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Morning Market Review for January 18, 2022

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Wheat rebounds on bargain buying. (Comments are updated by 7:30 a.m. Central Time.)

Corn, soy tumble on improving South American weather outlooks

  • Corn down 1-5 cents
  • Soybeans down 10-17 cents; Soymeal down $10.10/ton; Soyoil down $0.28/lb
  • Chicago wheat up 8-9 cents; Kansas City wheat up 9-11 cents; Minneapolis wheat up 8-9 cents

*Prices as of 6:55am CST.

Good morning! Our friends at Advance Trading, Inc. will be covering the daily newsletters tomorrow through Friday while Ben Potter and I help at the Farm Futures Ag Finance Bootcamp and Ag Business Summit in Coralville, Iowa.

On Thursday, I will be giving a presentation about 2022 acreage and the current outlook for the input market at the Summit. Interested in attending? Click here for registration info! There is also a virtual option if that better suits your needs this year.

Looking forward to seeing you in Coralville! -JH

Corn

Corn prices edged $0.01-$0.05/bushel lower on improving South American weather forecasts. But the losses were capped by some soybean harvest delays in Brazil’s northern regions, which could delay the planting of the second Brazilian corn crop.

Brazil’s second corn crop is largely exported around the world and competes directly with U.S. corn exports for global market share.

China’s insatiable appetite for corn over the past year was nothing short of eye-popping – and highly beneficial for U.S. growers – with new data released overnight from China’s General Administration of Customs showing a near triple increase in corn imports during the 2021 calendar year.

China imported 1.12 billion bushels of corn during that time, 152% higher than the previous record of 444.9 million bushels of corn imported in 2020.

Wheat imports also notched a new record, rising nearly 17% on the year to 358.9 million bushels as soaring soybean prices and tumbling hog prices pressured soybean crush margins in China into the red.

A larger than expected corn harvest in China last fall will likely reduce the volume of grain China imports in the coming year. China has become the world’s largest buyer of grain.

Soybeans

Harvest conditions are on the upswing in Brazil after a rainy weekend finally cleared up.  Also, beneficial rains in Argentina this weekend helped to stave off complete yield losses for its soybean crop. The improving South American weather outlook sent soybean prices $0.10-$0.17/bushel lower overnight.

The weather improvement in Argentina sent soymeal prices tumbling 2.5% lower overnight. Argentina is the world’s largest exporter of soymeal.

The National Oilseed Processors’ Association (NOPA) releases its estimates for December 2021 soy crush this morning, which will provide the latest look at how robust processor demand is for U.S. soybeans as export season slows to a close.

An analyst survey conducted by Reuters projects that today’s report will show 184.996 million bushels of soybeans crushed in December, with an expected range of 181.7 million – 188.7 million bushels.

December crush volumes are historically higher than those of the previous month. If realized, the pre-trade estimate would top the November 2021 crush by 5.5 million bushels. In fact, it would be the largest monthly soy crush volume for the current 2021/22 marketing year to date.

There are a lot of reasons to be optimistic about today’s report. The upper end of the trade range represents a new monthly record volume for NOPA members if realized, besting the previous record of 185.2 million bushels set in October 2020.

But even if the higher estimates miss the mark, today’s crush volume will likely land in the top five largest monthly crushes on record.

NOPA processors handle approximately 95% of all U.S. soybeans destined for crushing usage in the U.S. Last week’s latest WASDE update from USDA pegs 2021/22 annual soybean crushing volumes at 2.19 billion bushels, besting the prior high of 2.16 billion bushels set in the 2019/20 marketing year.

South America

Brazil’s soybean harvest is only about 1.7% complete, according to agribusiness consultancy Patria Agronegocios in a report released yesterday. Competing consultancy AgRural pegs the crop’s harvest at 1.2% complete.

Despite an earlier start to harvest this year – farms in Mato Grosso began combining shortly after Christmas – recent rains in Brazil’s central and northern regions have delayed harvest progress. This time last year, only a paltry 0.22% of the crop had been picked according to Patria Agronegocios. AgRural’s figure this time last year stood at 0.4% complete.

Luckily for Brazilian farmers (and less so for their U.S. counterparts), the excessive rain damage has been kept to a minimum and focused largely in the center north region of Brazil. Growers in western Mato Grosso have reported yields reaching up to 64.2 bushels per acre.

It remains too early to tell if the bountiful yields of the north will offset heat damage in the south. Soybean harvest in the more southern Parana state has also begun, though lingering drought in the region is likely to bring in significantly lower yields than in the north. Southernmost state Rio Grande do Sul has yet to start harvest, though severe drought conditions are not leaving growers hopeful for yields.

Meanwhile, in Argentina heavy rains fell over the weekend, easing concerns about drought losses in the country. Total accumulation ranged between 0.6-2.4 inches with most of the benefits helping late-planted corn crops. Early planted corn yields are likely already too far gone due to La Niña-induced heat stress.

Cooler temperatures are on the horizon for Argentina this week, which will help moderate soybean crop development and encourage planting for late-season soybeans after the lingering heat wave.

"It is obvious that there will be agricultural losses due to the drought, but these showers are interrupting it. If they had arrived a few days later, the outlook would have been completely different," Javier Dominguez, a farmer in the Buenos Aires province, told Reuters.

"It is obvious that there will be agricultural losses due to the drought, but these showers are interrupting it. If they had arrived a few days later, the outlook would have been completely different."

Brazil and Argentina compete with the U.S. for top global exporting sources for soybeans, soymeal, and corn supplies.

Wheat

Turkey issued a tender for 6.4 million bushels of milling wheat overnight. The bullish global demand signal as well as a round of bargain buying contributed to higher wheat prices in the U.S. this morning following last week’s selloff.

Weather

Mostly clear skies and moderate winter temperatures will grace much of the U.S. Heartland today, according to NOAA’s short-range forecasts. Winter storm systems in the Northern Plains and Great Lakes region will linger through the day.

The Western Plains could see more snow and a potential for freezing rain over the next 24 hours. Wintery mix systems will continue to hover over the Great Lakes region during that same time period, while showers move into the Ohio River Valley. No significant precipitant is forecast with the aforementioned systems.

Financials

S&P 500 futures fell 48 points (1.03%) to $4,606.75 this morning as a tech selloff continues and concerns about rising inflation and Federal Reserve interest rate hikes threaten asset prices.

Also worth a read on our website, FarmFutures.com:

  • Jim McCormick thinks that last week’s USDA reports, though relatively quiet at the time, provided some important insights about 2022 acreage intentions.
  • Naomi Blohm isn’t cutting any corners – USDA's January report was a dud. Now what?
  • The Farm Futures team’s coverage of Wednesday’s USDA reports is here.
  • Mike Wilson’s This Business of Farming column is more than a column – it’s a management lifestyle. Want to improve yours? Come to our Farm Futures Ag Business Summit next week in Coralville, Iowa to improve your management acumen!
  • PS – I’ll be speaking about fertilizer markets and providing a first look at 2022 acreage estimates this week. Stop by – you won’t want to miss it!
Morning Ag Commodity Prices - 1/18/2022
Contract Units High Low Last Net Change % Change
MAR '22 CORN $ / BSH  5.9525 5.8975 5.9125 -0.05 -0.84%
MAY '22 CORN $ / BSH  5.9625 5.91 5.925 -0.0475 -0.80%
JUL '22 CORN $ / BSH  5.925 5.8825 5.895 -0.04 -0.67%
SEP '22 CORN $ / BSH  5.6875 5.655 5.67 -0.02 -0.35%
DEC '22 CORN $ / BSH  5.5925 5.5475 5.57 -0.0125 -0.22%
MAR '23 CORN $ / BSH  5.67 5.625 5.6475 -0.0125 -0.22%
MAY '23 CORN $ / BSH  5.695 5.675 5.6825 -0.01 -0.18%
MAR '22 SOYBEANS $ / BSH  13.67 13.52 13.545 -0.1525 -1.11%
MAY '22 SOYBEANS $ / BSH  13.7675 13.62 13.64 -0.155 -1.12%
JUL '22 SOYBEANS $ / BSH  13.8325 13.6825 13.7075 -0.1525 -1.10%
AUG '22 SOYBEANS $ / BSH  13.635 13.5 13.5125 -0.145 -1.06%
SEP '22 SOYBEANS $ / BSH  13.155 13.06 13.0725 -0.1125 -0.85%
NOV '22 SOYBEANS $ / BSH  12.915 12.7725 12.805 -0.125 -0.97%
JAN '23 SOYBEANS $ / BSH  12.93 12.7925 12.8175 -0.125 -0.97%
MAR '23 SOYBEANS $ / BSH  12.8225 12.69 12.7225 -0.1025 -0.80%
MAY '23 SOYBEANS $ / BSH  12.75 12.6625 12.7 -0.095 -0.74%
MAR '22 SOYBEAN OIL  $ / LB 58.89 57.75 58.19 -0.27 -0.46%
MAY '22 SOYBEAN OIL  $ / LB 58.9 57.84 58.2 -0.3 -0.51%
MAR '22 SOY MEAL $ / TON 403.6 395.6 396.6 -9 -2.22%
MAY '22 SOY MEAL $ / TON 400.6 392.5 393.3 -9.5 -2.36%
JUL '22 SOY MEAL $ / TON 399.5 391.7 392.7 -9.2 -2.29%
AUG '22 SOY MEAL $ / TON 392.9 387.9 388.4 -8.4 -2.12%
SEP '22 SOY MEAL $ / TON 385 379.8 380.7 -7.7 -1.98%
MAR '22 Chicago SRW $ / BSH  7.525 7.4125 7.505 0.09 1.21%
MAY '22 Chicago SRW $ / BSH  7.555 7.4475 7.53 0.085 1.14%
JUL '22 Chicago SRW $ / BSH  7.475 7.37 7.45 0.0775 1.05%
SEP '22 Chicago SRW $ / BSH  7.49 7.43 7.4775 0.08 1.08%
DEC '22 Chicago SRW $ / BSH  7.5425 7.4525 7.5275 0.075 1.01%
MAR '22 Kansas City HRW $ / BSH  7.5675 7.45 7.5475 0.0975 1.31%
MAY '22 Kansas City HRW $ / BSH  7.6 7.495 7.585 0.1025 1.37%
JUL '22 Kansas City HRW $ / BSH  7.6375 7.53 7.63 0.1125 1.50%
SEP '22 Kansas City HRW $ / BSH  7.6725 7.5925 7.66 0.0975 1.29%
DEC '22 Kansas City HRW $ / BSH  7.745 7.69 7.74 0.0975 1.28%
MAR '22 MLPS Spring Wheat $ / BSH  8.885 8.7225 8.87 0.0875 1.00%
MAY '22 MLPS Spring Wheat $ / BSH  8.875 8.715 8.8675 0.0975 1.11%
JUL '22 MLPS Spring Wheat $ / BSH  8.8275 8.68 8.81 0.0775 0.89%
SEP '22 MLPS Spring Wheat $ / BSH  8.6475 8.52 8.6125 0.06 0.70%
DEC '22 MLPS Spring Wheat $ / BSH  8.5525 #N/A 8.51 0 0.00%
MAR '21 ICE Dollar Index $ 95.435 95.105 95.37 0.209 0.22%
 FE '21 Light Crude $ / BBL  85.74 83.5 84.86 1.04 1.24%
 MA '21 Light Crude $ / BBL  85.16 82.93 84.26 0.96 1.15%
FEB '22 ULS Diesel $ /U GAL 2.7116 2.6345 2.6876 0.0533 2.02%
MAR '22 ULS Diesel $ /U GAL 2.6545 2.585 2.6324 0.0464 1.79%
FEB '22 Gasoline $ /U GAL 2.4692 2.4075 2.441 0.022 0.91%
MAR '22 Gasoline $ /U GAL 2.4726 2.4121 2.4452 0.0215 0.89%
JAN '22 Feeder Cattle $ / CWT 0 #N/A 162.7 0 0.00%
MAR '22 Feeder Cattle $ / CWT 0 #N/A 166.375 0 0.00%
 FE '21 Live Cattle $ / CWT 0 #N/A 137.975 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 142.125 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 80.9 0 0.00%
APR '22 Live Hogs $ / CWT 0 #N/A 88.45 0 0.00%
JAN '22 Class III Milk $ / CWT 20.26 #N/A 20.28 0 0.00%
FEB '22 Class III Milk $ / CWT 22.2 22 22.1 0.02 0.09%
MAR '22 Class III Milk $ / CWT 22.65 22.29 22.61 0.18 0.80%

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