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Morning Market Review for December 1, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Grains claw back some of yesterday’s losses. (Comments are updated by 7:30 a.m. Central Time.)

The uptick isn’t enough to recoup yesterday’s selloff, but it signals more stability

  • Corn up 3-6 cents
  • Soybeans up 4-8 cents; Soymeal up $1.30/ton; Soyoil up $0.94/lb
  • Chicago wheat up 8-9 cents; Kansas City wheat up 5-6 cents; Minneapolis wheat up 11-12 cents

*Prices as of 6:55am CST.

Corn

Corn rose $0.03-$0.06/bushel overnight on rising energy prices after markets stabilized following yesterday’s omicron and Federal Reserve – fueled selloff. Bullish corn consumption data from ethanol production is also expected from both USDA and the EIA later today as well. It marked the first time in three trading sessions corn was on pace to gain money in the futures markets.

It will be a big report day for ethanol production today. Two reports come out that will provide fresh insights as to how the ethanol industry has surged back over the past eight weeks.

First, the U.S. Energy Information Administration (EIA) releases its weekly Petroleum Inventory Status report which provides the most current look at national ethanol production through the week ending November 26. To be sure, market impacts from the omicron coronavirus variant discovery are not likely to be reflected in today’s report, as the variant’s announcement was made just last Friday (November 26).

But that’s not all bad news for ethanol. The previous week saw ethanol output rise to 1.079 million barrels/day of output – the 15th highest weekly volume on record. With the Thanksgiving holiday encompassing this latest reporting week, it seems likely that we could see another high week of ethanol production in today’s report.

Last week’s gasoline consumption rates stood at 9.334 million barrels/day. That held blend rates at 11.56% - the highest blend rating in November 2021. With more Americans than ever hitting the road over this past Thanksgiving (myself included), expect the holiday to skew some of those metrics higher in EIA’s report today.

Second, USDA releases its monthly Grain Processing report, which will provide a complete look at where the agency sees ethanol trends going during the 2021/22 marketing year. With three of the top five weeks of ethanol output recorded in the month of October, EIA data suggests that corn consumption for ethanol in October 2021 could reach 520.2 million bushels, which would shatter all previous monthly records for corn usage for ethanol.

But I’ve noticed that EIA data tends to run much higher than the monthly USDA data collected directly from ethanol plants. But don’t let your hopes down just yet. The eye-popping EIA data is undisputedly high and even if monthly corn consumption rates for ethanol don’t top 500 million bushels, it remains highly likely that today’s report will challenge volumes recorded in 2017/18’s record-setting year for the highest on record.

Soybeans

Soybean futures prices rose $0.04-$0.08/bushel this morning on bargain buying after five sessions of losses and energy complex price recovery. Favorable usage data expected from USDA today and steady seasonal soymeal demand from poultry producers in the South could help solidify the morning’s gains.

USDA also releases monthly crush volumes for October 2021 today. Analyst estimates peg today’s volume for October 2021 at 195.6 million bushels, up 31.5 million bushels from September 2021 crush volumes of 164.1 million bushels.

If realized, the October 2021 crush would be the third highest on record following the October 2020 (196.5M bu.) and January 2021 (196.5M bu.) crushes. It would be the highest volume in nine months since the January 2021 crush.

Trade estimates peg the range for today’s estimate between 194.5 million to 196.3 million bushels. While it may not top last year’s records, it is still likely to land among the top three volumes on record.

The trends expected for both corn and soybean derived biofuels in today’s reports suggest that biofuels are likely to remain a viable source of renewable energy in the years to come.

Wheat

Wheat prices rose due in large part to unquenchable global demand for high-protein wheat following production hiccups across the globe. Futures prices remain inverted in the Chicago, Kansas City, and Minneapolis markets as import dynamics power the wheat complex higher this morning, even in the face of a strong dollar.

High-protein wheat continues to fetch staggering premiums across global markets with one Middle East miller paying over $23 million for an Australian shipment of high-grade wheat back in October. Now, that same buyer is willing to pay 10% over that figure for another shipment.

But heavy rains amid harvest activity in Australia cut protein levels for its spring wheat crop, adding insult to injury after North American spring wheat crop shortfalls this summer due to drought. As a result, the Middle East flour miller will not likely be able to find wheat on the global market meeting the protein specifications it needs to continue its normal production schedule.

"The global wheat market has changed dramatically over the last few weeks,” a Mid-East grain trader told Reuters. “If you booked high-quality wheat, you are not sure about what you get."

Middle East and North African countries are among the largest importers of wheat in the world, led by top countries Egypt (448M bu.) and Turkey (404M bu.). Meanwhile, the E.U., Russia, Ukraine, Australia, and the U.S. are expected to comprise the top five exporting countries in the world during 2021/22 despite production hiccups in each region this year.

The high protein wheat shortfalls have sent wheat prices in Australia and Russia to record highs while soft wheat in Chicago topped a nine-year high a few weeks ago. World food prices soared to a 10-year high in October and are likely going to continue to climb as wheat and edible oil prices remain high.

With dry weather in the U.S. Plains and Russia casting doubt upon 2022/23 production and quality volumes already – Russia has already issued forecasts for smaller winter wheat acreages planted this fall due to dry weather – it seems that high wheat prices are going to linger over the next year. For better or for worse.

Weather

The first day of December will start out with temperatures in the 70s (because that makes sense) across much of the Heartland today, according to NOAA’s short-range forecasts. The Eastern Corn Belt could see a chance of scattered showers by this evening though total accumulation over the next 24 hours will likely remain negligible.

Inputs (Global)

India will offer farmers fertilizer subsidies topping $20.64 billion to ensure supplies amid global shortages and rising acreage expansions across the globe – nearly double of the subsidy offered to farmers from the government last year. India is the world’s largest buyer of urea and a significant phosphate importer as well.

Global fertilizer prices are more than 200% higher than the same time a year ago due in large part to price increases from key inputs, coal and natural gas. Pandemic-fueled production slowdowns and supply chain backlogs have also contributed to tightening supply conditions around the world following a three-year global acreage expansion.

This means that there will be more international competition for fertilizers as spring growing season approaches, particularly for urea and DAP. It is likely these effects will trickle over into U.S. prices in the coming weeks.

Financials

S&P 500 futures climbed 59.5 points (+1.3%) higher overnight to $4,625.75 as omicron-fueled fears lessened. Global manufacturing levels stabilized in November, offering some bullish sentiment though the gains were capped by lingering omicron uncertainties.

Asian indices and the energy complex also moved higher on a round of bargain buying after yesterday’s selloff.

Also worth a read on our website, FarmFutures.com

Morning Ag Commodity Prices - 12/1/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.735 5.68 5.72 0.05 0.88%
MAR '22 CORN $ / BSH  5.74 5.6875 5.7275 0.0525 0.93%
MAY '22 CORN $ / BSH  5.7625 5.7075 5.75 0.05 0.88%
JUL '22 CORN $ / BSH  5.7675 5.71 5.755 0.0475 0.83%
SEP '22 CORN $ / BSH  5.5625 5.525 5.5625 0.035 0.63%
DEC '22 CORN $ / BSH  5.4975 5.455 5.49 0.025 0.46%
MAR '23 CORN $ / BSH  5.57 5.54 5.57 0.0275 0.50%
JAN '22 SOYBEANS $ / BSH  12.3275 12.2075 12.26 0.0875 0.72%
MAR '22 SOYBEANS $ / BSH  12.405 12.2875 12.3375 0.0725 0.59%
MAY '22 SOYBEANS $ / BSH  12.4875 12.38 12.4175 0.065 0.53%
JUL '22 SOYBEANS $ / BSH  12.56 12.4575 12.49 0.0675 0.54%
AUG '22 SOYBEANS $ / BSH  12.52 12.44 12.445 0.0675 0.55%
SEP '22 SOYBEANS $ / BSH  12.2925 12.2525 12.255 0.0575 0.47%
NOV '22 SOYBEANS $ / BSH  12.1975 12.1 12.1325 0.0425 0.35%
JAN '23 SOYBEANS $ / BSH  12.185 12.13 12.165 0.0625 0.52%
MAR '23 SOYBEANS $ / BSH  11.99 11.9475 11.9525 0.03 0.25%
DEC '21 SOYBEAN OIL  $ / LB 56.05 55.34 56.05 0.94 1.71%
JAN '22 SOYBEAN OIL  $ / LB 56.12 55.24 55.88 0.67 1.21%
DEC '21 SOY MEAL $ / TON 350.6 348.5 348.5 -0.3 -0.09%
JAN '22 SOY MEAL $ / TON 345.2 341.9 342.7 0.9 0.26%
MAR '22 SOY MEAL $ / TON 344.1 340.7 341.6 0.5 0.15%
MAY '22 SOY MEAL $ / TON 345.1 342.1 342.9 0.1 0.03%
JUL '22 SOY MEAL $ / TON 348 345.3 346.1 -0.1 -0.03%
DEC '21 Chicago SRW $ / BSH  7.84 7.825 7.825 0.0875 1.13%
MAR '22 Chicago SRW $ / BSH  7.99 7.89 7.935 0.0625 0.79%
MAY '22 Chicago SRW $ / BSH  8.0525 7.96 7.9975 0.06 0.76%
JUL '22 Chicago SRW $ / BSH  7.97 7.8975 7.9225 0.0525 0.67%
SEP '22 Chicago SRW $ / BSH  7.97 7.91 7.9375 0.0625 0.79%
DEC '21 Kansas City HRW $ / BSH  8.2425 8.2425 8.2425 0.0525 0.64%
MAR '22 Kansas City HRW $ / BSH  8.33 8.24 8.275 0.0525 0.64%
MAY '22 Kansas City HRW $ / BSH  8.315 8.235 8.2775 0.0575 0.70%
JUL '22 Kansas City HRW $ / BSH  8.19 8.0925 8.135 0.0425 0.53%
SEP '22 Kansas City HRW $ / BSH  8.1625 8.0975 8.13 0.05 0.62%
DEC '21 MLPS Spring Wheat $ / BSH  10.2 #N/A 10.2 0 0.00%
MAR '22 MLPS Spring Wheat $ / BSH  10.26 10.145 10.22 0.12 1.19%
MAY '22 MLPS Spring Wheat $ / BSH  10.1725 10.03 10.11 0.11 1.10%
JUL '22 MLPS Spring Wheat $ / BSH  9.84 9.775 9.775 0.0775 0.80%
SEP '22 MLPS Spring Wheat $ / BSH  9.08 9.0775 9.08 0.025 0.28%
DEC '21 ICE Dollar Index $ 96.14 95.78 95.98 -0.027 -0.03%
 JA '21 Light Crude $ / BBL  69.49 66.2 69.18 3 4.53%
 FE '21 Light Crude $ / BBL  69.18 65.88 68.88 3.03 4.60%
JAN '22 ULS Diesel $ /U GAL 2.16 2.0678 2.1498 0.0895 4.34%
FEB '22 ULS Diesel $ /U GAL 2.1475 2.0618 2.1403 0.0875 4.26%
JAN '22 Gasoline $ /U GAL 2.0369 1.9484 2.0258 0.0857 4.42%
FEB '22 Gasoline $ /U GAL 2.0213 1.9357 2.0128 0.0846 4.39%
JAN '22 Feeder Cattle $ / CWT 0 #N/A 164.85 0 0.00%
MAR '22 Feeder Cattle $ / CWT 0 #N/A 166.5 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 135.875 0 0.00%
 FE '21 Live Cattle $ / CWT 0 #N/A 137.9 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 73.375 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 79.975 0 0.00%
DEC '21 Class III Milk $ / CWT 18.01 18 18.01 0 0.00%
JAN '22 Class III Milk $ / CWT 18.23 18.23 18.23 0.02 0.11%
FEB '22 Class III Milk $ / CWT 18.92 18.72 18.74 -0.11 -0.58%

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