Morning report: Corn mixed and soy trades higher ahead of updated global supply and demand updates. (Comments are updated by 7:30 a.m. Central Time.)
Plus – a preview of today’s USDA reports
Corn mixed to down 1-8 cents
Soybeans up 5-24 cents; Soymeal up $5.50/ton; Soyoil up $2.44/lb
Chicago wheat down 37-47; Kansas City wheat down 35-39 cents; Minneapolis wheat down 15-19 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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Happy WASDE day!
Good morning! USDA releases its monthly World Agricultural Supply and Demand Estimates (WASDE) report today at 11am CST. This month’s report will focus heavily on South American production and the U.S. response to the Black Sea crisis.
But don’t be too surprised if USDA does not provide the market solutions to current price volatility due to the conflict. It is still early in this conflict to grasp the full consequences of what some of these sanctions and military activities will mean for the markets as a whole.
Here is a brief preview of what to expect from today’s reports. A full preview is available on our website. As always, our team will provide live coverage and analysis as the report is released, so tune in to FarmFutures.com or our social feeds (@FarmFutures) at 11am CST for the most current information.
Domestic stocks
USDA will likely leave supply estimates alone this month, though as March 31 Quarterly Grain Stocks reports are released, market watchers can expect those numbers to shift in the April 2022 WASDE. That leaves demand adjustments to be the sole focus in this month’s report.
Trade guesses suggest that USDA will tighten corn stocks by 60 million bushels in today’s report. As livestock producers battle $7/bushel corn, it seems unlikely that extra usage kick will come from the livestock and residual category but rather from exports and potentially ethanol.
In the soybean market, analysts expect USDA to trim 47 million bushels from soybean stocks on strong demand, from both at home and abroad. Strong domestic crush volumes and increasing export demand from China and other global buyers.
Forecasters expect USDA to cut 20 million bushels of wheat from current U.S. 2021/22 ending stock projections in today’s WASDE. The best hope for increased U.S. wheat consumption is likely to come in the form of exports as Black Sea markets remain inaccessible during the Russian-Ukrainian conflict.
South American Production
USDA was conservative with their February 2022 cuts to South American production. But as soybean harvest wraps up in Brazil and closes in on Argentina’s crops, expect more concrete production forecasts, especially as export paces are reported.
Bottom line: Keep a close eye on an USDA revisions to Brazil and Argentina’s crop and export forecasts. The Black Sea may be dominating headlines, but the issues with the South American crops still represent significant fundamental challenges for the global grain and oilseed markets.
Global stocks
While South American crop modifications will invariably cause some global ending stock repositioning, there will be increased focus on Russian and Ukrainian stocks and export projections for wheat and corn forecasts. To be sure, pre-report trade estimates are not expecting any significant jockeying in global grain and oilseed stocks and trade flows from today’s report.
But USDA could also scale back import volumes on the countries that rely heavily on the Black Sea grain market and any significant changes could trigger rapid price volatility. African and Middle Eastern countries rely heavily on grain shipments from Russia and Ukraine, especially after drought gripped the Middle East last year and North Africa endures dry conditions currently.
Also, be sure to watch for potential export revisions for countries with available exportable supplies as the Black Sea market remains closed and harvest for Northern Hemisphere crops is still a few months away. Brazil has already hinted at more corn and wheat exports. India and Australia are also primed to fulfill export orders in the coming months.
Remember – we are still in the early days of this conflict and are still measuring its impacts to global markets. USDA’s revisions to global figures could easily change as more market developments come to light in the coming months.
Inputs
Yara, the world’s second largest ammonia fertilizer producer, announced overnight it would stop ammonia and urea production at the company’s Italy and France plants as natural gas prices once again surge due to economic sanctions levied against Russian fuel supplies due to the ongoing Ukrainian military conflict.
Global natural gas prices have hit record highs in recent days over the conflict. The two plants, located in Ferrara, Italy and Le Havre, France, combine for an annual production capacity of 0.9 million tonnes of urea and 1 million tonnes of ammonia.
“Including optimisation and maintenance at other production facilities, Yara’s European ammonia and urea production is expected to be operating at approximately 45% of capacity by the end of this week,” the company said in a statement.
The cuts are likely to further tighten already shrinking global fertilizer supplies just as peak planting activity is slated to begin across the Northern Hemisphere. Yara’s plant closures late in 2021 were believed to have a similar effect, though a rapid surge in production late in the year largely restored production volumes, the company said.
“Yara will continue to monitor the situation and to the extent possible use its global production system to keep supplying customers and secure continuity in food supply chains, but curtailing production where necessary due to challenging market conditions,” the company said.
Corn
Rising corn export prospects for South America kept corn prices mixed this morning.
Soybeans
Strong global edible oil demand and prospects for a shrinking South American crop helped propel prices in the U.S. soy complex higher overnight. Soybean futures gained $0.07-$0.23/bushel while soymeal futures surged 1%-1.5% higher with nearby futures settling over the $480/ton benchmark.
Wheat
Global wheat prices fell again overnight on a round of profit-taking following the intense market volatility faced by the wheat market over the past two weeks. Yesterday’s losses were the first in seven trading sessions. Markets are largely waiting results from today’s USDA reports while trying to balance changing world economic dynamics in the face of the Russian-Ukrainian conflict.
Speculative traders are also exiting some long positions on wheat and other grain commodities in favor of a rising equities markets overnight, which is further inflating the price action in the wheat sector.
France increased its export outlook for the 2021/22 marketing season overnight, cutting its ending stocks as it gears up to step in to supply global buyers as Black Sea markets remain inaccessible. The French farm office FranceAgriMer projects 2021/22 exports will total 356 million bushels, an increase of 9% increase in export volumes from February 2022 forecasts.
Traders expect that Algerian wheat demand, which shifted to Russian originators earlier in the export season, will return back to French shores for soft wheat supplies.
Iraq only has enough wheat on hand in its strategic reserves to last until April 2022, according to Alaa al-Jubouri, the country’s trade minister. The country’s government is currently reviewing export deals with the U.S. and Germany after last year’s production shortfall due to drought.
A Ukrainian cabinet resolution passed overnight banned export sales of rye, barley, buckwheat, millet, sugar, salt, and wheat until January 2023. This news came a day after Ukraine attempted to issue export licenses to spur the international shipments of corn, wheat, and sunflower exports via railway.
However, Russian forces have been cutting off food access to besieged Ukrainian cities, so this latest resolution is likely a method of keeping Ukrainians in these cities nourished as they continue to weather out the war.
India has booked about 18.4 million bushels worth of wheat export sales over the past few days, according to traders. With five consecutive years’ worth of bumper crops at its disposal, India will likely be a top candidate to step in to fulfil previous export orders that were sourced out of the Black Sea.
India is expected to export over 257 million bushels of wheat during the 2021/22 – a new record high for the Asian country. It’s low shipping costs to Southeast Asian destinations make it a lucrative option for buyers looking to save money as wheat prices soar to 14-year highs (in Chicago) or even record high prices (in Paris). Most sales have been booked at $9.25-$9.53/bushel FOB.
“The buyers, who are worried about supply disruptions from Ukraine and Russia, know that only India can be a big, steady supplier of wheat at this point of time, and that’s why they have turned to India,” a dealer told Reuters.
Weather
Cooler temperatures have settled into the Heartland for the week, according to NOAA’s short-range forecasts. Snow and a wintry precipitation mix will dust the Central Plains and far Eastern Corn Belt today. The system over the Plains will slowly move East into the Central Mississippi River Valley over the next 24-36 hours.
Financials
Russia continues its brutal assault on residential Ukrainian areas as Russian forces continue to face Ukrainian resistance in their advances. The tactic does not bode well for the long-term future of Ukraine’s infrastructure system, which could continue to leave Ukrainian grain inaccessible to the outside world.
Ceasefire talks between Russia and Ukraine have yielded few results so far but hope for humanitarian help has increased as the Russian shelling continues.
S&P 500 futures rose 64.75 points (1.55%) overnight to $4,233.50 as global stocks recovered from yesterday’s selloff. “The war in Ukraine continues to dominate everything,” Lorcan Roche Kelly wrote for Bloomberg this morning, noting that more Western companies are pulling out of their businesses in Russia.
Nickel took off on a wild rally yesterday, as metal supplies from the Black Sea remain constricted. Global commodities continued their pause from yesterday overnight as nearby Brent crude oil contracts shrunk back below the $125/barrel mark.
Also worth a read on our website, FarmFutures.com
Both of my E-corn-omics articles! The first one on wheat (A Black Sea wheat primer) and the second on corn and soybean market conditions ahead of spring planting season (Brace for a wild spring).
Bryce Knorr points out that fertilizer decisions – especially for nitrogen – will factor heavily into 2022 acreage.
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.
Naomi Blohm maps out the stars that need to align for $10 corn, $15 wheat, and $20 soybeans. Spoiler alert – Ukraine and tight global grain and oilseed supplies have a lot to do with it.
Morning Ag Commodity Prices – 3/9/2022
Contract
Units
High
Low
Last
Net Change
% Change
MAR ’22 CORN
$ / BSH
7.5725
7.5275
7.5725
0.0275
0.36%
MAY ’22 CORN
$ / BSH
7.595
7.415
7.495
-0.035
-0.46%
JUL ’22 CORN
$ / BSH
7.2925
7.1125
7.18
-0.08
-1.10%
SEP ’22 CORN
$ / BSH
6.7675
6.6425
6.6925
-0.0375
-0.56%
DEC ’22 CORN
$ / BSH
6.48
6.38
6.44
0.0025
0.04%
MAR ’23 CORN
$ / BSH
6.42
6.35
6.39
-0.005
-0.08%
MAY ’23 CORN
$ / BSH
6.3725
6.335
6.3525
-0.01
-0.16%
MAR ’22 SOYBEANS
$ / BSH
17.4525
17.2775
17.2825
0.2375
1.39%
MAY ’22 SOYBEANS
$ / BSH
17.34
16.865
17.1025
0.205
1.21%
JUL ’22 SOYBEANS
$ / BSH
16.895
16.4925
16.74
0.1825
1.10%
AUG ’22 SOYBEANS
$ / BSH
16.2975
15.9925
16.16
0.1175
0.73%
SEP ’22 SOYBEANS
$ / BSH
15.3625
15.19
15.265
0.0975
0.64%
NOV ’22 SOYBEANS
$ / BSH
14.8825
14.64
14.8475
0.115
0.78%
JAN ’23 SOYBEANS
$ / BSH
14.6
14.455
14.5875
0.0925
0.64%
MAR ’23 SOYBEANS
$ / BSH
14.1225
14.01
14.105
0.065
0.46%
MAY ’23 SOYBEANS
$ / BSH
13.975
13.82
13.9325
0.065
0.47%
MAR ’22 SOYBEAN OIL
$ / LB
83.54
80.2
82.17
2.49
3.13%
MAY ’22 SOYBEAN OIL
$ / LB
78.58
75.57
76.88
1.13
1.49%
MAR ’22 SOY MEAL
$ / TON
0
#N/A
489.9
0
0.00%
MAY ’22 SOY MEAL
$ / TON
483.3
471.8
480.7
7.4
1.56%
JUL ’22 SOY MEAL
$ / TON
470.3
460.5
467
6.4
1.39%
AUG ’22 SOY MEAL
$ / TON
456.8
447.3
453.5
5.2
1.16%
SEP ’22 SOY MEAL
$ / TON
442.9
438.3
439.5
4.1
0.94%
MAR ’22 Chicago SRW
$ / BSH
9.6425
#N/A
12.73
0
0.00%
MAY ’22 Chicago SRW
$ / BSH
12.85
12.015
12.605
-0.26
-2.02%
JUL ’22 Chicago SRW
$ / BSH
11.94
11.175
11.62
-0.3325
-2.78%
SEP ’22 Chicago SRW
$ / BSH
10.9725
10.3275
10.685
-0.32
-2.91%
DEC ’22 Chicago SRW
$ / BSH
10.11
9.5425
9.87
-0.2375
-2.35%
MAR ’22 Kansas City HRW
$ / BSH
0
#N/A
11.86
0
0.00%
MAY ’22 Kansas City HRW
$ / BSH
11.995
11.25
11.7275
-0.2675
-2.23%
JUL ’22 Kansas City HRW
$ / BSH
11.75
11.05
11.4725
-0.31
-2.63%
SEP ’22 Kansas City HRW
$ / BSH
11.525
10.87
11.175
-0.35
-3.04%
DEC ’22 Kansas City HRW
$ / BSH
11.175
10.6
10.84
-0.3775
-3.37%
MAR ’22 MLPS Spring Wheat
$ / BSH
0
#N/A
11.615
0
0.00%
MAY ’22 MLPS Spring Wheat
$ / BSH
11.42
10.8875
11.1075
-0.3325
-2.91%
JUL ’22 MLPS Spring Wheat
$ / BSH
11.15
10.6175
10.8575
-0.2575
-2.32%
SEP ’22 MLPS Spring Wheat
$ / BSH
10.7475
10.205
10.455
-0.205
-1.92%
DEC ’22 MLPS Spring Wheat
$ / BSH
10.6675
10.165
10.4075
-0.18
-1.70%
MAR ’21 ICE Dollar Index
$
99.085
98.47
98.575
-0.505
-0.51%
AP ’21 Light Crude
$ / BBL
126.84
119.03
119.45
-4.25
-3.44%
MA ’21 Light Crude
$ / BBL
122.73
115.16
115.5
-4.15
-3.47%
APR ’22 ULS Diesel
$ /U GAL
4.6709
4.01
4.094
-0.3433
-7.74%
MAY ’22 ULS Diesel
$ /U GAL
4.3138
3.7707
3.8375
-0.298
-7.21%
APR ’22 Gasoline
$ /U GAL
3.76
3.5769
3.5953
-0.0873
-2.37%
MAY ’22 Gasoline
$ /U GAL
3.7096
3.5295
3.55
-0.0892
-2.45%
MAR ’22 Feeder Cattle
$ / CWT
0
#N/A
154.025
0
0.00%
APR ’22 Feeder Cattle
$ / CWT
0
#N/A
160.325
0
0.00%
AP ’21 Live Cattle
$ / CWT
0
#N/A
139.05
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
135.45
0
0.00%
APR ’22 Live Hogs
$ / CWT
0
#N/A
102.925
0
0.00%
MAY ’22 Live Hogs
$ / CWT
0
#N/A
108.225
0
0.00%
MAR ’22 Class III Milk
$ / CWT
22.68
22.61
22.68
-0.01
-0.04%
APR ’22 Class III Milk
$ / CWT
24.55
24.42
24.51
-0.04
-0.16%
MAY ’22 Class III Milk
$ / CWT
24.65
24.42
24.42
-0.23
-0.93%
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