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Economy concerns slash grain prices

phongphan5922/Thinkstock markets charts - green with red line
Afternoon report: Corn, soybeans and wheat all face losses in Friday’s session


High inflation, rising interest rates and recession fears proved to be a deadly combination on Wall St., and the selloff spread to a broad set of other commodities. Grain prices weren’t immune, with most contracts losing 2% to 3% by the close. Wheat prices were hit the hardest, but corn and soybeans also suffered a moderate setback today after an ample round of technical selling.

The latest 72-hour cumulative precipitation map from NOAA shows very little rainfall will be likely west of the Mississippi River between Saturday and Tuesday, although large portions of the eastern Corn Belt will see at least some measurable moisture during this time. NOAA’s 8-to-14-day outlook predicts a return to seasonally dry, warm weather for much of the central U.S. between September 30 and October 6.

On Wall St., the Dow eroded another 766 points lower to 29,310 as a terrible week draws to a close. The Dow has lost 20% from its high, which means it is in clear bear market territory at this time. Energy futures also slumped on U.S. and global recession fears, with crude oil down 5.75% this afternoon to fall below $79 per barrel. Diesel and gasoline each lost more than 5% today. The U.S. Dollar firmed substantially and is now at the highest level since 2002.

On Thursday, commodity funds were net buyers of corn (+1,000), soyoil (+3,500) and CBOT wheat (+2,500) contracts but were net sellers of soybeans (-3,000) and soymeal (-6,000).

Corn

Corn prices were in the red (like most stocks and commodities today) after a round of technical selling, suffering a double-digit setback in the process. Harvest progress continues to generate additional short-term headwinds. December futures dropped 13.25 cents to $6.75, with March futures down 13.5 cents to $6.7975.

Corn basis bids were mostly steady across the central U.S. but did tumble 15 to 20 cents lower at two Indiana ethanol plants on Friday.

Rarely have pre-harvest corn prices been this high, notes Matthew Kruse, president of Commstock Investments. “This week saw December corn reach $6.9850,” he points out. “The last time the board was at that level leading up to harvest was in 2012.  October 1st of 2012 saw corn prices reach $7.76.” Kruse serves up a round of timely analysis in today’s Ag Marketing IQ blog – click here to learn more.

France’s 2022 corn harvest is 26% complete through September 19, per the latest reporting from farm office FranceAgriMer. Harvest is off to a much earlier start due to hot, dry conditions that severely damaged crop quality this season. Only 43% of the crop is rated in good-to-excellent condition, steady from a week ago. Production could spill to the lowest level since 1990 for Europe’s top grain producer.

Ukraine’s 2022 corn harvest is just underway, with the country’s agriculture ministry reporting a progress of 0.5% so far. Production expectations currently range between 984.2 million and 1.063 billion bushels. That would be a decline of as much as 41%, if realized. Exports so far during the 2022/23 marketing year have reached 162.7 million bushels.

Join us next week at the online platform Farm Progress 365 for free informational sessions devoted to maximizing yield maps and putting them to work on your operation. The sessions will take place September 27, 28 and 29 – click here to learn more about them and sign up today!

Preliminary volume estimates were for 247,428 contracts, moving well ahead of Thursday’s final count of 149,552.

Soybeans

Soybean prices faded more than 2% after a round of technical selling amid growing concerns of either a U.S. or a global recession (or both), which in turn would stoke demand concerns. November futures lost 31 cents to $14.26, with January futures down 31.75 cents to $14.3150.

Soybean basis bids were steady to weak after crumbling 15 to 35 cents lower at three Midwestern processors and easing 2 cents lower at an Illinois river terminal on Friday.

China will once again sell another 18.4 million bushels of its state imported soybean reserves in an auction that will be held on September 30. The country has routinely offered similar sales throughout the year to keep local supplies boosted and cool high prices.

Hedges can be good a useful marketing tool, but they can also get out of hand if not managed properly, according to grain marketing consultant Roger Wright. “Often, what starts out as market risk reduction program becomes a very high stakes speculation position,” he notes. Wright looks to a now-defunct company called VeraSun Energy as one such example in today’s Ag Marketing IQ blog – click here to learn more.

How are your crops looking this week? Have you started harvest yet?  Click this link to take the survey and share updates about your farm’s crop development. Farm Futures grain market analyst Jacqueline Holland regularly reviews and uploads results to the FFTF Google MyMap, so farmers can peer anecdotes from around the country.

Preliminary volume estimates were for 180,209 contracts, shifting slightly above Thursday’s final count of 178,368.

Wheat

Wheat prices followed a broad set of other commodities lower on growing global recession fears, while a very strong U.S. Dollar is doing additional damage to prices right now. December Chicago SRW futures lost 33.75 cents to $8.77, December Kansas City HRW futures fell 29 cents to $9.5050, and December MGEX spring wheat futures dropped 23.25 cents to $9.5450.

As Ukraine continues to face large production and export challenges amid the ongoing Russian invasion, the country’s farmers at least have one big thing going in their favor – recent rains have left soil moistures at their best levels in a decade, according to Ukraine’s state weather forecasting center. That should allow for a strong start to the 2022/23 season for winter crops.

Crop damages due to devastating floods in Pakistan are expected to be more than $1.5 billion. “According to the preliminary estimates, cotton, rice, maize, pulses, potatoes, tomatoes, sugarcane, wheat, chilies, tobacco, oil seeds, millets and garlic were among the vegetables damaged because of the floods,” according to a report that assessed the damages.

The Philippines purchased 1.7 million bushels of animal feed wheat, likely sourced from Australia, in an international tender that closed on Thursday. The grain is for shipment in January.

Preliminary volume estimates were for 80,859 CBOT contracts, which was moderately below Thursday’s final count of 97,565.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
22-Dec 688 669.5 676.75 -13.25
23-Mar 693.25 674.75 681.75 -13.5
Soybeans        
22-Nov 1456 1420.5 1425.75 -31
23-Jan 1462.25 1427.25 1431.75 -31.75
Soymeal                $/ton        
22-Dec 429 420.2 423.3 -5.4
Soyoil                    cents/lb        
22-Dec 66.4 63.6 63.68 -2.73
Wheat                    $/bushel        
22-Dec 913 876 880.5 -33.75
23-Mar 923.25 889.5 893.75 -32.5
KC Wheat        
22-Dec 980 945.75 950.5 -29
23-Mar 975.5 943.25 947.25 -28.75
MPLS Wheat        
22-Dec 976.75 946 949.25 -23.25
23-Mar 979.75 952 954.75 -22.5
Live Cattle             cents/lb        
22-Oct 144.925 144.1 144.4 -0.45
Feeder Cattle         cents/lb        
22-Oct 178.925 177.675 178.4 0.425
Lean Hogs             cents/lb        
22-Dec 85.25 82.6 82.85 -2.825
Crude Oil  $/barrel *Energy prices may not represent final settlements      
22-Oct 83.92 78.04 78.52 -4.97
Diesel        
22-Oct 3.4114 3.2059 3.2338 -0.1777
Unleaded Gasoline   $/gallon        
22-Oct 2.5283 2.3435 2.3823 -0.1334
Natural Gas        
22-Nov 7.374 6.867 6.99 -0.203
U.S. Dollar Index        
22-Sep 112.955 110.84 112.95 1.845
Gold                      $/ounce        
22-Oct 1674.5 1638.6 1667 -3.8
Copper        
22-Sep 3.489 3.3645 3.368 -0.1305
Fertilizer Swaps     (as of 09/16)  
DAP Tampa-index      765.0 -52.5
DAP-New Orleans      837.8 -5.51
Urea-New Orleans      734.1 25.9
Urea-Middle East      865.0 -20
Urea-Black Sea      585.0 35
UAN (32%) New Orleans      556.7 16.53

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