Afternoon report: Corn prices find meager gains in Friday’s session
USDA’s latest World Agricultural Supply and Demand Estimates report, out earlier today, didn’t cause much of a shake-up for grain prices. Soybean prices fell more than 1% despite USDA showing tightening domestic stocks and robust export demand, with traders locking in profits after seeing prices rise to the highest level in nearly a decade earlier this week. Most wheat contracts finished Friday’s session slightly higher, with corn picking up modest gains. Kansas City HRW contracts showed the most upside, moving nearly 1% higher.
NOAA’s latest 72-hour cumulative precipitation map shows more rain is possible across large areas of the Midwest and Plains between Saturday and Monday, although few places will gather much more than 0.25″ during this time. Most of North Dakota could see 0.75″ or more over the weekend, however. NOAA’s 8-to-14-day outlook predicts a return to seasonally dry conditions between June 17 and June 23, with much hotter-than-normal weather likely across the eastern two-thirds of the country.
On Wall St., the Dow tumbled 740 points lower in afternoon trading to 31,532 on the heels of more bearish inflation data. The May consumer price index report showed that year-over-year inflation has reached the highest level since 1981, at 8.6%. Energy futures trended lower as well. Crude oil dropped 0.75% this afternoon but remains above $120 per barrel. Diesel dropped a similar amount, with gasoline down more than 2%. The U.S. Dollar firmed substantially.
On Thursday, commodity funds were net buyers of corn (+4,500), soybeans (+10,500) and soymeal (+4,000) contracts but were net sellers of soyoil (-3,000) and CBOT wheat (-3,500).
Corn
Corn prices fought through a choppy session to emerge with modest gains after USDA’s WASDE report failed to show anything that would shock prices in either direction. (Click here to read our full coverage and exclusive analysis of the report’s key numbers.) July futures picked up 0.25 cents to reach $7.7325, while September futures added 3.5 cents to $7.3275.
Corn basis bids were steady to firm after rising 2 to 10 cents higher at three Midwestern locations on Friday. An Illinois ethanol plant bucked the overall trend after dropping 5 cents today.
USDA’s outlook for corn in today’s WASDE report includes assumptions of “larger beginning stocks, slightly higher use and increased ending stocks,” according to the June report. Beginning stocks increased by 45 million bushels, which is mostly due to a decline in exports this marketing year. Export expectations were lowered 50 million bushels, while food, seed and industrial use trended 5 million bushels higher.
Domestic ending stocks for 2021/22 increased to 1.485 billion bushels, and 2022/23 ending stocks also moved higher, reaching 1.400 billion bushels. Analysts expected to see a modest decline for both numbers. The season-average farm price for producers held steady, at $6.75 per bushel.
French farm office FranceAgriMer noted a two-point quality decline for corn in its latest crop report, with 88% of the crop rated in good-to-excellent condition through June 6.
The prospect of margin calls is why most traders are willing to pay so much for options, according to grain marketing consultant Roger Wright. Every day, options lose one day of life, he adds. “Therefore, the probability of that option making money also diminishes.” Wright takes a closer look at this concept in today’s Ag Marketing IQ blog – click here to learn more.
Preliminary volume estimates were for 261,516 contracts, which was down considerably from Thursday’s final count of 465,518.
Soybeans
Soybean prices eroded more than 1% lower on a round of profit taking despite USDA reporting healthy export demand and tightening stocks in today’s WASDE report. Prices remain close to a decade-long high, meantime. July futures fell 21 cents to $17.48, with August futures down 17.75 cents to $16.62.
Soybean basis bids showed some volatility in either direction on Friday, tumbling as much as 20 cents lower at two interior river terminals while firming 10 cents higher at two Midwestern processors today.
USDA’s latest outlook for soybeans saw lower beginning and ending stocks, plus higher prices. The agency raised its soybean export estimates by 30 million bushels to 2.17 billion, “reflecting strong export sales and a reduced export forecast for Brazil.” That meant 2022/23 ending stocks fell 30 million bushels to 280 million, versus an average trade guess of 307 million.
USDA’s new South American production estimates for 2021/22 firmed. Brazilian production increased to 4.629 billion bushels, while Argentine production increased to 1.595 billion bushels.
China plans to auction off another 18.4 million bushels of its state reserves of imported soybeans on June 17 to replenish local supplies and quell high prices. The country has offered similar auctions regularly throughout 2022.
If it has been awhile since you’ve ventured over to FarmFutures.com, our Friday feature “7 ag stories you might have missed” offers a nice snapshot of the industry’s top headlines over the past several days. The latest batch of content includes stories on farmland price trends, a push by Nutrien to ramp up potash production, an unusual battle between two state beef councils and more. Click here to get started.
Preliminary volume estimates were for 207,413 contracts, trending 36% below Thursday’s final count of 322,719.
Wheat
Wheat prices moved mostly modestly higher on Friday after some technical buying on the heels of a mixed bag of USDA supply and demand data. July Chicago SRW futures picked up a penny to reach $10.7225, July Kansas City HRW futures rose 10.25 cents to $11.7250, and July MGEX spring wheat futures held steady at $12.24.
USDA’s outlook for wheat includes a trend of increased supplies, steady domestic use, unchanged exports and higher stocks. Supplies firmed 8 million bushels from a month ago, reaching 1.737 billion bushels. In contrast, analysts were expecting to see a modest reduction, with an average trade guess of 1.713 billion bushels. 2022/23 ending stocks also moved 8 million bushels higher to reach 627 million bushels. The agency notes that this is still 4% lower from year-ago levels.
USDA projects the season-average farm price at $10.75 per bushel, which is unchanged from May.
Russian consultancy IKAR increased its estimates for the country’s 2022 wheat production, moving it to 3.197 billion bushels from its mid-May forecast of 3.123 billion bushels. It also raised its expectations for Russian wheat exports to 1.506 billion bushels.
French farm office FranceAgriMer reported lower soft wheat quality ratings for the sixth consecutive week, with 66% of the crop in good-to-excellent condition through June 6. That’s a 25-point decline since early May as the country has struggled with plenty of hot, dry weather since that time.
Egypt’s supply ministry reports that the country’s strategic wheat reserves are sufficient to last through the end of this year. Egypt also has vegetable oil reserves that should last six months. The country is a significant importer of both commodities.
Preliminary volume estimates were for 90,616 CBOT contracts, tracking moderately below Thursday’s final count of 138,326.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-Jul
781
765.75
773.25
0.25
22-Sep
737
722.75
732.75
3.5
Soybeans
22-Jul
1775.5
1742.75
1745.5
-21
22-Sep
1604
1578.75
1584.25
-15.75
Soymeal $/ton
22-Aug
420.6
414.3
417.6
1
Soyoil cents/lb
22-Aug
80.59
78.38
78.46
-1.86
Wheat $/bushel
22-Jul
1081.25
1053
1070.75
1
22-Sep
1095
1066.75
1084.75
1.75
KC Wheat
22-Jul
1167.75
1140
1162.5
10.25
22-Sep
1173.75
1146.75
1169.25
11.75
MPLS Wheat
22-Jul
1232
1213
1221.5
0
22-Sep
1230.25
1212.5
1221.25
4
Live Cattle cents/lb
22-Jun
136.95
136
136
-1.05
Feeder Cattle cents/lb
22-Sep
177.775
175.5
175.65
-1.725
Lean Hogs cents/lb
22-Jul
106.875
105.225
105.85
0.85
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Jul
122.75
118.33
120.5
-1.01
Diesel
22-Jul
4.5135
4.3155
4.3657
-0.038
Unleaded Gasoline $/gallon
22-Jul
4.3224
4.1259
4.1578
-0.1184
Natural Gas
22-Aug
9.161
8.635
8.812
-0.166
U.S. Dollar Index
22-Jun
104.23
103.06
104.175
0.957
Gold $/ounce
22-Jul
1876.6
1824.1
1869.5
20.7
Copper
22-Jun
4.34
4.3
4.3
-0.089
Fertilizer Swaps
(as of 06/10)
DAP Tampa-index
1,105.0
-12.5
DAP-New Orleans
862.6
19.29
Urea-New Orleans
542.9
-63.38
Urea-Middle East
675.0
-24
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
620.6
-35.27
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