Morning Market Review for December 3, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Energy rally lifts corn, soy futures. (Comments are updated by 7:30 a.m. Central Time.)

Plus – a look at rising nitrogen prices in Illinois and more global political turmoil for the potash industry

  • Corn up 3-4 cents
  • Soybeans up 8-13 cents; Soymeal up $2.50/ton; Soyoil up $0.82/lb
  • Chicago wheat down 3-4 cents; Kansas City wheat down 4-5 cents; Minneapolis wheat down 1-2 cents

*Prices as of 6:50am CST.

Author’s Note

Good morning! The Farm Futures team is conducting our tri-annual farmer survey with our readers to estimate 2021 production and 2022 acreage. The survey results are widely regarded in the marketplace and are available to farmers looking to make pro-active marketing decisions leading up to the January 2022 WASDE report issued by USDA.

Want to participate in our farmer survey? Click here to share your farm’s insights, which will remain confidential. Results for 2021 production will be released online in early January and 2022 acreage estimates will be announced at the Farm Futures Business Summit in Coralville, Iowa as well as online on January 20.

Thank you! -JH

Corn

A rally in the energy markets this morning helped prop up overnight gains in the corn market, especially as concerns about the omicron coronavirus variant ease from the marketplace. Gains were capped by yesterday’s optimism over increasing Argentine corn production prospects after beneficial rains fell in South America.

Soybeans

Export optimism, albeit temporary, and support from the energy complex helped prop up gains in the soy complex overnight. USDA announced two large daily flash sales yesterday totaling 10.8 million bushels.

But competitive freight costs in Brazil and its potentially record-setting crop continue to cap gains in the U.S. Soybean export shipments from the U.S. to China are expected to shrink this year relative to last due in large part to Brazil’s recovery after last year’s harvest delays but also primary because of shipping delays out of U.S. ports earlier this summer following Hurricane Ida damage.

Seasonal poultry demand in the South continues to lift soymeal futures, especially with unprecedented egg set volumes being added to broiler production in preparation for New Year’s diet forecasts.

Wheat

French soft wheat crop reports issued overnight pointed to favorable growing conditions in the E.U.’s largest wheat producer. Additionally, rain forecasts for Russian wheat improved and with it so did prospects for Russia’s 2022 wheat crop.

U.S. wheat markets traded lower on the news this morning, with some profit taking also at play as markets await the results of a Saudi Arabian wheat tender as well as results from Australia’s wheat harvest. "It is difficult to estimate the percentage of feed wheat at this stage, but traders say it could exceed half of the harvested volume," consultancy Agritel said overnight of the Australian crop.

Statistics Canada will release updated 2021 production figures today, which will likely show lower spring and durum wheat output following this summer’s drought.

Inputs (Global)

The potash industry saw potential for [even] higher prices yesterday after the U.S. Treasury announced it would begin reducing its transactions with Belarusian potash company, Belarus Potash Company (BPC). The company is one of several in Belarus that has provided sovereign debt financing for the Belarusian government, an act which the U.S. has levied economic sanctions against.

BPC produces and sells 16% of the world’s potash supplies. Its primary customers include China, India, and Brazil. Potash production and distribution is Belarus’s main source of foreign currency revenue.

Belarus is one of the world’s largest producers of potash. Earlier sanctions levied against the Eastern European country earlier this year by the U.S. restricted potash trade flows after Belarusian President Lukashenko’s inhumane handling of political dissenters following Lukashenko’s alleged tampering in last Belarusian presidential election.

The United Kingdom and Canada also joined the U.S. in adding additional sanctions yesterday to Belarus in an effort to pressure the Lukashenko administration. Reuters reported that the British government froze assets for another Belarusian potash producer, OJSC Belaruskali.

"These sanctions continue to target important sources of revenue to the Lukashenko regime and place severe restrictions on those responsible for some of the worst anti-democratic acts in Belarus," British foreign minister Liz Truss said in a statement.

Lukashenko commented on the pressure overnight, noting that its economy is facing “unprecedented…external pressure.”

"Our economy is under external pressure on an unprecedented scale and depth," Belarus' state news agency Belta quoted Lukashenko. "Aggressive rhetoric persists."

Potash prices in the U.S. moderated over the past two weeks, but this news suggests that more upward price pressure may be on the way for potassium supplements in the near future. Shares in publicly traded North American fertilizer companies Nutrien and Mosaic soared on the news yesterday, as both stand to profit from reduced competition from Belarusian trade restrictions.

Inputs (U.S.)

Yesterday, USDA’s Illinois Department of Agricultural Market News Service issued its bi-weekly production cost report for the state, which is the largest producer of soybeans and second largest producer of corn in the U.S.

Nitrogen prices continue to rise but phosphate and potassium prices moderated in yesterday’s report, offering some signs of minor price relief for farmers in the Prairie State. High natural gas prices and tight global supply outlooks contributed to the rise in anhydrous, urea, and UAN prices in Illinois over the past two weeks.

Ongoing production concerns in China amid new COVID-19 restrictions at the Russian border and dwindling natural gas supplies in Europe continue to threaten global nitrogen availability next spring, especially after India – the world’s third largest wheat producer – nearly doubled its government-issued fertilizer subsidies to farmers earlier this week.

This is the context in which Illinois farmers saw nitrogen prices rise over the past two weeks. Seasonal demand is also at its peak, which adds another layer of price appreciation. Anhydrous ammonia prices in Illinois gained 7% to land at $1,434.38/ton over the past two weeks. Urea added 6%, rising to $915/ton in the same period.

Illinois bi-weekly production costs

Anhydrous prices are now three times higher than year-ago rates in Illinois – the largest price increase of any input in the state. In the last two months alone, anhydrous prices have risen by two thirds.

Last week’s discovery of the omicron variant adds another layer of uncertainty for global fertilizer production leading up to Spring 2022. While much about the variant’s impact remains unknown at present, tight global fertilizer supplies leave the industry more susceptible to any production shocks that may await from potential lockdown measures.

Farmers may have grumbled at high input costs this fall. But the headlines from the newswires over the past week suggests that it was likely a sage business move to concentrate fertilizer applications this fall instead of next spring. A lot of unknowns remain for Spring 2022 production and the uncertainty is likely to continue driving production expenses higher as 2021 comes to a close.

Weather

This week’s warmer temperatures will cool off in the Upper Midwest today, according to NOAA’s short-range forecasts. The lower thermometer readings will bring a chance of snow to the Great Lakes region by this evening though accumulation will be light.

Financials

S&P 500 shares inched 2.25 points (+0.05%) higher overnight to $4,578 as equity indices wavered ahead of this morning’s jobs report. Market watchers expect this morning’s jobs report could spill over into the commodity sector, so growers will want to keep an eye out for those headlines this morning.

Omicron fears eased slightly but worries continue to grow about the Federal Reserve pulling back monetary support more quickly than previously outlined. Energy stocks bounced up on the overarching sentiments while the dollar strengthened on the growing economic uncertainty.

Also worth a read on our website, FarmFutures.com

Morning Ag Commodity Prices - 12/3/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.8125 5.7625 5.8125 0.0425 0.74%
MAR '22 CORN $ / BSH  5.81 5.7525 5.805 0.0375 0.65%
MAY '22 CORN $ / BSH  5.8325 5.7775 5.8275 0.035 0.60%
JUL '22 CORN $ / BSH  5.83 5.775 5.825 0.035 0.60%
SEP '22 CORN $ / BSH  5.61 5.5575 5.6025 0.025 0.45%
DEC '22 CORN $ / BSH  5.5225 5.47 5.52 0.03 0.55%
MAR '23 CORN $ / BSH  5.595 5.545 5.5925 0.0275 0.49%
JAN '22 SOYBEANS $ / BSH  12.565 12.4425 12.5575 0.115 0.92%
MAR '22 SOYBEANS $ / BSH  12.6225 12.5025 12.6125 0.1125 0.90%
MAY '22 SOYBEANS $ / BSH  12.695 12.5725 12.685 0.115 0.91%
JUL '22 SOYBEANS $ / BSH  12.755 12.6325 12.745 0.11 0.87%
AUG '22 SOYBEANS $ / BSH  12.685 12.5925 12.67 0.1075 0.86%
SEP '22 SOYBEANS $ / BSH  12.4325 12.3725 12.4275 0.1 0.81%
NOV '22 SOYBEANS $ / BSH  12.3 12.2 12.285 0.0925 0.76%
JAN '23 SOYBEANS $ / BSH  12.285 12.225 12.285 0.085 0.70%
MAR '23 SOYBEANS $ / BSH  12.0925 12.045 12.0875 0.08 0.67%
DEC '21 SOYBEAN OIL  $ / LB 0 #N/A 56.23 0 0.00%
JAN '22 SOYBEAN OIL  $ / LB 57.3 56.36 57.1 0.76 1.35%
DEC '21 SOY MEAL $ / TON 358.8 #N/A 358 0 0.00%
JAN '22 SOY MEAL $ / TON 351.8 348.4 351.4 2.6 0.75%
MAR '22 SOY MEAL $ / TON 349.8 346.9 349.4 2.5 0.72%
MAY '22 SOY MEAL $ / TON 351 348.2 350.7 2.1 0.60%
JUL '22 SOY MEAL $ / TON 354 351.6 353.8 2 0.57%
DEC '21 Chicago SRW $ / BSH  8.095 8.07 8.07 0.005 0.06%
MAR '22 Chicago SRW $ / BSH  8.1975 8.09 8.1275 -0.0225 -0.28%
MAY '22 Chicago SRW $ / BSH  8.25 8.1325 8.165 -0.03 -0.37%
JUL '22 Chicago SRW $ / BSH  8.0675 7.97 7.99 -0.035 -0.44%
SEP '22 Chicago SRW $ / BSH  8.055 7.975 8.0075 -0.0125 -0.16%
DEC '21 Kansas City HRW $ / BSH  8.32 #N/A 8.385 0 0.00%
MAR '22 Kansas City HRW $ / BSH  8.4875 8.3225 8.3775 -0.045 -0.53%
MAY '22 Kansas City HRW $ / BSH  8.4725 8.3175 8.38 -0.0375 -0.45%
JUL '22 Kansas City HRW $ / BSH  8.2775 8.1525 8.2075 -0.0275 -0.33%
SEP '22 Kansas City HRW $ / BSH  8.2375 8.1325 8.1975 -0.015 -0.18%
DEC '21 MLPS Spring Wheat $ / BSH  10.5 10.5 10.5 -0.11 -1.04%
MAR '22 MLPS Spring Wheat $ / BSH  10.42 10.3625 10.41 -0.0125 -0.12%
MAY '22 MLPS Spring Wheat $ / BSH  10.2575 10.2425 10.2575 -0.02 -0.19%
JUL '22 MLPS Spring Wheat $ / BSH  9.92 9.9025 9.9025 -0.035 -0.35%
SEP '22 MLPS Spring Wheat $ / BSH  9.2475 9.1875 9.2 -0.0475 -0.51%
DEC '21 ICE Dollar Index $ 96.32 96.135 96.175 0.017 0.02%
 JA '21 Light Crude $ / BBL  68.71 66.44 68.38 1.88 2.83%
 FE '21 Light Crude $ / BBL  68.47 66.21 68.15 1.88 2.84%
JAN '22 ULS Diesel $ /U GAL 2.1515 2.0876 2.1448 0.0414 1.97%
FEB '22 ULS Diesel $ /U GAL 2.1388 2.0765 2.1287 0.0368 1.76%
JAN '22 Gasoline $ /U GAL 2.0144 1.958 2.0107 0.043 2.19%
FEB '22 Gasoline $ /U GAL 1.997 1.9424 1.9932 0.0424 2.17%
JAN '22 Feeder Cattle $ / CWT 0 #N/A 165.775 0 0.00%
MAR '22 Feeder Cattle $ / CWT 0 #N/A 168.325 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 137.65 0 0.00%
 FE '21 Live Cattle $ / CWT 0 #N/A 139.575 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 74.4 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 82 0 0.00%
DEC '21 Class III Milk $ / CWT 18.4 18.39 18.4 0.07 0.38%
JAN '22 Class III Milk $ / CWT 18.59 18.3 18.3 0.01 0.05%
FEB '22 Class III Milk $ / CWT 18.66 #N/A 18.62 0 0.00%

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