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More recession fears sink grain prices

morning market recap.jpg
Morning report: Plus – an update on fertilizer costs. (Comments are updated by 7:30 a.m. Central Time.)

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  •  Corn down 8-14 cents
  • Soybeans down 11-18 cents; Soymeal down $5.90/ton; Soyoil down $1.59/lb
  • Chicago wheat down 16-18 cents; Kansas City wheat down 13-15 cents; Minneapolis wheat down 11-12 cents

*Prices as of 6:55am CDT.

Feedback from the Field updates! Are you combining yet?! Click this link to take the survey and share updates about your farm’s harvest 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!

I published an updated Feedback from the Field column to our site on Tuesday. So far, few of our respondents have crops that are ready for harvest, but with warm and dry weather on the horizon, that is not likely to remain the trend. Check out the latest article for all of the top market insights!

Input prices

The bi-weekly Production cost report from the Illinois USDA was updated yesterday and it is growing apparent that Europe’s natural gas problems are causing troubles for farmers in the Heartland this fall.

Through the two weeks ending September 22, average quotes for anhydrous ammonia in Illinois rose $74.44/ton to $1,318.33/ton as prices were pressured higher by slowed ammonia production in the European Union and China over the past two months. Tight natural gas stocks in these countries due to the Russian conflict and an unusually hot summer have sent natural gas costs skyrocketing which has rendered fertilizer production in both regions unprofitable.

Yesterday’s report saw urea prices remain largely unchanged over the past two weeks, averaging $858.33/ton. UAN quotes increased slightly, rising to $608.33/ton, which is well below the high of $686.05/acre recorded earlier this fall.

Closer to home, that price pressure is being felt as many growers look to lock in 2023 pricing and start fall applications as the weather begins to cool. And higher nitrogen prices continue to take a significant bite out of 2023 earnings potential. In the past year, per acre nitrogen costs for 200 bushel-per-acre corn yields have risen 43%-51%, tightening 2023 per acre crop budget forecasts to the tune of $33-$40/acre.

Phosphate prices eased slightly in yesterday’s report, though potash quotes saw the biggest drop. Average potash prices in Illinois have fallen over 9% in the last two weeks, with an average quote now priced at $790/ton.

Average NPK costs for producing 200-bushel-per-acre corn in Illinois now range between $193-$237/acre, which is $37-$61/acre higher (35%) than a year ago. Natural gas and global macroeconomic concerns are likely to continue influencing fertilizer prices as the fall season continues, so if you can find a good deal on fertilizer in the coming weeks, pounce on it.

Corn

Wall Street and Asian market losses on recession worries sent corn futures falling $0.08-$0.13/bushel this morning. Accelerating harvest speeds following some late week showers in the Midwest are likely increase supplies and add some bearish pressure to the corn complex.

Prices are still likely to end the week higher as Black Sea trade flows and South American weather risks are debated in the market. The Black Sea Grain Initiative, which has revived grain shipments out of Ukrainian ports in the Black Sea, could be threatened after Russian President Vladimir Putin announced a partial mobilization of troops to assist in the Ukrainian invasion.

"Trade flows are not without disruption risk, but so long as ports and transit lanes are open for grains, then prices should generally stay contained," Citi analysts reassured market watchers, in a note reported by Reuters.

USDA releases updated Cattle on Feed data today and corn markets should probably brace for more bearish news this week, especially as ethanol production begins to show signs of weakness.

Inventory volumes are expected to drift 1% lower to 1.3% higher than year-ago volumes, which registered at 11.234 million head. September 1 Cattle on Feed figures typically drift lower than the previous months as peak demand season (summer) keeps consumer purchases of beef steady.

Perhaps most unusually, August 2022 placement volumes are expected on average to fall 2.7% from a year ago. August is typically an important month for herd restocking, and any shortfalls in today’s report could signal contraction in the cattle market, which would be unsurprising considering the high volume of burned pastures on the Plains and high feed costs producers are facing.

But consumer demand likely isn’t slowing down, even if production shows signs of contraction. Market estimates peg slaughtering rates in today’s report as being 5%-6.5% higher than a year ago. Many herds have been forced to cull breeding stock amid dry pastures and have been sending low-weight animals to packing plants as feed supplies run scarce.

Demand may be high, but it will need to push cattle prices even higher following today’s report if cattle producers are to be incentivized to reverse the liquidation trends at play in the cattle markets currently.

That is not great news for corn growers – livestock and residual consumption typically accounts for the largest portion of corn usage in the U.S. But as the cattle herd shrinks in the coming year, ethanol will take the top spot for corn consumption in the U.S. But that could turn out to be a more bearish than bullish omen in the coming months.

Today’s cattle report follows a bearish weekly ethanol production reading on Wednesday that saw weekly output slip to the lowest levels since the February 2021 cold snap that took a large portion of the country’s ethanol production offline. The ethanol production decline is due in large part to consumer sensitivity to high gasoline prices.

Soybeans

Soybean prices fell $0.11-$0.16/bushel overnight on looming macroeconomic concerns. Some harvest pressure was also likely at play, though the majority of soy’s losses this morning were due in large part to outside market forces.

Wheat

Wheat prices looked to end three straight sessions of gains this morning, as futures prices fell $0.11-$0.17/bushel on a stronger dollar and global recession worries. A lackluster weekly export sales report from USDA yesterday also contributed to lower prices this morning.

The International Grains Council also issued a higher forecast for 2022/23 global wheat production yesterday. The IGC cited better-than-expected spring wheat yields out of Russia as the primary driver of higher wheat production this year, adding 147 million bushels of wheat to current supply volumes, bringing 2022/23 global production estimates to 29.1 billion bushels.

Weather

Temperatures are going to continue trending cooler across the Corn Belt today, according to NOAA’s short-range forecasts. Yesterday’s showers are expected to drift east into the Upper Midwest through today and tomorrow, which could disrupt any early harvest activity in the region. But clear skies and warm temps should return to most of the Corn Belt late in the weekend, which means than any rain delays in the next couple days are likely to be short-lived.

The 6-10-day NOAA outlook continues to forecast high heat and excessive dryness for most of the Heartland through the end of September. The 8-14-day NOAA outlook is also trending warmer, much like the 6-10-day forecast. The end of September is likely to be drier across the country, which will aid harvesting progress, which is likely to hit its peak activity by the end of September. The 8-14-day forecast is beginning to show increased chances of moisture for the Central Rockies (which is great news for my new little grass seedlings!).

Financials

S&P 500 futures dropped a staggering 1.32% to $3,722.25 overnight after Britain’s tax cuts amid soaring inflation and rising interest rates weighed on the global economy. As has been the trend over the past few months, the mounting global uncertainty about a widespread economic recession pushed the dollar and Treasury bond yields higher. Oil prices drifted lower on the sentiment.

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

  • Harvest is ramping up across the Heartland! Our upcoming Farm Progress 365 session has the latest insights to help farmers maximize yields and time sales effectively – join online from September 27 – September 29!
  • Naomi Blohm explains why the latest selloff in the cotton market was likely overdone.
  • In Farm Futures’ September 2022 issue, Ben Potter offers insights for growers to maintain profitability in an uncertain 2023 following profitable 2021 and 2022 growing seasons.
  • AgMarket.Net’s Jim McCormick weighs bullish farm-level corn signals against bearish global price outlooks and explains what it means for farmers.
  • Jacqui Fatka previews potential tweaks to conservation programs in the upcoming Farm Bill.79
Morning Ag Commodity Prices - 9/23/2022
Contract Units High Low Last Net Change % Change
DEC '22 CORN $ / BSH  6.88 6.765 6.7825 -0.1 -1.45%
MAR '23 CORN $ / BSH  6.9325 6.8175 6.835 -0.0975 -1.41%
MAY '23 CORN $ / BSH  6.94 6.83 6.8475 -0.095 -1.37%
JUL '23 CORN $ / BSH  6.875 6.77 6.79 -0.095 -1.38%
SEP '23 CORN $ / BSH  6.435 6.3375 6.3525 -0.0725 -1.13%
DEC '23 CORN $ / BSH  6.3 6.22 6.22 -0.08 -1.27%
AR2 '24 CORN $ / BSH  6.3675 6.29 6.2925 -0.075 -1.18%
AY2 '24 CORN $ / BSH  6.345 #N/A 6.39 0 0.00%
JUL '24 CORN $ / BSH  6.3625 #N/A 6.3625 0 0.00%
NOV '22 SOYBEANS $ / BSH  14.56 14.435 14.44 -0.13 -0.89%
JAN '23 SOYBEANS $ / BSH  14.6225 14.4975 14.515 -0.1175 -0.80%
MAR '23 SOYBEANS $ / BSH  14.6375 14.525 14.545 -0.105 -0.72%
MAY '23 SOYBEANS $ / BSH  14.6625 14.555 14.575 -0.1025 -0.70%
JUL '23 SOYBEANS $ / BSH  14.6525 14.5525 14.5675 -0.105 -0.72%
AUG '23 SOYBEANS $ / BSH  14.44 14.3525 14.3525 -0.1125 -0.78%
SEP '23 SOYBEANS $ / BSH  14.0275 13.9625 13.9775 -0.06 -0.43%
NOV '23 SOYBEANS $ / BSH  13.8175 13.7375 13.7475 -0.0975 -0.70%
AN2 '24 SOYBEANS $ / BSH  11.5 #N/A 13.865 0 0.00%
AR2 '24 SOYBEANS $ / BSH  0 #N/A 13.7825 0 0.00%
AY2 '24 SOYBEANS $ / BSH  0 #N/A 13.74 0 0.00%
OCT '22 SOYBEAN OIL  $ / LB 69.4 67.97 68 -1.43 -2.06%
DEC '22 SOYBEAN OIL  $ / LB 66.4 65 65.04 -1.42 -2.14%
OCT '22 SOY MEAL $ / TON 446 439.8 440.8 -5.1 -1.14%
DEC '22 SOY MEAL $ / TON 429 425.1 425.3 -3.6 -0.84%
JAN '23 SOY MEAL $ / TON 423.1 420.1 420.3 -2.7 -0.64%
MAR '23 SOY MEAL $ / TON 414.7 412.8 413 -1.6 -0.39%
MAY '23 SOY MEAL $ / TON 410.9 408.8 409.4 -0.8 -0.20%
DEC '22 Chicago SRW $ / BSH  9.13 8.935 8.9575 -0.15 -1.65%
MAR '23 Chicago SRW $ / BSH  9.2325 9.06 9.085 -0.135 -1.46%
MAY '23 Chicago SRW $ / BSH  9.29 9.12 9.1425 -0.1325 -1.43%
JUL '23 Chicago SRW $ / BSH  9.135 8.9725 9 -0.135 -1.48%
SEP '23 Chicago SRW $ / BSH  9.1125 8.9325 8.9525 -0.1575 -1.73%
DEC '23 Chicago SRW $ / BSH  9.1125 8.9425 8.9575 -0.17 -1.86%
AR2 '24 Chicago SRW $ / BSH  9.05 8.9925 8.9925 -0.0825 -0.91%
DEC '22 Kansas City HRW $ / BSH  9.8 9.655 9.68 -0.115 -1.17%
MAR '23 Kansas City HRW $ / BSH  9.755 9.625 9.64 -0.115 -1.18%
MAY '23 Kansas City HRW $ / BSH  9.7275 9.6025 9.6225 -0.1075 -1.10%
JUL '23 Kansas City HRW $ / BSH  9.5925 9.4525 9.4625 -0.12 -1.25%
SEP '23 Kansas City HRW $ / BSH  9.4875 9.3925 9.3925 -0.125 -1.31%
DEC '23 Kansas City HRW $ / BSH  9.5125 #N/A 9.5275 0 0.00%
AR2 '24 Kansas City HRW $ / BSH  0 #N/A 9.4875 0 0.00%
DEC '22 MLPS Spring Wheat $ / BSH  9.7675 9.655 9.665 -0.1125 -1.15%
MAR '23 MLPS Spring Wheat $ / BSH  9.7975 9.705 9.705 -0.12 -1.22%
MAY '23 MLPS Spring Wheat $ / BSH  9.7525 9.74 9.7525 -0.105 -1.07%
JUL '23 MLPS Spring Wheat $ / BSH  9.79 9.75 9.75 -0.05 -0.51%
SEP '23 MLPS Spring Wheat $ / BSH  9.47 9.4 9.4 -0.06 -0.63%
DEC '23 MLPS Spring Wheat $ / BSH  9.395 9.395 9.395 0.0125 0.13%
AR2 '24 MLPS Spring Wheat $ / BSH  0 #N/A 0 0 0.00%
DEC '21 ICE Dollar Index $ 112.105 110.84 112.045 0.94 0.85%
 NO '21 Light Crude $ / BBL  83.92 80.35 80.53 -2.96 -3.55%
 DE '21 Light Crude $ / BBL  83.45 79.95 80.14 -2.89 -3.48%
OCT '22 ULS Diesel $ /U GAL 3.4114 3.2786 3.2948 -0.1167 -3.42%
NOV '22 ULS Diesel $ /U GAL 3.3246 3.2027 3.2216 -0.0991 -2.98%
OCT '22 Gasoline $ /U GAL 2.5283 2.3929 2.4055 -0.1102 -4.38%
NOV '22 Gasoline $ /U GAL 2.4459 2.3186 2.3299 -0.1017 -4.18%
SEP '22 Feeder Cattle $ / CWT 0 #N/A 178.2 0 0.00%
OCT '22 Feeder Cattle $ / CWT 0 #N/A 177.975 0 0.00%
CT2 '21 Live Cattle $ / CWT 0 #N/A 144.85 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 149.35 0 0.00%
OCT '22 Live Hogs $ / CWT 0 #N/A 94.125 0 0.00%
DEC '22 Live Hogs $ / CWT 0 #N/A 85.675 0 0.00%
SEP '22 Class III Milk $ / CWT 19.85 19.85 19.85 -0.02 -0.10%
OCT '22 Class III Milk $ / CWT 21.62 21.54 21.62 0.16 0.75%
NOV '22 Class III Milk $ / CWT 21.42 21.39 21.39 0.12 0.56%

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