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Bargain buyers revive grain prices

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Morning report: Easing recession worries trigger price gains across the board for grains this morning. (Comments are updated by 7:30 a.m. Central Time.)

  • Corn up 10-15 cents
  • Soybeans up 5-10 cents; Soymeal up $4.90/ton; Soyoil up $0.38/lb
  • Chicago wheat up 19-22 cents; Kansas City wheat up 13-14 cents; Minneapolis wheat up 8-9 cents

*Prices as of 7:10am CDT.

Feedback from the Field updates! Good morning! I did a local crop tour yesterday, as I had to trek over to Greeley in the afternoon. I’d rank most of the corn crops I saw in fair condition, though there were a couple (likely dryland) fields where the corn was rolled up so much, I thought it was a field of onions.

And to be clear – that’s not an unreasonable assumption. There are several large onion farms here on the Front Range.

The alfalfa fields I saw looked to be in much better shape than the corn, with center pivots actively running to keep those fields in good shape. But there is not denying it is dry here.

Yesterday’s Drought Monitor reading shows 69.98% of the High Plains to be in an abnormally dry to exceptional drought condition. Colorado on average typically only receives 17-18 inches of precipitation annually, though I believe the Front Range trends closer to 12-14 inches of moisture throughout the year.

We’ve only received a tenth of an inch of rain in June, but 4.66 inches have evapotranspiration from the soil. My lawn is starting to fry, especially after we had to reorder new sprinkler heads because the original ones were the wrong size. But that’s par for the course for 2022, I suppose.

I’m not alone in that sentiment - my latest FFTF column showcases growers’ increasing worries about heat stress, which was reflected in Tuesday’s weekly Crop Progress report from USDA.

“We had too much rain at the end of May,” explained a Central Kansas corn grower who reported local corn crops to be in fair condition. “Then it turned hot and dry due to a flash drought. Corn standing 3-4 feet is starting to tassel.”

Is heat stress a concern on your operation? 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!

Corn

It was a mostly quiet trading session overnight, which allowed bargain buyers to buy back into the grain markets and partially reverse some of the week’s earlier price losses. Corn futures rose $0.10-$0.13/bushel overnight on easing concerns about a looming global recession across the broad spectrum of financial and commodity markets.

Some uncertainty about global access to Ukraine’s corn crop this year also helped prop up the morning’s price gains as market watchers remain skeptical about Russia’s willingness to allow safe passage for Ukrainian grain in the Black Sea.

The International Grains Council (IGC) raised its forecast for Ukrainian corn acreage, thus upping its global corn supply outlook following a better-than-expected Ukrainian sowing season this spring even amid an ongoing war.

It’s May and you know what that means – peak barbeque season is about to shake up Cattle on Feed numbers expected in today’s monthly data update from USDA!

There is some room for optimism for corn demand in today’s Cattle on Feed inventory volumes. Pre-report trade estimates peg today’s volume for June 1 cattle inventories 0.5%-1.9% higher than a year ago, ranging between 11.9 million – 12.1 million head with an average guess of 12.0 million head.

But don’t hope for too much optimism. The cattle market is not likely to shift back into expansion mode until late 2023, at the earliest. Currently, severe drought in the Plains and astronomical feed prices is limiting cattle producers’ ability to feed herds and forcing many to contract herd sizes as a result. We could also see some herd loss here due to severe heat impacts over the past few weeks.

Regardless, cattle inventories tend to drift lower during the summer months as BBQ season regularly depletes the herd for consumer enjoyment purposes (mmm steak….). May 2022 placements are likely to see a seasonal spike as feedlots prep for the seasonal demand surge and this month is not likely to be an exception to that historical trend.

Analyst estimates ahead of today’s report predict May 2022 cattle placements largely in line with last year at 1.86 million – 1.93 million head and average trade guess of 1.90 million head. Expect the widest variation in this number, especially as drought on the Plains has forced many cattle producers to sell off breeding stock earlier this year.

But cattle market watchers are leaving little doubts about cattle sales for slaughter volumes in May 2022. Pre-report trade estimates are expecting a 2.1%-4.1% annual increase in monthly marketings for May 2022 as summer grilling season takes off. That equates to 1.97 million – 2.0 million head with an average guess of 1.98 million head sold for slaughter during May 2022.

It will be tough for corn to derive any bullish demand news from this month’s Cattle on Feed report. Historically, cattle are the biggest consumers of corn but as the herd shrinks amid high feed costs and ethanol production and export paces continue to surge in the face of a smaller 2022 crop compared to last year, corn markets may not need bullish cattle data to continue its bullish price run.

Soybeans

Soybean prices inched $0.04-$0.07/bushel higher this morning on bargain buying after hitting nearly three-month price lows yesterday. Weather is now the primary focus for soybean markets as the trade determines whether or not the recent heat wave will have negative impacts on the crop’s reproductive stages expected late next month.

Rains this weekend could also slow planting progress for double crop soybean-winter wheat rotations, so that will be worth watching also as it could add additional bullish pressure to soybean prices in today’s trading session.

Wheat

Wheat prices also benefited from easing (or at least accepting) global recession worries this morning, rising $0.10-$0.22/bushel this morning on a weakening dollar and bargain buying after Chicago futures hit their lowest price point since March 1.

Gains were capped by harvest progress in the Northern Hemisphere. Dry weather in the Southern Plains will likely help winter wheat harvest wrap up quickly in that region over the next week or two, though rains in the Midwest this weekend will likely slow winter wheat harvest progress – and double crop soybean planting rates.

I’m also reading

Reuters’ global agriculture analyst Karen Braun always writes insightful content on the ag markets. But her work this week has been especially exceptional. This week, Braun hits on two key themes sweeping through the ag markets right now: comparisons to 2008 markets and corn and soybean selloffs this week.

Here are the links to her articles if you are interested in reading them. I cannot recommend them enough!

Wild 2022 in grain markets sparks 2008 comparisons

This week's CBOT corn, soy freefalls hard to match in recent years

Weather

Showers and thunderstorms are going to linger over the Upper Plains and Upper Midwest today, according to NOAA’s short-range forecasts. The weather system is likely to ease temperatures slightly in the region, though not likely past the 80-degree benchmark.

The showers will continue to hover in the region through tomorrow, dropping well over an inch of accumulation across the Upper Midwest over the next 24 hours.

NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending warmer for the Heartland in the short run and heating up within the next two weeks. During that time, chances for moisture across the Heartland are forecast above average.

However, as that time frame moves into the 8- to 14-day forecast, rains will give way to below average chances for moisture in the Eastern Corn Belt. One bright spot – drought-stressed regions of the Western Plains are forecast to receive above average chances for precipitation during that time (yay for my yard!).

Last week’s heat wave had the most significant impact on soil moisture levels in the Midwest, which rose to 24.77% abnormally dry to exceptional drought condition through the week ending June 21. Last week, that reading stood at a mere 9.44% abnormally dry to exceptional drought condition.

June 21 drought monitor 2022.png

That jump should provide a pretty good reason for why growers may be worried about 2022 yields – as well as why market prices are so responsive to wet extended forecasts. Overall, nationwide dryness and drought ratings rose 5.77% on the week to 62.49% - a five-week high thanks to this current heat wave.

Ironically, ratings in the High Plains only rose 0.26% on the week. As I look out on my lawn I’m reminded – you can’t kill it if it’s already dead. Though I’m not so sure Mother Nature agrees with that sentiment this year.

Financials

Federal Reserve Chairman Jerome Powell concluded two days of Congressional testimony yesterday, briefing lawmakers on the current state of the country’s economy. Yes, recession fears are still looming and there are more rate hikes expected. And manufacturing purchasing data out yesterday pointed to a five-month low in manufacturing activity through May 2022.

But in the absence of more attention on Powell today and that potential signal for cooling economic expansion, stock markets edged higher this morning with the S&P 500 rising 0.80% to $3,830.00 at last glance.

If the slowing manufacturing activity is any indication of slowing inflation, that could lead the Federal Reserve to opt for a smaller interest rate hike in late July (July 26-27).

What else I’m reading this morning on our website, FarmFutures.com:

Morning Ag Commodity Prices - 6/24/2022
Contract Units High Low Last Net Change % Change
JUL '22 CORN $ / BSH  7.5175 7.35 7.51 0.0425 0.57%
SEP '22 CORN $ / BSH  6.82 6.6125 6.81 0.1425 2.14%
DEC '22 CORN $ / BSH  6.72 6.515 6.71 0.155 2.36%
MAR '23 CORN $ / BSH  6.77 6.57 6.77 0.16 2.42%
MAY '23 CORN $ / BSH  6.785 6.6 6.785 0.15 2.26%
JUL '23 CORN $ / BSH  6.75 6.555 6.75 0.1525 2.31%
SEP '23 CORN $ / BSH  6.2975 6.1425 6.2975 0.1225 1.98%
JUL '22 SOYBEANS $ / BSH  16.0075 15.83 16.0025 0.07 0.44%
AUG '22 SOYBEANS $ / BSH  15.145 14.9475 15.1175 0.045 0.30%
SEP '22 SOYBEANS $ / BSH  14.4475 14.2225 14.4275 0.0575 0.40%
NOV '22 SOYBEANS $ / BSH  14.245 13.9925 14.225 0.07 0.49%
JAN '23 SOYBEANS $ / BSH  14.2825 14.0425 14.2625 0.06 0.42%
MAR '23 SOYBEANS $ / BSH  14.235 14.0125 14.22 0.055 0.39%
MAY '23 SOYBEANS $ / BSH  14.2475 14.02 14.2225 0.0525 0.37%
JUL '23 SOYBEANS $ / BSH  14.2225 13.9975 14.1925 0.045 0.32%
AUG '23 SOYBEANS $ / BSH  10.75 #N/A 13.9725 0 0.00%
JUL '22 SOYBEAN OIL  $ / LB 68.29 67 68.05 0.34 0.50%
AUG '22 SOYBEAN OIL  $ / LB 66 64.84 65.83 0.32 0.49%
JUL '22 SOY MEAL $ / TON 432 424.4 431.9 5.2 1.22%
AUG '22 SOY MEAL $ / TON 410.5 403.7 410.2 4.2 1.03%
SEP '22 SOY MEAL $ / TON 396.1 390 396.1 3 0.76%
OCT '22 SOY MEAL $ / TON 389 383.4 388.7 2.1 0.54%
DEC '22 SOY MEAL $ / TON 389.9 384.5 389.7 1.8 0.46%
JUL '22 Chicago SRW $ / BSH  9.625 9.2725 9.585 0.2125 2.27%
SEP '22 Chicago SRW $ / BSH  9.73 9.3875 9.695 0.2025 2.13%
DEC '22 Chicago SRW $ / BSH  9.8725 9.54 9.845 0.2 2.07%
MAR '23 Chicago SRW $ / BSH  9.9575 9.6375 9.925 0.18 1.85%
MAY '23 Chicago SRW $ / BSH  9.9925 9.68 9.98 0.19 1.94%
JUL '22 Kansas City HRW $ / BSH  10.22 9.96 10.19 0.14 1.39%
SEP '22 Kansas City HRW $ / BSH  10.275 10.0175 10.24 0.1325 1.31%
DEC '22 Kansas City HRW $ / BSH  10.375 10.12 10.345 0.14 1.37%
MAR '23 Kansas City HRW $ / BSH  10.435 10.1925 10.4025 0.13 1.27%
MAY '23 Kansas City HRW $ / BSH  10.3775 10.125 10.35 0.1325 1.30%
JUL '22 MLPS Spring Wheat $ / BSH  10.9 10.7 10.9 0.095 0.88%
SEP '22 MLPS Spring Wheat $ / BSH  10.915 10.7 10.905 0.1075 1.00%
DEC '22 MLPS Spring Wheat $ / BSH  10.975 10.7825 10.975 0.115 1.06%
MAR '23 MLPS Spring Wheat $ / BSH  11.08 10.9025 11.08 0.1075 0.98%
MAY '23 MLPS Spring Wheat $ / BSH  11.1 11 11.1 0.0875 0.79%
SEP '21 ICE Dollar Index $ 104.28 103.905 104.2 0.008 0.01%
 AU '21 Light Crude $ / BBL  106.26 103.64 105.9 1.63 1.56%
 SE '21 Light Crude $ / BBL  103.35 100.84 102.99 1.41 1.39%
JUL '22 ULS Diesel $ /U GAL 4.3525 4.3023 4.3371 -0.0008 -0.02%
AUG '22 ULS Diesel $ /U GAL 4.2371 4.1769 4.2189 0.0019 0.05%
JUL '22 Gasoline $ /U GAL 3.8155 3.7296 3.802 0.0364 0.97%
AUG '22 Gasoline $ /U GAL 3.7118 3.6252 3.6883 0.0273 0.75%
AUG '22 Feeder Cattle $ / CWT 0 #N/A 174.85 0 0.00%
SEP '22 Feeder Cattle $ / CWT 0 #N/A 176.85 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 135.25 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 133.875 0 0.00%
JUL '22 Live Hogs $ / CWT 0 #N/A 108.55 0 0.00%
AUG '22 Live Hogs $ / CWT 0 #N/A 103.675 0 0.00%
JUN '22 Class III Milk $ / CWT 24.33 24.33 24.33 0.04 0.16%
JUL '22 Class III Milk $ / CWT 23.2 22.96 23.12 -0.34 -1.45%
AUG '22 Class III Milk $ / CWT 23.69 23.52 23.69 -0.36 -1.50%

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