Morning report: The S&P 500 dips into bear territory following Friday’s high inflation readings. (Comments are updated by 7:30 a.m. Central Time.)
Corn up 2-4 cents
Soybeans down 16-20 cents; Soymeal down $1.40/ton; Soyoil down $1.39/lb
Chicago wheat up 11-12 cents; Kansas City wheat up 8-12 cents; Minneapolis wheat up 12-13 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! The only thing surprising about the June 2022 World Agricultural Supply and Demand Estimates report was how few surprises there were in last Friday’s latest update. Wheat was the star of the show, with U.S., Russia, and India production taking the market focus.
I’ll sprinkle in insights from Friday’s report throughout the newsletter today. Have a good week!
Corn
Corn futures prices rose $0.02-$0.04/bushel overnight as hot and dry weather in the Corn Belt this week generated market concerns about crop development. Some spillover worries from hot temperatures in Europe also helped support gains in the corn market this morning.
Lower 2021/22 U.S. corn exports will help grow 2022/23 stocks, according to Friday’s WASDE report. USDA refrained from making major changes to 2022/23 domestic corn usage rates which is likely a reflection of the tight stocks and eager consumption rates.
USDA was increasingly more optimistic about planting progress in Ukraine. USDA increased 2022/23 Ukrainian production estimates by 217 million bushels from last month’s report, now forecasting the embattled country’s corn crop this year at 984 million bushels.
Earlier this spring, the overarching market consensus was the Ukrainian farmers would produce 50%-55% fewer corn bushels this spring. Now, USDA expects a 41% smaller 2022 Ukrainian corn crop relative to last year.
But the optimism only went so far. USDA did not adjust either of Ukraine’s 2021/22 or 2022/23 corn export forecasts. Recent negotiations and mediation efforts from Turkey and the U.N. between Russia and Ukraine have yet to yield a solution that will allow for free and clear transport of Ukrainian grain through the Black Sea.
This signals that the Black Sea conflict is going to continue to be a slow grind and will likely have devastating impacts for countries susceptible to famine this year, particularly in the Horn of Africa.
Soybeans
Lower crude oil prices compounded with more profit-taking following last week’s highs to send soybean futures $0.16-$0.20/bushel lower in the overnight trading session. A stronger dollar dimmed export optimism after last week’s export-fueled rally. Investor sentiment was also waning in the face of the S&P 500’s return to the bear market. Lower edible oil futures prices also trickled over into the soy complex.
Vegetable oil markets plunged overnight as palm oil futures hit a 10-year low on falling crude oil prices. Indonesia modified its palm oil export policy again overnight, now committing to higher palm oil export volumes just several weeks after imposing an export ban. Indonesia is the world’s largest palm oil producer and exporter.
Second largest producer and exporter, Malaysia, continues to forecast slower exports and rising ending stock volumes, adding more bearish pressure to the global edible oils price complex. A COVID-19 flare-up in Beijing, China prompted more local lockdowns, which was another bearish omen for edible oils during the overnight trading session.
But there is a cap on these losses being held in place by shrinking U.S. soy supplies expected in the 2022/23 marketing campaign. Hot weather in the Midwest this week is also raising concerns about crop development.
More U.S. soybean exports for the 2021/22 season tightened 2022/23 U.S. soybean stocks in Friday’s WASDE report. It will also result in 2021/22 ending soybean stocks in the U.S. shrinking to the 6th tightest volume on record.
But similar to corn, the strong usage rates are not likely to abate in the new marketing year, especially if prospects hold firm for a record-breaking U.S. soybean crop this year.
I don’t think the market received enough bullish information from USDA on Friday to justify a price run back to the 10-year high matched in the markets last Thursday. I think the hope for any new rallies in the coming weeks will solely depend on new export sales announced by USDA and a continuation of strong domestic usage rates.
Wheat
It’s hot on the U.S. Plains today and it’s also hot across Europe, raising production concerns for the world’s second largest wheat exporter. Spain saw its most severe pre-summer heatwave in 20 years over the weekend, with the hot and dry conditions expected to roast areas of France and Italy as well this week.
Optimism for potential access to Ukrainian grain stocks capped the morning’s gains, even though that outcome remains uncertain.
“The situation in Ukraine remains the focus of concern, to which we must now add the climatic situation in Western Europe, with a severe heat wave expected during the week, raising fears of scalding,” consultancy Agritel said.
Egypt has bought up more local wheat supplies than it did a year ago, according to the country’s General Company for Silos and Storage chairman, Kamal Hashim. The world’s largest wheat importer has acquired 143.3 million bushels of wheat from its farmers, 8% higher than last year.
The uptick comes from a new government mandate enforced this year, which requires Egyptian wheat growers to sell at least 60% of their crop to the state. Last year, that figure stood at 40%. Farmers who do not comply with the mandates face fines and potentially jailtime for non-compliance.
Egypt hopes to buy 220.4 million bushels of local wheat this year, about two-thirds more than the past two years amid the Black Sea conflict. Prior to the war, Egypt was heavily reliant on Ukraine and Russia for its wheat supplies.
A smaller U.S. hard red winter wheat crop was not much of a surprise in Friday’s WADE report, especially after seeing subpar yields across Kansas during last month’s Wheat Quality Council tour across the state. Top wheat grower Kansas is already expected to have a 25% decrease in winter wheat yields this year, dropping down to 39.0 bushels per acre.
But conditions in the Eastern Corn Belt and Pacific Northwest have been more favorable to soft red winter and white wheat crops in both respective locations. Record yields expected for soft red winter wheat crops in Missouri and Tennessee are likely to boost 2022 soft red winter wheat production beyond last month’s estimates.
Globally, wheat was the star of this month’s WASDE report. USDA increased Russian wheat production and export forecasts as favorable weather for winter wheat crop development is likely to produce the country’s largest crop since the fall of the Soviet Union.
Middle East buyers are also forecast to increase 2022/23 wheat purchases by 13 million bushels to 857 million bushels. The Middle East follows Northern Africa as the world’s second largest wheat importing region.
India, who has risen to prominence in the global wheat trade over the past couple months following five consecutive bumper crops and unfavorable government pricing, saw its 2022/23 production and export forecasts cut as a devastating heat wave boils the country.
India’s 2021/22 wheat exports were also cut 4.4 million bushels after the government imposed an export ban in mid-May amid concerns about domestic availability following the ongoing drought. India is still expected to set a new record high for exports in 2021/22 at 295 million bushels.
India having reduced wheat supplies will force more importers to look further away for affordable wheat supplies. It’s a dynamic that will likely keep wheat prices high, especially while Russian importers try to circumnavigate sanctions and Ukrainian supplies remain trapped within the country.
Ukraine
Growers in the southern Odessa region of the country began harvest over the weekend thanks to favorable (dry) weather. Winter barley threshing is currently underway as Ukrainian growers wrap up a 2022 planting season amid the constant danger of Russian military strikes.
Ukraine’s agriculture ministry has not issued a formal 2022 grain production forecast but expects its growers will plant 35.1 million acres of spring grain crops, down 16% from 2021 sowings.
Ukraine’s deputy foreign minister Dmytro Senik commented on Ukraine’s current shipping paces via truck and rail over the weekend, noting that the slower paces and bottlenecks are likely to continue exacerbating global hunger issues.
“Those routes are not perfect because it creates certain bottlenecks, but we are doing our best to develop those routes in the meantime,” Senik told Reuters overnight. Ukraine uses Soviet-era rail tracks, which are smaller than those used elsewhere in Europe.
Ukrainian grain has to be transferred at the Polish border to the different tracks. Currently the storage and transfer facilities are not adequate at these border locations to prevent bottlenecks from piling up.
Weather
Heat is going to continue blistering the Plains today but temperatures in the Upper Midwest should be more palatable, according to NOAA’s short-range forecasts. Showers and thunderstorms are going to accompany those cooler temperatures in the Northern Plains today through early tomorrow morning. The Upper Midwest will likely see up to 1.5 inches of precipitation accumulation over the next 24 hours.
It is hot, hot, hot out there, friends. We have been working on installing an irrigation system in our yard. We spent last weekend measuring out lines and trenching, which I am exceptionally good at. We accomplished laying the irrigation pipe on Saturday and set up the drip irrigation system in our garden yesterday. Needless to say, we were pretty gassed last night after working in the heat all weekend.
We are still waiting to receive our sprinkler heads before we can mark this project as complete. We also have to re-level the yard after we dug it all up, so there are still a couple more hot days of yardwork left.
I’m waiting for a family member to remind me that milking cows is actually a cooler alternative to yardwork. They won’t be wrong, but I need to wait another day before I can hear it!
NOAA’s 6- to 10-day forecasts updated yesterday are trending hot for the Heartland but with above average chances of moisture for the Mountain West (!) while the 8- to 14-day forecast is showing dry and warm conditions across the country.
Financials
The S&P 500 traded 2.09% lower overnight to $3,819.00 at last glance, likely pushing the index back into bearish territory when it opens this morning. A bear market means that the index is currently trading 20% or lower than the index’s latest high, which was $4,793.54, recorded on January 4, 2022.
The fallout comes after the U.S. Labor Department reported higher than expected inflationary pressures in May. Friday’s latest Consumer Price Index (CPI) data update found consumer goods rose 8.6% in May from year ago values, up from 8.3% in April.
“The very fact that it overshot expectations has really frayed investor’s nerves even more and shown how difficult it is to try to keep a lid on inflation,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told the Wall Street Journal this morning. “The worry is that inflation is getting too hot to handle for central banks and they’ll have to dose economies with cold water in the form of tighter policy.”
The Federal Reserve’s Federal Open Market Committee (FOMC) begins a two-day meeting tomorrow. Fed officials previously forecasted no greater than a 0.25% increase in interest rates following the meeting, but Friday’s high inflation reading is creating uncertainty about whether the Fed will stick to that schedule.
“Most investors believe that the central bank will announce Wednesday it is raising its benchmark interest rate by half a percentage point,” Chelsey Dulaney and Dave Sebastian wrote this morning for the Wall Street Journal. “But expectations that the Fed will be forced to move even more aggressively this year have risen since Friday’s inflation report.”
In the market’s eyes, an accelerated rise in interest rates raises the likelihood of the domestic (at best) economy falling into a recession. Energy prices followed the financial market selloff this morning (also because of additional COVID lockdown measures in China), because a recession would likely result in lower fuel consumption.
Brace for a rough week in the financial markets, friends. And don’t look at your 401(k) balance if you can help it.
What else I’m reading this morning on our website, FarmFutures.com
Our team’s June 2022 WASDE coverage!
“Look but don’t touch,” is increasingly becoming the theme of the market volatility surrounding Ukrainian grain, writes AgMarket.Net’s Brian Splitt. In the latest South American Crop Watch,
Julio Bravo provides a closer look at Brazil’s safrinha corn harvest.
Grower Kyle Stackhouse reports uneven emergence and peak spraying activity on his Indiana farm.
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.
Morning Ag Commodity Prices – 6/13/2022
Contract
Units
High
Low
Last
Net Change
% Change
JUL ’22 CORN
$ / BSH
7.8225
7.705
7.7575
0.025
0.32%
SEP ’22 CORN
$ / BSH
7.405
7.3
7.3525
0.025
0.34%
DEC ’22 CORN
$ / BSH
7.2875
7.19
7.2425
0.0375
0.52%
MAR ’23 CORN
$ / BSH
7.325
7.2325
7.2825
0.035
0.48%
MAY ’23 CORN
$ / BSH
7.34
7.2525
7.2925
0.03
0.41%
JUL ’23 CORN
$ / BSH
7.3025
7.215
7.2575
0.025
0.35%
SEP ’23 CORN
$ / BSH
6.77
6.7075
6.7075
-0.04
-0.59%
JUL ’22 SOYBEANS
$ / BSH
17.57
17.225
17.2625
-0.1925
-1.10%
AUG ’22 SOYBEANS
$ / BSH
16.685
16.4075
16.45
-0.17
-1.02%
SEP ’22 SOYBEANS
$ / BSH
15.9175
15.6225
15.67
-0.1725
-1.09%
NOV ’22 SOYBEANS
$ / BSH
15.74
15.405
15.4725
-0.21
-1.34%
JAN ’23 SOYBEANS
$ / BSH
15.7575
15.4375
15.505
-0.2
-1.27%
MAR ’23 SOYBEANS
$ / BSH
15.555
15.2875
15.35
-0.1825
-1.17%
MAY ’23 SOYBEANS
$ / BSH
15.4575
15.235
15.2925
-0.1825
-1.18%
JUL ’23 SOYBEANS
$ / BSH
15.3875
15.1975
15.25
-0.175
-1.13%
AUG ’23 SOYBEANS
$ / BSH
10.75
#N/A
15.1225
0
0.00%
JUL ’22 SOYBEAN OIL
$ / LB
81.07
79.34
79.46
-1.35
-1.67%
AUG ’22 SOYBEAN OIL
$ / LB
78.7
76.97
77.3
-1.16
-1.48%
JUL ’22 SOY MEAL
$ / TON
430.7
422.1
423.8
-5.3
-1.24%
AUG ’22 SOY MEAL
$ / TON
418.9
411.1
412.6
-5
-1.20%
SEP ’22 SOY MEAL
$ / TON
410.4
403.5
405.3
-3.8
-0.93%
OCT ’22 SOY MEAL
$ / TON
403
396.6
397.1
-4.3
-1.07%
DEC ’22 SOY MEAL
$ / TON
404
396.8
398.4
-3.4
-0.85%
JUL ’22 Chicago SRW
$ / BSH
10.935
10.65
10.8025
0.095
0.89%
SEP ’22 Chicago SRW
$ / BSH
11.0775
10.7925
10.9425
0.095
0.88%
DEC ’22 Chicago SRW
$ / BSH
11.2025
10.925
11.09
0.11
1.00%
MAR ’23 Chicago SRW
$ / BSH
11.3
11.025
11.18
0.1
0.90%
MAY ’23 Chicago SRW
$ / BSH
11.3325
11.115
11.205
0.085
0.76%
JUL ’22 Kansas City HRW
$ / BSH
11.83
11.58
11.73
0.105
0.90%
SEP ’22 Kansas City HRW
$ / BSH
11.9
11.645
11.79
0.0975
0.83%
DEC ’22 Kansas City HRW
$ / BSH
11.96
11.72
11.8575
0.085
0.72%
MAR ’23 Kansas City HRW
$ / BSH
12
11.7725
11.9025
0.075
0.63%
MAY ’23 Kansas City HRW
$ / BSH
11.935
#N/A
11.765
0
0.00%
JUL ’22 MLPS Spring Wheat
$ / BSH
12.375
12.23
12.34
0.125
1.02%
SEP ’22 MLPS Spring Wheat
$ / BSH
12.37
12.23
12.34
0.1275
1.04%
DEC ’22 MLPS Spring Wheat
$ / BSH
12.365
12.245
12.29
0.095
0.78%
MAR ’23 MLPS Spring Wheat
$ / BSH
12.3925
12.28
12.2925
0.0725
0.59%
MAY ’23 MLPS Spring Wheat
$ / BSH
12.3225
#N/A
12.1925
0
0.00%
JUN ’21 ICE Dollar Index
$
104.825
104.29
104.76
0.609
0.58%
JU ’21 Light Crude
$ / BBL
120.26
118
118.65
-2.02
-1.67%
AU ’21 Light Crude
$ / BBL
117.72
115.45
116.16
-1.96
-1.66%
JUL ’22 ULS Diesel
$ /U GAL
4.3747
4.268
4.3321
-0.0346
-0.79%
AUG ’22 ULS Diesel
$ /U GAL
4.2594
4.1612
4.2196
-0.0386
-0.91%
JUL ’22 Gasoline
$ /U GAL
4.1699
4.0501
4.0801
-0.0921
-2.21%
AUG ’22 Gasoline
$ /U GAL
3.9967
3.8848
3.9167
-0.0809
-2.02%
AUG ’22 Feeder Cattle
$ / CWT
0
#N/A
174.475
0
0.00%
SEP ’22 Feeder Cattle
$ / CWT
0
#N/A
176.05
0
0.00%
JU ’21 Live Cattle
$ / CWT
0
#N/A
136.2
0
0.00%
AU ’21 Live Cattle
$ / CWT
0
#N/A
136.2
0
0.00%
JUN ’22 Live Hogs
$ / CWT
0
#N/A
107.8
0
0.00%
JUL ’22 Live Hogs
$ / CWT
0
#N/A
105.475
0
0.00%
JUN ’22 Class III Milk
$ / CWT
24.34
#N/A
24.34
0
0.00%
JUL ’22 Class III Milk
$ / CWT
24.64
24.62
24.64
0.02
0.08%
AUG ’22 Class III Milk
$ / CWT
24.65
#N/A
24.65
0
0.00%
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