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Grains waver ahead of WASDE

morning market recap.jpg
Morning report: Corn fluctuates between gains and losses, while wheat and soybeans trend lower ahead of USDA data. (Comments are updated by 7:30 a.m. Central Time.)

  • Corn mixed
  • Soybeans down 3-5 cents; Soymeal up $2.70/ton; Soyoil down $0.59/lb
  • Chicago wheat down 8-9 cents; Kansas City wheat down 9-11 cents; Minneapolis wheat down 6-11 cents

*Prices as of 7:00am CDT.

Feedback from the Field updates! Our latest farmer updates were published on our website on Tuesday! Check out this article for all the latest on growing conditions around the country – which remain highly variable.

How does your farm’s crop conditions stack up against other farms around the country? Click this link to take the survey and share updates about your farm’s crop development. 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! And Happy WASDE Day! Today’s USDA reports will focus on updated U.S. corn and soybean yields and acreage. I’ve written a full preview of today’s reports that can be found on our website, via this link.

In this preview, I will focus exclusively on yield, acreage, and USDA variations, for the sake of brevity. But the online article also features insights about wheat production, U.S. export prospects, and forecasts for Black Sea shipping volume revisions in today’s reports if you are interested in a deeper dive ahead of the reports.

As always, our team will be covering USDA’s report release live. Stay tuned to FarmFutures.com and our social platforms for the latest insights and analysis after USDA releases the data at 11am CDT.

Yield forecasts

Corn and Soybean Production

The August WASDE is important because it is the first time in the growing season that NASS will release yield estimates to reflect current crop conditions, calculated from a farmer survey distributed in July 2022.

Pre-report analyst estimates vary, between 173.2 bushels per acre (bpa) and 177.6 bpa for corn and 49.9 bpa – 52.5 bpa for soybeans with average estimates of 175.9 bpa for corn and 51.1 bpa for soybeans. The trade is largely convinced that the slow and cold start to the growing season paired with pockets of heat damage is likely going to result in yields below the 2021 season (177.0 bpa for corn, 51.5 bpa for soybeans).

That would mean tighter stocks following several years of shrinking supplies. If USDA’s results shake out similarly to the trade estimates, growers can expect for a bullish floor to remain under prices. But that isn’t a guarantee in 2022.

The results from our August 2022 Farm Futures reader survey found that growers are more optimistic about soybean yields than corn, estimating 52.5 bpa for today’s soybean reading and 174.8 bpa for corn.

The soybean estimate is a considerable deviation from the other trade guesses and is the only one that is higher than the 2021 record of 51.5 bpa. It also presents a starkly different narrative than the markets have been discussing lately – a conversation that revolves around heat-induced yield losses. Farmers talked a big game about being pessimistic about yields in the survey, with 26% expecting USDA to decrease 2022 soybean yields by 2 to 3 bpa compared to last year’s yield.

However, another 23% are not expecting any national soybean yield changes in today’s report. And the high yield forecast should be a warning that soybean yields could surprise growers and markets today, potentially ushering in bearish price sentiment to the soybean complex.

Farm Futures’ corn yield forecast is considerably more conservative relative to beans. With 28% of growers expecting USDA to cut 2-3 bpa from 2021 corn yields in today’s report, it came as a little surprise that the survey’s corn yield estimate calculated out to 174.8 bpa.

When the rubber hits the road, it appears that farmers expect to suffer more losses on their corn crops this year than soybeans, especially in contrast to beans. While many areas received timely rains during corn pollination, persistent drought in the Western Corn Belt could inflict enough losses on the national scale to offset favorable yields further East. And it is not yet known how the next week’s forecast will bode for soybeans currently filling pods.

It’s worth noting that several growers admitted to struggling to answer the yield question in the Farm Futures August 2022 survey. They confessed that because of late planted crops, it was still too early to make a guess on yields with any degree of certainty.

USDA will issue another yield forecast in the October 2022 Crop Production and WASDE reports that will feature another farmer-surveyed calculation. If the impending heat wave expected to bake the Upper Midwest over the next week holds true to forecasts, we could see further yield changes – and market volatility – through the next couple months.

Acreage forecasts

In its June 30 Acreage report, USDA-NASS noted that the planting delays in North Dakota, South Dakota, and Minnesota would lead the organization to resurvey farmers in July for more reliable acreage estimates.

The trade estimates suggest that some acreage is likely to shift from corn into soybeans (approx. 100K acres). But the analysts are also forecasting soybean acres could receive another 100K acres on top of the gains from corn from other late-season rotation swings in the Upper Midwest.

That is not the only acreage-related datapoint USDA will be releasing today. USDA’s Farm Service Agency (FSA) will release its first look at 2022 prevent plant acreage an hour after the WASDE and Crop Production reports are released.

The aforementioned planting delays in the Upper Midwest are likely to account for the lion’s share of the prevent plant acreage expected in the report. Prevent plant acres are likely to be higher than in 2021, but it is not yet certain how it will compare to 2020 acreage when another cold and wet start to the season diverted acres away from farmers’ original plans.

Forecasting USDA

All told, production estimates are forecast to remain unchanged for soybeans but trend over 100 million bushels lower for corn. Corn prices seem destined to ride out the bulls in today’s report while soybeans are at growing risk of a bear attack.

As I’ve noted in both my survey findings and previous E-corn-omics columns, there is typically more variability in USDA’s corn yield estimate in August relative to the soybean guess. Since 2000, the August USDA corn yield has eventually been revised higher 12 out of the last 22 years, or 55% of the time. There can be a little more certainty with soybean projections. In the past 22 years, USDA has only revised final soybean yields higher 8 times (36%) following the August yield report.

Plus, corn revisions tend to be larger than those of soybeans, which is due in part to corn’s innately higher yields than soybeans. Since 2000, August to January corn yield revisions have averaged 4.5 bpa while soybean changes only average 2.0 bpa.

Naomi Blohm reminds readers in the latest Ag Marketing IQ column that the August WASDE is slightly more likely to have bearish impacts on new crop prices, but with this report, “there is no smoking gun you can rely on. You can’t outguess these USDA reports, nor how the market will react, so be ready for anything by incorporating strategic marketing on your priced and unpriced bushels.”

And remember – outside money could also play a significant role in today’s reports. Hedge fund managers have largely exited the corn and soybean complex in recent months, but a futures rally in today’s report could reverse that trend. Easing inflation is another threat money managers hold over the commodity markets, which should remind growers that ag prices are still intertwined with the broader economy and that any economic disruption that increases inflationary pressures could also benefit farmers.

At the same time, the easing inflation pressures could keep weakening the dollar, which bodes well for export prospects as peak wheat export season begins to taper down and peak soybean export season ramps up.

Corn

Corn futures traded $0.01-$0.02/bushel lower this morning ahead of USDA reports that are expected to show a smaller corn crop harvested in the U.S. this fall. Despite cooling inflationary pressures, the dollar strengthened overnight and a round of profit-taking following four days of gains.

Concerns about hot and dry weather, especially in the Upper Midwest, kept a lid on the morning’s losses.

Soybeans

Soybean losses this morning were derived in large part from overnight losses in the edible oils complex after monthly palm oil import paces to top global buyer India for July dropped 10% from the previous month. Soyoil’s losses were limited by India’s renewed interest in soyoil imports during that time as a substitute for palm oil.

Nearby soybean futures contracts dropped $0.13-$0.27/bushel while new crop prices edged $0.07-$0.10/bushel lower at last glance. The losses were held in check by weather concerns in the U.S.’s Upper Midwest, where peak pod filling is currently underway.

Wheat

Wheat prices fell $0.06-$0.11/bushel overnight amid a stronger dollar and profit-taking, following prices hitting a two-week high during yesterday’s trading session. September futures in Chicago held steady just above the $8/bushel benchmark as further damages continue to be prevented by the heatwave in Europe limiting wheat transportation and slow Ukrainian shipping paces.

Ukraine shipped its first wheat shipment overnight since the Russian invasion and naval blockade began in February. No ships departed from any of the three Ukrainian Black Sea ports yesterday following bad weather and rocky seas.

Of the two ships departing from Ukrainian ports overnight, one ship is carrying 112,057 bushels (3,050 tonnes) of wheat to Turkey. The other ship is bound for Iran, containing 2.4 million bushels (60K metric tonnes) of corn.

So far, 14 ships have left Ukrainian ports since August 1, when the “Grain Initiative” began. Ukraine still has an estimated 20MMT of 2021/22 grain left to ship before the deadline for safe passage amid the Russian naval blockade ends at the end of October. Plus, Ukraine’s 2022 wheat harvest is expected to reach 735 million bushels (20MMT), much of which will be needed to be exported.

Weather

Temperature highs will continue to hover in the 80s today for the Great Lakes region and Upper Midwest, according to NOAA’s short-range forecasts. While that will hopefully stave off drought worries for top soybean-producing states, blistering temperatures in the Plains and Western Corn Belt could damage yield prospects for corn and soybean crops in that region.

It will be a mostly dry day for the Heartland, with only a few scattered showers forecast in the Red River Valley, Minnesota, Wisconsin, and Eastern Iowa through this evening. Expected accumulation will likely be light, with the system only dropping up to three quarters of an inch of rain over the next 24 hours.

NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending cooler for most of the Heartland by late next week. The Upper Midwest is trending drier during that time, while chances for above average moisture are expected for the Central Plains and Eastern Corn Belt.

Financials

S&P 500 futures continued their upward charge overnight, rising 0.36% to $4,222.00 at last glance, marking a fourth consecutive week of gains for the index. Gains continue to be fueled by optimism from easing inflationary pressures. Energy futures dipped after OPEC cut demand forecasts for the coming year on expectations for slowing global economic growth.

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

  • Naomi Blohm explains why Friday’s WASDE report is so important – and how farmers can prepare for it.
  • Bryce Knorr tries to predict what will happen after Friday’s WASDE reports. It’s a double-edged sword: weaker demand could take the air out of the bull market, but it could also lower input costs.
  • Farm Futures’ yield results from our latest farmer survey!
  • Virginia Tech’s Dave Kohl predicts what is in store for farm finances over the next couple years.
  • A special Farm Futures white paper by University of Minnesota agricultural economist Ed Usset examines different grain marketing strategies farmers may look to use.
Morning Ag Commodity Prices - 8/12/2022
Contract Units High Low Last Net Change % Change
SEP '22 CORN $ / BSH  6.32 6.25 6.2775 -0.015 -0.24%
DEC '22 CORN $ / BSH  6.3175 6.2425 6.27 -0.0075 -0.12%
MAR '23 CORN $ / BSH  6.3825 6.315 6.34 -0.005 -0.08%
MAY '23 CORN $ / BSH  6.405 6.34 6.3625 -0.0125 -0.20%
JUL '23 CORN $ / BSH  6.385 6.3275 6.3475 -0.015 -0.24%
SEP '23 CORN $ / BSH  6.0425 6.0125 6.02 -0.0075 -0.12%
DEC '23 CORN $ / BSH  5.9475 5.905 5.935 0.0025 0.04%
AR2 '24 CORN $ / BSH  6 6 6 -0.0075 -0.12%
MAY '24 CORN $ / BSH  6.0525 #N/A 6.0425 0 0.00%
AUG '22 SOYBEANS $ / BSH  16.875 16.825 16.875 -0.22 -1.29%
SEP '22 SOYBEANS $ / BSH  15.2575 15.07 15.105 -0.0975 -0.64%
NOV '22 SOYBEANS $ / BSH  14.57 14.3825 14.4275 -0.0575 -0.40%
JAN '23 SOYBEANS $ / BSH  14.6275 14.4475 14.49 -0.06 -0.41%
MAR '23 SOYBEANS $ / BSH  14.6175 14.4525 14.48 -0.0675 -0.46%
MAY '23 SOYBEANS $ / BSH  14.62 14.445 14.4925 -0.055 -0.38%
JUL '23 SOYBEANS $ / BSH  14.585 14.43 14.465 -0.06 -0.41%
AUG '23 SOYBEANS $ / BSH  14.235 14.235 14.235 -0.045 -0.32%
SEP '23 SOYBEANS $ / BSH  0 #N/A 13.8025 0 0.00%
NOV '23 SOYBEANS $ / BSH  13.69 13.5525 13.5875 -0.0425 -0.31%
AN2 '24 SOYBEANS $ / BSH  13.615 13.615 13.615 -0.045 -0.33%
AUG '22 SOYBEAN OIL  $ / LB 0 #N/A 71.97 0 0.00%
SEP '22 SOYBEAN OIL  $ / LB 69.69 68.44 68.57 -0.73 -1.05%
AUG '22 SOY MEAL $ / TON 0 #N/A 520.2 0 0.00%
SEP '22 SOY MEAL $ / TON 463.1 457.1 459.7 3.2 0.70%
OCT '22 SOY MEAL $ / TON 419.9 415.2 417.5 0.6 0.14%
DEC '22 SOY MEAL $ / TON 415 410.2 412.8 0.4 0.10%
JAN '23 SOY MEAL $ / TON 410.1 405.9 407.9 -0.3 -0.07%
SEP '22 Chicago SRW $ / BSH  8.1125 7.9675 8 -0.1075 -1.33%
DEC '22 Chicago SRW $ / BSH  8.25 8.13 8.1525 -0.11 -1.33%
MAR '23 Chicago SRW $ / BSH  8.395 8.2825 8.29 -0.1225 -1.46%
MAY '23 Chicago SRW $ / BSH  8.4875 8.3775 8.3825 -0.125 -1.47%
JUL '23 Chicago SRW $ / BSH  8.47 8.3575 8.3575 -0.1325 -1.56%
SEP '23 Chicago SRW $ / BSH  8.4775 8.4 8.4 -0.1125 -1.32%
DEC '23 Chicago SRW $ / BSH  8.49 8.4375 8.4375 -0.1175 -1.37%
SEP '22 Kansas City HRW $ / BSH  8.86 8.75 8.7675 -0.125 -1.41%
DEC '22 Kansas City HRW $ / BSH  8.9025 8.79 8.805 -0.115 -1.29%
MAR '23 Kansas City HRW $ / BSH  8.9525 8.845 8.8575 -0.115 -1.28%
MAY '23 Kansas City HRW $ / BSH  8.9425 8.88 8.88 -0.1175 -1.31%
JUL '23 Kansas City HRW $ / BSH  8.85 8.8425 8.8475 -0.055 -0.62%
SEP '23 Kansas City HRW $ / BSH  0 #N/A 8.8725 0 0.00%
DEC '23 Kansas City HRW $ / BSH  8.8325 #N/A 8.875 0 0.00%
SEP '22 MLPS Spring Wheat $ / BSH  9.19 9.1 9.14 -0.0775 -0.84%
DEC '22 MLPS Spring Wheat $ / BSH  9.33 9.23 9.2375 -0.1125 -1.20%
MAR '23 MLPS Spring Wheat $ / BSH  9.43 9.3825 9.4175 -0.0575 -0.61%
MAY '23 MLPS Spring Wheat $ / BSH  9.4675 9.4675 9.4675 -0.085 -0.89%
JUL '23 MLPS Spring Wheat $ / BSH  9.5225 #N/A 9.5825 0 0.00%
SEP '23 MLPS Spring Wheat $ / BSH  9.2375 #N/A 9.3775 0 0.00%
DEC '23 MLPS Spring Wheat $ / BSH  0 #N/A 9.4675 0 0.00%
SEP '21 ICE Dollar Index $ 105.46 104.97 105.445 0.451 0.43%
 SE '21 Light Crude $ / BBL  94.81 92.65 92.86 -1.48 -1.57%
 OC '21 Light Crude $ / BBL  94.02 91.92 92.09 -1.44 -1.54%
SEP '22 ULS Diesel $ /U GAL 3.5408 3.4521 3.4851 0.0011 0.03%
OCT '22 ULS Diesel $ /U GAL 3.5036 3.4204 3.4552 0.0021 0.06%
SEP '22 Gasoline $ /U GAL 3.0844 3.0133 3.0169 -0.0546 -1.78%
OCT '22 Gasoline $ /U GAL 2.8209 2.7521 2.7521 -0.0546 -1.95%
AUG '22 Feeder Cattle $ / CWT 0 #N/A 179.95 0 0.00%
SEP '22 Feeder Cattle $ / CWT 0 #N/A 184.6 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 140.6 0 0.00%
CT2 '21 Live Cattle $ / CWT 0 #N/A 145.1 0 0.00%
AUG '22 Live Hogs $ / CWT 0 #N/A 122.4 0 0.00%
OCT '22 Live Hogs $ / CWT 0 #N/A 101.075 0 0.00%
AUG '22 Class III Milk $ / CWT 20.12 20.12 20.12 -0.01 -0.05%
SEP '22 Class III Milk $ / CWT 20.05 19.98 19.98 -0.12 -0.60%
OCT '22 Class III Milk $ / CWT 20.63 #N/A 20.81 0 0.00%

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