Morning report: Plus – a preview of what to expect in today’s USDA reports. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 3-6 cents
Soybeans up 2-6 cents; Soymeal up $2.60/ton; Soyoil down $0.25/lb
Chicago wheat up 4-8 cents; Kansas City wheat up 4-6 cents; Minneapolis wheat up 4-8 cents
*Prices as of 6:50am CDT.
Good morning! And happy USDA report day! USDA’s National Agricultural Statistics Service (NASS) releases the 2022 Small Grains Summary, Quarterly Grain Stocks report, and will also potentially make revisions to the 2021 corn and soybean crops in its data dump today at 11am CDT.
Here are a few of the key items I’ll be watching for in today’s reports. A full copy of this preview is available online and features more statistical insights and logic for the 2021 crop revisions, as well as the reasoning behind other potential data revisions.
As always, our team will be providing real-time coverage of the September 30 USDA reports, which are released by USDA’s National Agricultural Statistics Service (NASS) at 11am CDT. Follow us at FarmFutures.com or on social (@FarmFutures) for all the latest updates and insights.
Small Grains Summary
The highlight of this USDA-NASS report will be wheat production. The markets are expecting USDA to trim back some of its earlier estimates released in August to account for what perhaps may have been an overestimation of winter crop yields.
Hard red spring wheat crops are expecting to see a slight upward revision. That could bode bearishly for Minneapolis futures, though price action is likely to be determined by diplomatic stability in the Black Sea in the coming days.
On the surface, this report appears to have bullish to neutral sentiments for wheat prices, as markets expect the total U.S. wheat crop to be slightly smaller than previous estimates. But a big factor for wheat prices following tomorrow’s reports will depend largely on first quarter (Q1 2022/23) usage rates for the freshly harvested wheat crop – regardless of its size.
Quarterly Grain Stocks Report – Corn
Average trade guess peg September 1, 2022 corn stocks at 1.512 billion bushels. If this holds true, it would put 2021/22 Q4 corn usage rates at 2.834 billion bushels – a 1.4% decrease from corn usage rates a year ago.
Lower cattle consumption of corn could be a factor for the lower usage rates, especially as drought has decimated pastures on the Plains and feed costs remain high. Ethanol output began trending lower towards the end of Q4 2021/22, which could also add some bearish prospects to the corn markets on Friday. A strong dollar and renewed access to Black Sea corn supplies is also limiting export interest for U.S. corn.
The trade range for September 1 corn stocks is pretty wide – a total variance of 216 million bushels amid a range of 1.42 billion and 1.633 billion bushels. If USDA’s numbers trend higher than the 1.512-billion-bushel mark, bearish price action could be afoot.
Of course, some of these potential price losses will be limited by a smaller 2022 crop. But as corn consumers – both at home and abroad – begin to show more buying resistance to higher prices, corn growers should prepare accordingly for tighter profit margins in the coming months.
Quarterly Grain Stocks Report – Soybeans
Soybean stocks represent a much more optimistic story ahead of tomorrow’s reports. Record Q3 soybean usage volumes left fewer available soybean supplies around the countryside during the summer months, though marketing year-to-date soy crushings were nearly 3% higher than the same time a year ago through July 2022. June and July crush rates were 8% higher than a year ago as domestic buyers competed against export markets for U.S. soybeans.
With that background, it should come as no surprise that the market is expected September 1 soybean stocks to come in at 242 million bushels. If USDA’s forecast holds true to analyst expectations, that volume would translate into 729 million bushels of soybeans consumed between June 1 and September 1 of this year – a staggering 43% increase from last year’s Q4 usage rates.
The trade range for the September 1 volume is narrower for soybeans than corn. Only 49 million bushels separate the lowest trade estimate (215M bu.) from the largest (264M bu.). That implies more certainty leading up to the USDA-NASS reports tomorrow and potentially more price volatility if USDA’s expected revisions do not reflect the strong late-season demand push in the soybean market.
All told, soybeans likely have the most significant chance of a bullish price run in tomorrow’s reports relative to corn and wheat.
Quarterly Grain Stocks Report – Wheat
While corn and soybean markets will be evaluating marketing year-end stocks, September 1 wheat volumes will provide the first look at supplies and usage rates for the 2022/23 marketing year.
Markets expect the September 1 wheat reading to mirror last year’s volumes during the same reporting period. That is a direct reflection of two consecutive growing seasons of drought – this year’s excessive dryness eroded hard red winter wheat yields in the Plains after last year’s dry spell in the Northern Plains tanked 2021 spring wheat production.
The average trade guess for September 1 wheat stocks stands at 1.776 billion bushels – a scant 0.1% increase from a year ago. That translates into a quarterly usage rate of nearly 777 million bushels. The estimate featured a range of guesses from 1.663 billion – 1.844 billion bushels.
While that usage rate would be a 4% decline from year ago, the wide range reflects a wide degree of uncertainty with these estimates (about 181M bu. worth of it) – similar to corn. Of course, USDA is likely to adjust wheat production estimates in its Small Grains Summary, which will also impact usage calculations.
But as the estimates stand today, I don’t expect dynamics to shift too significantly in the wheat market which will likely keep wheat prices neutral in response to the USDA data. Domestic demand has been strong through the first quarter of the 2022/23 wheat marketing year, though export sellers have faced some buying resistance due to a stronger dollar.
Usage rates are likely to be calculated in the middle of the pack – maybe slightly higher – relative to the same reporting period in the past seven years. If USDA makes further cuts to 2022 wheat production, that could reduce Q1 usage, which would be bearish for prices.
But if NASS does not make significant changes to production or previous stock readings, wheat prices could continue to gain upward price momentum from falling Argentine wheat output and concerns about Black Sea supply availability.
Quarterly Grain Stocks Report – Other considerations
In some cases, revisions were made throughout the year as late reports or corrections were submitted to NASS. For example, NASS had to adjust March 1, 2022 off-farm corn stocks 94.1 million bushels lower in the June 1, 2022 Quarterly Grain Stocks report after late reports from commercial facilities were filed with USDA in March, according to my personal correspondence with NASS’s chief for the crops branch, Lance Honig.
Statistics are not a perfect science and sometimes revisions to previous reports are necessary to ensure accuracy. And as labor markets tighten – especially in agriculture – it’s more likely that some of these reporting metrics are subject to revisions.
2021 Corn & Soybean Production
Feedback from the Field updates! How is harvest progress going on your farm this fall?! Click this link to take the survey and share updates about your farm’s harvest progress. I review and upload results daily to the FFTF Google(TM) MyMap, so farmers can see others’ responses from across the country – or even across the county!
I published an updated Feedback from the Field column to our site on Tuesday. Check it out for the best farmer insights from across the country. More harvesting progress has been made over the past week, but it is still slow going as many farmers continue to wait for crops to mature.
Corn
Corn prices rose $0.03-$0.06/bushel overnight as markets continue to fret over Black Sea supply access and dry weather in Argentina that will likely shrink its corn crop during the 2022/23 growing season. Gains were capped by persistent global recession fears amid high inflationary forces.
“The market is worried about escalation in Russia-Ukraine war,” one Singapore-based trader told Reuters last night. “Dry conditions in parts of the U.S. Plains and Argentina could threaten production.”
Markets are also bracing for today’s USDA reports, which are likely to show larger U.S. corn stocks – a sign that demand destruction forces could be at play in the corn market currently.
Today marks the close of the third quarter of the 2022 fiscal year, which is likely to feature corn prices recording a 6.7% gain due in large part to a smaller than expected 2022 crop.
Soybeans
Soybean prices edged $0.02-$0.06/bushel higher this morning on last minute positioning ahead of USDA reports, which are expected to show tightening soybean stocks in the U.S. amid rapid export demand this spring. Gains were limited by advancing harvest pressures.
Soybean prices are expected to close the third quarter today at a loss.
Low water levels on the Mississippi River are causing barges to limit loading volumes, slowing soybean flows to export terminals at the U.S. Gulf during peak soybean harvest and export season. And with a dry extended forecast for the Mississippi River basin, those worries are not likley to subside quickly.
“The projections for the water levels are going down, which means this situation is going to get worse,” Mike Steenhoek, executive director for the Soy Transportation Coalition, told Reuters. “Unless we get a significant amount of rainfall soon, this season is going to be a challenge.”
In lower regions of the Mississippi River, tow boats are only pulling 40% of their usual capacity through the shipping lanes, forcing grain originators to use alternative transportation – which tends to be costlier and more time intensive – to ship grain and oilseed supplies.
Yesterday, the National Weather Service announced that river levels at Memphis were at the eighth-lowest on record and are on track to top historic lows set during the infamous drought of 1988. A shipper in Cairo, Illinois reported 10 barges have run aground on the river just south of the city due to receding water levels.
Much of the lower half of the Mississippi River is being plagued by drought, according to the National Drought Monitor.
USDA data noted that grain barge unloading paces at Louisiana Gulf locations are trending 39% lower than the five-year average since September 1. That means that as export volumes are likely to be limited, growers may be better off looking closer to home for higher cash offerings for freshly harvested crops this fall.
Wheat
Chicago wheat prices surged past the $9/bushel benchmark overnight on lingering concerns about Russian relations and Ukrainian export capacity in the Black Sea. Overall, the U.S. wheat complex traded $0.07-$0.11/bushel higher on continued Black Sea worries.
As a result, wheat is expected to close the month 8% higher, marking the second consecutive month of gains for wheat prices. Third quarter earnings in the wheat market are expected to be flat to slightly higher compared to Q2.
Weather
Skies are forecast to be clear through much of the weekend in the Heartland, though far east regions of the Eastern Corn Belt could see some Hurricane Ian rains by tomorrow afternoon. A low-pressure system is keeping a rain system in place over the Northern Rockies. Parts of that system could drift east into the Dakotas and Nebraska over the weekend, which would slow harvest progress.
The favorable weather conditions will likely continue into the first week of October as well. NOAA’s 6-10-day outlook is showing cooler temperature probabilities for the Upper Midwest and Eastern Corn Belt, though chances for perception continue to hover between normal to slim. The 8-14-day outlook is still trending warmer and continues to show below average chances for precipitation for much of the Heartland through the end of next week.
That’s good news for corn, soybean, and spring wheat growers eager to make significant strides on harvest progress over the next two weeks. But for growers in the Plains who are eager to receive moisture for newly planted winter wheat crops, the next couple weeks could be a little more anxiety-producing if no rains move into the Plains.
Hurricane Ian is slated to make landfall in South Carolina today after devastating Florida the past couple days. NOAA is warning residents along the coast of dangerous storm surges and hurricane-force winds. NOAA expects “major to record river flooding” will persist in Central Florida over the next week.
Financials
After touching its lowest point since November 2020 yesterday, S&P 500 futures rose 0.21% to $3,662.00 on a round of bargain buying following a very volatile week in the financial markets. The Eurozone reported September 2022 inflation at 10% and updated Personal Consumption Expenditure (PCE) data expected today will be closely watched for signs that interest rate hikes are cooling higher prices.
The PCE is the primary metric the Fed uses to measure inflation. The worries about persistently high inflation are giving rise to fear in the financial markets that interest rate hikes could bring about a global recession, especially if inflation doesn’t show any signs of relenting in today’s PCE report.
“In the trade-off between growth and inflation, the Fed is going to choose inflation,” Desmond Lawrence, senior investment strategist at State Street Global Advisors, told the Wall Street Journal this morning. “That’s what’s really giving you the choppiness that we’ve had in the past week in particular.”
What else I’m reading this morning on our website, FarmFutures.com:
Naomi Blohm reminds market watchers that China still needs soybeans ahead of Friday’s USDA reports.
My latest E-corn-omics column examines the fast start to Brazil’s soybean planting season and explains why the Brazilian crop is so important this year.
Commstock’s Matthew Kruse weighs the pros and cons of rain in Brazil as soybean planting season ramps up.
Management coach Tim Schaefer offers insights for farmers who view farm transition planning as “something to think about” to move into a “Let’s roll!” mindset.
Morning Ag Commodity Prices – 9/30/2022
Contract
Units
High
Low
Last
Net Change
% Change
DEC ’22 CORN
$ / BSH
6.75
6.6925
6.745
0.05
0.75%
MAR ’23 CORN
$ / BSH
6.815
6.76
6.8075
0.0475
0.70%
MAY ’23 CORN
$ / BSH
6.825
6.775
6.82
0.045
0.66%
JUL ’23 CORN
$ / BSH
6.77
6.7225
6.76
0.035
0.52%
SEP ’23 CORN
$ / BSH
6.3
6.2675
6.3
0.04
0.64%
DEC ’23 CORN
$ / BSH
6.1725
6.14
6.17
0.03
0.49%
AR2 ’24 CORN
$ / BSH
6.24
#N/A
6.205
0
0.00%
AY2 ’24 CORN
$ / BSH
6.2375
6.2375
6.2375
0.0125
0.20%
JUL ’24 CORN
$ / BSH
6.2225
6.205
6.2225
0.03
0.48%
NOV ’22 SOYBEANS
$ / BSH
14.1975
14.0925
14.1625
0.055
0.39%
JAN ’23 SOYBEANS
$ / BSH
14.2875
14.1875
14.2475
0.0425
0.30%
MAR ’23 SOYBEANS
$ / BSH
14.335
14.235
14.2975
0.05
0.35%
MAY ’23 SOYBEANS
$ / BSH
14.3725
14.2825
14.34
0.05
0.35%
JUL ’23 SOYBEANS
$ / BSH
14.3725
14.2825
14.335
0.04
0.28%
AUG ’23 SOYBEANS
$ / BSH
14.19
14.1275
14.1575
0.045
0.32%
SEP ’23 SOYBEANS
$ / BSH
13.84
13.775
13.82
0.055
0.40%
NOV ’23 SOYBEANS
$ / BSH
13.705
13.61
13.6675
0.0375
0.28%
AN2 ’24 SOYBEANS
$ / BSH
13.5
#N/A
13.65
0
0.00%
AR2 ’24 SOYBEANS
$ / BSH
11.5
#N/A
13.5875
0
0.00%
AY2 ’24 SOYBEANS
$ / BSH
13.62
#N/A
13.565
0
0.00%
OCT ’22 SOYBEAN OIL
$ / LB
67.23
67
67
-0.48
-0.71%
DEC ’22 SOYBEAN OIL
$ / LB
64.43
63.41
63.75
-0.11
-0.17%
OCT ’22 SOY MEAL
$ / TON
413.8
409
412.5
3.4
0.83%
DEC ’22 SOY MEAL
$ / TON
410.1
406.5
409.4
2.2
0.54%
JAN ’23 SOY MEAL
$ / TON
407.8
404.6
407.6
2.6
0.64%
MAR ’23 SOY MEAL
$ / TON
403.1
400
403
3
0.75%
MAY ’23 SOY MEAL
$ / TON
400.2
397.8
400.2
2.7
0.68%
DEC ’22 Chicago SRW
$ / BSH
9.12
8.9475
9.0825
0.12
1.34%
MAR ’23 Chicago SRW
$ / BSH
9.235
9.0725
9.2
0.12
1.32%
MAY ’23 Chicago SRW
$ / BSH
9.2975
9.1425
9.2575
0.11
1.20%
JUL ’23 Chicago SRW
$ / BSH
9.125
8.9825
9.085
0.095
1.06%
SEP ’23 Chicago SRW
$ / BSH
9.06
8.93
9.035
0.09
1.01%
DEC ’23 Chicago SRW
$ / BSH
9.05
8.9275
9.04
0.08
0.89%
AR2 ’24 Chicago SRW
$ / BSH
8.975
8.86
8.975
0.075
0.84%
DEC ’22 Kansas City HRW
$ / BSH
9.81
9.66
9.7825
0.115
1.19%
MAR ’23 Kansas City HRW
$ / BSH
9.785
9.6475
9.76
0.1175
1.22%
MAY ’23 Kansas City HRW
$ / BSH
9.76
9.6325
9.735
0.1075
1.12%
JUL ’23 Kansas City HRW
$ / BSH
9.5725
9.4925
9.555
0.105
1.11%
SEP ’23 Kansas City HRW
$ / BSH
9.49
9.44
9.49
0.125
1.33%
DEC ’23 Kansas City HRW
$ / BSH
9.485
9.3975
9.465
0.085
0.91%
AR2 ’24 Kansas City HRW
$ / BSH
0
#N/A
9.33
0
0.00%
DEC ’22 MLPS Spring Wheat
$ / BSH
9.7725
9.6425
9.73
0.07
0.72%
MAR ’23 MLPS Spring Wheat
$ / BSH
9.8025
9.6875
9.77
0.0675
0.70%
MAY ’23 MLPS Spring Wheat
$ / BSH
9.8225
#N/A
9.7225
0
0.00%
JUL ’23 MLPS Spring Wheat
$ / BSH
9.7525
#N/A
9.6725
0
0.00%
SEP ’23 MLPS Spring Wheat
$ / BSH
9.45
9.37
9.425
0.08
0.86%
DEC ’23 MLPS Spring Wheat
$ / BSH
9.365
9.36
9.36
0.0725
0.78%
AR2 ’24 MLPS Spring Wheat
$ / BSH
0
#N/A
0
0
0.00%
DEC ’21 ICE Dollar Index
$
112.565
111.54
112.515
0.313
0.28%
NO ’21 Light Crude
$ / BBL
82.56
80.75
81.11
-0.12
-0.15%
DE ’21 Light Crude
$ / BBL
81.72
79.95
80.26
-0.16
-0.20%
OCT ’22 ULS Diesel
$ /U GAL
3.4047
3.3522
3.3522
-0.0624
-1.83%
NOV ’22 ULS Diesel
$ /U GAL
3.2929
3.2241
3.2429
-0.0523
-1.59%
OCT ’22 Gasoline
$ /U GAL
2.4953
2.4736
2.475
-0.0326
-1.30%
NOV ’22 Gasoline
$ /U GAL
2.4267
2.3694
2.3708
-0.0319
-1.33%
OCT ’22 Feeder Cattle
$ / CWT
0
#N/A
177.325
0
0.00%
NOV ’22 Feeder Cattle
$ / CWT
0
#N/A
177.825
0
0.00%
CT2 ’21 Live Cattle
$ / CWT
0
#N/A
144.125
0
0.00%
DE ’21 Live Cattle
$ / CWT
0
#N/A
147.775
0
0.00%
OCT ’22 Live Hogs
$ / CWT
0
#N/A
89.45
0
0.00%
DEC ’22 Live Hogs
$ / CWT
0
#N/A
75.725
0
0.00%
SEP ’22 Class III Milk
$ / CWT
19.85
19.85
19.85
-0.02
-0.10%
OCT ’22 Class III Milk
$ / CWT
21.85
21.85
21.85
-0.09
-0.41%
NOV ’22 Class III Milk
$ / CWT
20.56
#N/A
20.81
0
0.00%
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