” reported an Ohio corn producer.
“Uneven emergence,” a North Dakota corn grower shared of local corn crops.
“Late planted, but good stands and color,” noted a Missouri corn farmer. “Planting in our area started second week of May.”
Another Ohio grower noted better than average corn conditions despite a late start. “The county is behind on planting as many farmers were afraid of the cold conditions!”
“All that is left to plant is double crop soybeans and it will be 2 weeks before we harvest wheat,” shared a Kentucky corn, soy, and wheat grower.
“Cold and rainy spell after planting caused about a 10-day delay in emergence,” a Nebraska soybean grower noted of the local soy crop.
“The beets are planted, but not where they should have been. The rotation is a mess, but they are in,” lamented a Minnesota soybean, spring wheat, and sugarbeet producer.
“Oats were planted timely (Easter weekend) and look very nice,” chirped a Michigan grower. “Everything’s planted in this area with the exception of dry beans which are in progress.”
“Sunflowers will be 100% planted in the next 25 hours,” a North Dakota producer forecasted on Tuesday.
I have recently updated our survey to reflect current growing conditions, so you can share updated crop progress from your area as often as you would like through the survey portal!
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!
Good morning and happy WASDE day! Here is a quick preview of what to expect from today’s USDA reports. For a more detailed preview of what to expect from international production and usage estimates, check out the full preview article on our website.
As always, Farm Futures will be providing live coverage of the report’s release on our website, FarmFutures.com, and through our social media channels (@FarmFutures) following USDA’s latest data updates. Join us at 11am CDT for all the latest updates!
Wheat production
U.S. wheat production forecasts to be updated from USDA on Friday will likely generate the most significant chance of price volatility from the anticipated June 2022 WASDE reports. The May 2022 report found a lower-than-expected volume of 2022 winter wheat production, primarily due to hard red winter wheat shortfalls in the Southern Plains.
This month, the analyst guesses do not vary as widely, which means any price volatility will not likely be as severe as in May, unless USDA greatly deviates from last month’s forecasts. However, analysts do expect the losses for hard red winter wheat to continue to mount and are already issuing lower unofficial spring wheat production forecasts as well.
USDA will likely not issue official spring wheat forecasts until the July 2022 WASDE report. But calculating backwards using the total wheat crop and winter wheat crop estimates provides market watchers with a moving target of how USDA’s 2022 spring wheat estimates may shake out.
To that end, the average trade guess for total wheat production is slated to shrink by 16 million bushels (1%) from May 2022 forecasts. I expect a smaller 2022 wheat crop will be calculated on Friday to reflect spring wheat acres in North Dakota and Minnesota that were either a) unplanted due to weather delays from cool temps, late season snowstorms, and excessive spring showers or b) planted late due to said delays and likely to develop lower yields as a result.
Domestic stocks – old crop
With the 2021/22 marketing year for wheat now in the books, this will likely be the last month we see USDA make significant changes to 2021/22 wheat usage rates. Current analyst estimates forecast supplies will continue to grow – likely from anemic wheat export paces this spring.
Soy stocks are likely to further tighten amid an unseasonal buying spree from Chinese importers. The U.S. Census Bureau’s April 2022 trade data release on Tuesday pointed to a 22% monthly increase in soybean export sales relative to March 2022 volumes.
While price also played a factor in the extra revenues, the increase in volume was also significant. Exporters shipped 134.4 million bushels of soybeans in April 2022, a 15% increase from March. April soy shipment volumes have averaged 78.4 million bushels per month over the past five years, so this April 2022 reading is as rare as it is high.
U.S. soy shipping volumes are typically low during the spring months as buyers snap up South American bushels, so Tuesday’s findings with the staggering April export volumes and revenues were truly remarkable.
Old crop corn supplies are expected to remain largely unchanged.
Domestic stocks – new crop
U.S. corn planting delays are likely to move the 2022/23 ending stocks volume around 20 million bushels lower in Friday’s report, further tightening volumes available on the corn market.
While the supply adjustments are not likely until the July 2022 WASDE following the June 30 Acreage and Quarterly Stocks reports, it will be more interesting (at least to me) to see if USDA ends up revising 2022/23 corn export volumes (currently pegged at 2.4B bu.) beyond the original 100-million-bushel cut already forecast from the previous marketing year in light of strong domestic ethanol production forecasts.
I’ll also be eager to see if USDA makes any changes to feed and residual usage categories for corn. That usage metric is currently slated to be 5% lower than 2021/22 volumes amid a shrinking U.S. cattle herd. Any upward revisions would suggest that USDA has new data to suggest that the cattle market expansion could begin earlier than the late 2023 timeline currently forecasted, though I don’t expect this will be likely.
Soybean and wheat supplies are expected to only see minor ending stock volume changes, with wheat’s adjustments likely to be made on the production side due to yield and acreage shortfalls across the Plains.
South American corn and soy production
Brazilian corn production will be the key item to watch in this section of Friday’s report. Brazil has battled more hot and dry weather as its safrinha corn crop matured over the past couple months. With harvest expected to begin in the next few weeks and rains and cooler temperatures expected next week, markets are eager for any sign of potential yield loss.
The trade continues to call for additional cuts to Brazil’s soybean crop. It’s not out of line that USDA would make revisions to Brazilian soybean production at this point – forecasters at the World Ag Outlook Board (WAOB) closely track Brazilian export paces to reconcile against production estimates.
And as crop shortfalls limited Brazil’s export season this spring and U.S. soybean exports have been on the rise. The prospect has sent July 2022 soybean futures matching 10-year highs in Thursday morning trade. New contract highs could be recorded in tomorrow’s trading session if USDA cuts the estimate on Brazilian soybean production and exports beyond the current average trade guess (4.58B bu.).
Notably, Argentina’s Rosario Grains Exchange also called for higher soybean forecasts (1.55B bu., up 2% from last month) in estimates released early yesterday morning. That could limit any upward price gains if USDA issues further cuts to Brazil’s soybean crop.
Global stocks
Markets have been roiling in recent weeks on hopes – and skepticism – that some sort of peace negotiations between Russia and Ukraine will finally free trapped Ukrainian grain supplies. Any potential USDA revisions to Ukrainian export volumes could help calm market volatility – at least temporarily.
I expect to see the most volatility from the wheat markets amid global adjustments, especially as harvest looms in the Northern Hemisphere. Corn and soybean global stocks are going to be dependent upon any adjustments to U.S. and South American supplies.
Inputs
A fire at a liquefied natural gas (LNG) export facility in Houston, Texas has shut down one of the biggest LNG export plants in the U.S. following an explosion late Wednesday evening. The Freeport LNG plant can process up to 2.1 billion cubic feed of natural gas per day, exporting up to 15 million tonnes per year of LNG. It processes 20% of total U.S. LNG supplies.
The plant will remain shut down for three weeks. About 70% of the Freeport LNG plant’s monthly production over the past few months was exported to the U.K. and E.U., which are already reeling after cutting ties with Russian natural gas suppliers.
European LNG purchases from the U.S. over the past six months have resulted in record U.S. export volumes for LNG shipments. The Freeport LNG shutdown will likely have more dire impacts on European fuel availability and pricing than the U.S.
In fact, the U.S. – and specifically farmers – could stand to benefit from the slower export paces. U.S. natural gas storage volumes are currently 15% below normal levels for this time of year, flirting with an April 2019 low.
With hot temperatures expected across the Heartland and the South in the coming week, the country will be able to endure the heat comfortably while gas and power utilities companies can have a much-needed chance to restock LNG supplies.
“U.S. power grid operations might actually benefit from this additional supply,” Bernadette Johnson, general manager for power and renewables at Enverus, told Reuters yesterday. “However this is a relatively short-term event and the price impact should be short lived here in the U.S.”
The lower natural gas prices could also provide some temporary price relief for fertilizer producers and eventually trickle downstream to farm buyers.
More fertilizer news
Canadian fertilizer company Nutrien yesterday laid out expansion plans for potash and nitrogen production capacity through 2025 to address global supply shortages derived from Western banking sanctions levied against Russia and Belarus, two of the world’s top potash producers.
Nutrien is one of the world’s largest fertilizer producers. The company plans to add 5 million metric tonnes (MMT) of new potash capacity and 500k MT of nitrogen production between 2020 and 2025.
Nutrien currently is forecast to produce 15MMT of potash in 2022. That is a 2MMT increase from 2020 levels and adds an extra 1MMT of production that will largely be added to the market in the second half of 2022. The company now expects to produce 18MMT of potash by 2025.
“The acceleration pathway is through existing low-cost capacity that is unmatched in the industry and supported by world-class global logistics infrastructure,” the company said in a statement. “The incremental production capability is expected to be added at a similar annual pace to the additions over the past two years.”
Nutrien’s proposed plans for a clean nitrogen facility showed that construction on the facility – if it is approved – will begin in 2024. The plant is expected to be fully operational at 1.2MMT of clean ammonia by 2027.
Nutrien’s interim CEO, Ken Seitz, expects that current global crop supply tightness is unlikely to be resolved over the next one to two years. Seitz said in the company’s virtual investors update held yesterday that it will take several years for Russian and Belarusian potash output levels to recover from the negative impacts of Western banking sanctions.
The tight crop supplies mean that the company will likely keep fertilizer prices high over the next couple years. But the added production capacity could help relieve some price pressure on tight market supplies.
For more insights from Nutrien’s investor update and market outlook sessions from earlier this week, check out its investor events webpage.
Retail fertilizer prices continue to hover near record-highs, according to bi-weekly production data published by the Illinois USDA. But wholesale prices at the U.S. Gulf are beginning to back off highs, suggesting signs of seasonal demand slowdowns and inventory restocking.
This is largely good news for growers around the world, who have felt constrained by rising input costs and tightening global supplies over the past year. South America growers have especially the squeeze as its planting season approaches over the next few months.
But Brazil’s agriculture ministry has negotiated access to Russian fertilizer shipments, proclaiming that Russia has “saved” Brazil’s 2022/23 crops. Russia continues to ship fertilizer supplies to Brazil despite Western financial sanctions against Russia.
And Brazil is happy for the access. The country imports more than 85% of its fertilizers and has scrambled in recent months to strike deals with fertilizer producers around the world – namely Canadian and Middle Eastern suppliers – to ensure growers have access this fall.
Interestingly, year to date Brazilian fertilizer imports through May 2022 are 16.5% higher than a year ago, according to shipping agency Cargonave.. This likely points to expanded Brazilian corn and soybean acreage for the 2022/23 marketing campaign, which could help reduce prices and alleviate tight supplies.
USDA has previously cautioned of potential production downgrades in South America during the 2022/23 marketing year due to tight fertilizer supplies and high prices that would restrict grower applications and thus reduce yields. But if adequate input supplies are available and weather holds, Brazil could see record corn and soybean crops in the coming year which could turn prices for corn and soybeans lower.
Most of the shipments have been sourced from Russia.
Corn
Dry and hot forecasts for the Midwest bode well for corn crop development over the next week. But that sentiment sent corn prices $0.02-$0.03/bushel lower this morning. Improved Ukrainian grain shipping rates also had bearish price prospects for the corn complex, though losses were capped by strong domestic demand at play in local cash markets.
Soybeans
July 2022 soybean futures flirted with a 10-year high during yesterday’s trading session, thanks to strong export and domestic usage rates. It neared a record high price of $17.89/bushel on yesterday’s export optimism but has since backed down.
“The U.S. continues to see strong export sales of soybeans, bolstering old-crop prices,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters this morning.
Profit-takers took the tops off those highs in the overnight trading session, sending soybean prices $0.01-$0.07/bushel lower at last glance. But that rally could resume today if USDA makes further cuts to Brazil’s soybean crop.
Wheat: Wheat prices continued lower overnight as weather improvements in the U.S. Plains and European Union quell fears about global crop shortfalls. Improved shipping access for Ukrainian grain was also a bearish price factor for wheat and corn prices overnight. A stronger dollar also kept wheat trading in the red this morning.
According to European Union Commissioner of Agriculture Janusz Wojciechowski, Ukraine is now shipping nearly 2 million metric tonnes (MMT) of grain per month to international buyers. The war-ravaged country was previously shipping 1MMT of grain monthly.
“According to information from Ukraine, the export of grains is gradually rising and nearing two million tonnes per month currently,” Wojciechowski said overnight.
Improved shipping access on the Danube River has been a key source of improved grain flows for Ukraine. Train and truck shipments also continue to move Ukrainian grain into neighboring countries, albeit at a slower pace and higher cost.
Prior to Russia’s invasion, Ukraine was shipping 6MMT of grain monthly via export terminals in the Black Sea. However, those port facilities remain blocked by the Russian naval blockade as well as by mines planted near the harbors.
The United Nations’ Food and Agriculture Organization (FAO) predicts that 11 million – 19 million will go hungry in the next year due to Russia’s war in Ukraine.
Weather
Rain showers and thunderstorms will hover over the Central Mississippi River Valley this afternoon, according to NOAA’s short-range forecasts. The showers will shift eastward overnight into the Eastern Corn Belt.
Showers and thunderstorms are also forecast in the Northern Plains and Upper Midwest late tonight and early tomorrow morning. Another shower system is expected to move into the Upper Midwest on Sunday.
NOAA’s 6- to 10-day forecasts updated yesterday are trending warmer and dryer for the Upper Midwest while the 8- to 14-day forecast is beginning to show dry and warm conditions across the country.
Financials
The U.S. Labor Department is expected to release updated Consumer Price Index (CPI) data this morning that will provide the latest insights about the pace of inflation’s impact on the economy during the month of May. The April inflation reading stood at 8.3%, which was 0.2% lower than March but still high relative to the past four decades.
Market watchers expect today’s May 2022 inflation reading will trend similar to the April 8.3% benchmark, indicating that inflationary pressures are going to remain high – but at least aren’t continuing to rise.
U.S. stock futures wavered in the lead-up to the CPI release. S&P 500 futures edged 0.02% lower to $4,016.75 at last glance.
What else I’m reading this morning on our website, FarmFutures.com:
Naomi Blohm encourages corn producers to take advantage of the recent corn market rally, noting a seasonal tendency for December corn futures to drop shortly after the June USDA report into “late June.”
My latest E-corn-omics column takes a look at potential wheat pricing opportunities at harvest for growers who may be battling production shortfalls this summer.
Bryce Knorr points out that summer lows may be in for fuel and fertilizer – and encourages growers to consider locking in input prices for Fall 2022 harvest and the 2023 growing season.
Even though sales volumes slowed down relative to 2021, cropland prices are up 20% on the year, suggesting strong land demand isn’t going anywhere in 2022.
Morning Ag Commodity Prices – 6/10/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.74
7.665
7.685
-0.045
-0.58%
SEP ’22 CORN
$ / BSH
7.315
7.24
7.26
-0.0325
-0.45%
DEC ’22 CORN
$ / BSH
7.1925
7.115
7.1375
-0.03
-0.42%
MAR ’23 CORN
$ / BSH
7.2325
7.1625
7.18
-0.0325
-0.45%
MAY ’23 CORN
$ / BSH
7.2475
7.1775
7.1875
-0.0375
-0.52%
JUL ’23 CORN
$ / BSH
7.1975
7.1375
7.16
-0.025
-0.35%
SEP ’23 CORN
$ / BSH
6.67
6.67
6.67
-0.02
-0.30%
JUL ’22 SOYBEANS
$ / BSH
17.7275
17.5675
17.64
-0.05
-0.28%
AUG ’22 SOYBEANS
$ / BSH
16.825
16.6825
16.76
-0.0375
-0.22%
SEP ’22 SOYBEANS
$ / BSH
16.015
15.8925
15.9525
-0.05
-0.31%
NOV ’22 SOYBEANS
$ / BSH
15.8225
15.6925
15.75
-0.0725
-0.46%
JAN ’23 SOYBEANS
$ / BSH
15.84
15.715
15.78
-0.065
-0.41%
MAR ’23 SOYBEANS
$ / BSH
15.6775
15.5575
15.6175
-0.0725
-0.46%
MAY ’23 SOYBEANS
$ / BSH
15.645
15.5375
15.565
-0.08
-0.51%
JUL ’23 SOYBEANS
$ / BSH
15.5875
15.48
15.515
-0.08
-0.51%
AUG ’23 SOYBEANS
$ / BSH
15.1825
15.1825
15.1825
-0.14
-0.91%
JUL ’22 SOYBEAN OIL
$ / LB
82.95
81.75
82.01
-0.62
-0.75%
AUG ’22 SOYBEAN OIL
$ / LB
80.59
79.55
79.84
-0.41
-0.51%
JUL ’22 SOY MEAL
$ / TON
429.8
425.6
426.6
-0.9
-0.21%
AUG ’22 SOY MEAL
$ / TON
417.7
414.6
415.2
-2
-0.48%
SEP ’22 SOY MEAL
$ / TON
408.3
405.9
406.5
-2
-0.49%
OCT ’22 SOY MEAL
$ / TON
401.2
399.2
400.1
-1
-0.25%
DEC ’22 SOY MEAL
$ / TON
402.1
399.7
400.3
-1.7
-0.42%
JUL ’22 Chicago SRW
$ / BSH
10.8125
10.6175
10.62
-0.0925
-0.86%
SEP ’22 Chicago SRW
$ / BSH
10.95
10.7525
10.755
-0.0925
-0.85%
DEC ’22 Chicago SRW
$ / BSH
11.0725
10.8775
10.8825
-0.09
-0.82%
MAR ’23 Chicago SRW
$ / BSH
11.16
10.9975
11
-0.0675
-0.61%
MAY ’23 Chicago SRW
$ / BSH
11.185
11.03
11.0375
-0.075
-0.67%
JUL ’22 Kansas City HRW
$ / BSH
11.6325
11.46
11.465
-0.0725
-0.63%
SEP ’22 Kansas City HRW
$ / BSH
11.7
11.5325
11.5325
-0.075
-0.65%
DEC ’22 Kansas City HRW
$ / BSH
11.785
11.6125
11.6125
-0.0825
-0.71%
MAR ’23 Kansas City HRW
$ / BSH
11.81
11.7
11.7
-0.05
-0.43%
MAY ’23 Kansas City HRW
$ / BSH
11.68
11.68
11.68
-0.015
-0.13%
JUL ’22 MLPS Spring Wheat
$ / BSH
12.32
12.235
12.245
0.005
0.04%
SEP ’22 MLPS Spring Wheat
$ / BSH
12.3025
12.215
12.24
0.0175
0.14%
DEC ’22 MLPS Spring Wheat
$ / BSH
12.2825
12.1975
12.23
0.0275
0.23%
MAR ’23 MLPS Spring Wheat
$ / BSH
12.295
12.275
12.295
0.0625
0.51%
MAY ’23 MLPS Spring Wheat
$ / BSH
0
#N/A
12.2025
0
0.00%
JUN ’21 ICE Dollar Index
$
103.635
103.06
103.63
0.412
0.40%
JU ’21 Light Crude
$ / BBL
122.6
120.09
122.21
0.7
0.58%
AU ’21 Light Crude
$ / BBL
120.05
117.73
119.72
0.63
0.53%
JUL ’22 ULS Diesel
$ /U GAL
4.498
4.39
4.4764
0.0727
1.65%
AUG ’22 ULS Diesel
$ /U GAL
4.383
4.2872
4.3623
0.0567
1.32%
JUL ’22 Gasoline
$ /U GAL
4.3224
4.23
4.2945
0.0183
0.43%
AUG ’22 Gasoline
$ /U GAL
4.1237
4.0413
4.098
0.0141
0.35%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
176.025
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
177.375
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
137.05
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
137.2
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
106.975
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
105
0
0.00%
JUN ’22 Class III Milk
$ / CWT
24.42
#N/A
24.42
0
0.00%
JUL ’22 Class III Milk
$ / CWT
24.88
#N/A
24.95
0
0.00%
AUG ’22 Class III Milk
$ / CWT
24.94
#N/A
24.97
0
0.00%
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