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Morning Market Review for January 25, 2022

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Wheat continues higher in invasion concerns. (Comments are updated by 7:30 a.m. Central Time.)

Soy losses limited on rising domestic demand

  • Corn down 1-2 cents
  • Soybeans down 3-6 cents; Soymeal down $3.30/ton; Soyoil up $0.27/lb
  • Chicago wheat up 8-11 cents; Kansas City wheat up 7-9 cents; Minneapolis wheat up 5-7 cents

*Prices as of 6:50am CST.

Corn

Corn prices drifted $0.01-$0.02/bushel lower overnight on improving South American weather forecasts. Losses were capped by growing concerns about a Russian military invasion of Ukraine. Ukraine is the world’s fourth largest corn exporter.

Ethanol demand is heating up in the European Union. In France, E85 consumption rose 33% last year to a record-high 121.5 million gallons as soaring energy prices made the fuel additive an economical choice for consumers. French ethanol producers expect 2022 E85 volumes to top those of 2021.

This could be good news for U.S. ethanol producers, as it opens the door to potential ethanol export opportunities in the 2021/22 marketing year as the domestic fuel market recovers from pandemic lows.

Soybeans

Soybean prices fell $0.03-$0.06/bushel overnight though losses were held at bay on mixed results from Brazilian soybean harvest reports. Strong U.S. demand also helped limit bleeding in the soy complex this morning.

Rising crude oil prices helped to prop up gains in the soyoil market this morning. "Recovery in the European stock market in the afternoon session pushed crude oil and soybean oil higher, thus prompting buyers to bargain hunt in CPO futures," a Kuala Lumpur-based trader told Reuters during the overnight trading session.

Wheat

Wheat prices continued higher this morning on global concerns about a Russian invasion in Ukraine. Chicago wheat surged past the $8/bushel benchmark it had dipped below just four weeks ago. Russia and Ukraine are expected to be the world’s second and fourth, respectively, largest exporters this year.

"Wheat prices ... are the most impacted by the current geopolitical crisis with Russia, with operators pointing to probable supply disruptions," consultancy Agritel told Reuters this morning.

Harsh winter weather forced six major grain terminals in Ukraine to scale back operations overnight, according to Ukraine’s state seaport authority. Ports at Odessa, Chornomorsk, Mykolayiv, Pivdeny, Kherson and Olvia will have limited grain loading operations today as poor weather continues to batter the Black Sea region.

Ukraine has shipped about 68% of its anticipated 2021/22 exportable wheat supplies so far this year, so the closures likely have less impact on wheat pricing this morning relative to if the closures would have occurred earlier in the 2021/22 marketing year.

China

A better than expected corn harvest last fall in China drove corn prices lower and shifted livestock producer demand away from more inexpensive wheat imports that Chinese livestock feeders had come to rely on in the era of high grain prices.

A recent Reuters report found analysts and traders expect that China’s usage of wheat for animal feed will likely drop by more than half of the volume consumed a year prior.

"Corn supplies would be sufficient in the new year while wheat prices would remain high, making wheat lose its advantage to substitute corn," Lv Fengyang, analyst with the agriculture arm of Mysteel, a China-based commodity consultancy, told Reuters.

About 1.47 billion bushels of wheat were consumed by the Chinese livestock sector in 2020/21. This year, that volume is more likely to fall between 367 million – 882 million bushels. Corn and soymeal have resumed their places as the more economical feed choices for Chinese livestock producers.

"We have stopped using domestic wheat," a manager with a feed producer in southern China told Reuters. "Can't use it anymore, as the price is too high."

The availability of wheat – or lack thereof – makes using wheat as a feed substitute an additional challenge for Chinese feed producers.

"The biggest problem with (using) wheat in feed is that supplies are not stable," said a manager with a major livestock producer in northern China. "We are running out of stocks of wheat (purchased earlier) from the state reserves, and it is hard to get wheat from the market."

Meanwhile, the Chinese government has banned livestock feeders from participating in state wheat reserve auctions, renewing its focus on domestic food security initiatives. “Wheat is a food grain after all,” said one analyst.

The lower corn prices and falling feed wheat usage suggest that China may not be as large of a buyer on the world wheat market as it was last year. That means U.S. wheat producers will be more reliant on North American and Southeast Asian countries for trade volumes this year.

Weather

Two snow systems will continue to sandwich the Heartland today, according to NOAA’s short-range forecasts. The first system started in the Northern Rockies yesterday and is currently hovering over the Central Plains. It will linger over the region through the afternoon before shifting into the Southern Plains early tomorrow morning.

And friends – this is great news! Not only does it help alleviate drought conditions in my yard, but it means that the ski resorts are getting snow today too! And that is wonderful because my husband and I are going on a long-awaited ski trip later this week!!!

The second system is currently hovering over the Eastern Great Lakes and Eastern Corn Belt regions and will dissipate later tonight.

More cold temperatures are on the way for the Upper Midwest through Thursday. But February forecasts are trending warmer for the Midwest, bringing relief to workers who brave outside chores every day.

Financials

Stock futures edged lower overnight after yesterday’s volatile session, in which the S&P 500 sold off 4% of its value before buying it back by the end of the day. The index was 62.75 points (1.42%) lower at last glance, resting at $4,341 before markets opened.

Ongoing market turbulence continues to be fueled by escalating tensions between Russian and Ukraine and an announcement of an expected rate hike from the U.S. Federal Reserve to help curb inflationary pressures.

The Fed begins its two-day Federal Open Market Committee (FOMC) meeting today. A rate hike announcement is expected at the meeting’s conclusion tomorrow.

Also worth a read on our website, FarmFutures.com

  • Our Farm Futures January 2022 survey found that soybean acreage will top that of corn in 2022 due to astronomical input costs.
    • Winter wheat acres will see a bump, but total wheat acreage will be limited by lower spring wheat and durum acres, which typically require higher fertilizer applications. What does that mean for your farm? Find out in our survey results article!
  • Bryce Knorr’s annual hedging study finds soybean hedgers ruled in 2021. For the winning – and losing – marketing strategies for the last year, check out Knorr’s latest column.
  • Interested in helping your farm achieve new goals in 2022? Darren Frye has three tips to help track your farm’s financial progress.
  • While I was watching corn and soybean acres last week, Naomi Blohm was keeping track of hogs and rice. Blohm shares why these markets are going to be among the hottest in 2022.
  • Larry Shonkwiler looks at corn supply and demand forecasts for 2022.
Morning Ag Commodity Prices - 1/25/2022
Contract Units High Low Last Net Change % Change
MAR '22 CORN $ / BSH  6.2225 6.185 6.2075 -0.0025 -0.04%
MAY '22 CORN $ / BSH  6.19 6.145 6.1775 0.0025 0.04%
JUL '22 CORN $ / BSH  6.1225 6.08 6.1125 0.005 0.08%
SEP '22 CORN $ / BSH  5.8 5.7725 5.7925 -0.01 -0.17%
DEC '22 CORN $ / BSH  5.67 5.64 5.665 -0.01 -0.18%
MAR '23 CORN $ / BSH  5.74 5.7175 5.74 -0.01 -0.17%
MAY '23 CORN $ / BSH  5.775 5.75 5.77 -0.0125 -0.22%
MAR '22 SOYBEANS $ / BSH  14.0875 13.9325 13.975 -0.055 -0.39%
MAY '22 SOYBEANS $ / BSH  14.165 14.0175 14.0525 -0.0575 -0.41%
JUL '22 SOYBEANS $ / BSH  14.2 14.0575 14.085 -0.055 -0.39%
AUG '22 SOYBEANS $ / BSH  13.925 13.815 13.83 -0.0575 -0.41%
SEP '22 SOYBEANS $ / BSH  13.3675 13.27 13.295 -0.0375 -0.28%
NOV '22 SOYBEANS $ / BSH  13.1125 13.0075 13.035 -0.04 -0.31%
JAN '23 SOYBEANS $ / BSH  13.115 13.035 13.05 -0.03 -0.23%
MAR '23 SOYBEANS $ / BSH  13.02 12.915 12.945 -0.0375 -0.29%
MAY '23 SOYBEANS $ / BSH  13 12.895 12.9225 -0.0325 -0.25%
MAR '22 SOYBEAN OIL  $ / LB 62.77 61.89 62.24 0.27 0.44%
MAY '22 SOYBEAN OIL  $ / LB 62.79 61.95 62.28 0.26 0.42%
MAR '22 SOY MEAL $ / TON 394.3 389.3 390.4 -3.5 -0.89%
MAY '22 SOY MEAL $ / TON 393.3 388.3 389.3 -3.4 -0.87%
JUL '22 SOY MEAL $ / TON 392 387.3 388.4 -3.2 -0.82%
AUG '22 SOY MEAL $ / TON 386.2 382.3 382.8 -3.4 -0.88%
SEP '22 SOY MEAL $ / TON 376.7 374.9 374.9 -3.3 -0.87%
MAR '22 Chicago SRW $ / BSH  8.1575 8.005 8.135 0.13 1.62%
MAY '22 Chicago SRW $ / BSH  8.1875 8.0375 8.1625 0.1225 1.52%
JUL '22 Chicago SRW $ / BSH  8.0425 7.9275 8.0275 0.105 1.33%
SEP '22 Chicago SRW $ / BSH  8.0375 7.93 8.0175 0.095 1.20%
DEC '22 Chicago SRW $ / BSH  8.07 7.9625 8.045 0.0925 1.16%
MAR '22 Kansas City HRW $ / BSH  8.31 8.1825 8.29 0.11 1.34%
MAY '22 Kansas City HRW $ / BSH  8.3275 8.205 8.305 0.1 1.22%
JUL '22 Kansas City HRW $ / BSH  8.3075 8.2025 8.295 0.095 1.16%
SEP '22 Kansas City HRW $ / BSH  8.33 8.23 8.32 0.09 1.09%
DEC '22 Kansas City HRW $ / BSH  8.395 8.3425 8.385 0.0875 1.05%
MAR '22 MLPS Spring Wheat $ / BSH  9.5625 9.455 9.5175 0.0325 0.34%
MAY '22 MLPS Spring Wheat $ / BSH  9.52 9.4125 9.465 0.025 0.26%
JUL '22 MLPS Spring Wheat $ / BSH  9.44 9.35 9.4125 0.0525 0.56%
SEP '22 MLPS Spring Wheat $ / BSH  9.135 9.065 9.135 0.065 0.72%
DEC '22 MLPS Spring Wheat $ / BSH  9.0375 8.98 9.0375 0.0575 0.64%
MAR '21 ICE Dollar Index $ 96.26 95.895 96.21 0.309 0.32%
 MA '21 Light Crude $ / BBL  84.55 82.99 83.03 -0.28 -0.34%
 AP '21 Light Crude $ / BBL  83.61 82.14 82.17 -0.24 -0.29%
FEB '22 ULS Diesel $ /U GAL 2.6691 2.6154 2.6163 -0.0111 -0.42%
MAR '22 ULS Diesel $ /U GAL 2.6271 2.577 2.5773 -0.0081 -0.31%
FEB '22 Gasoline $ /U GAL 2.4389 2.4023 2.4024 0.0044 0.18%
MAR '22 Gasoline $ /U GAL 2.4429 2.406 2.407 0.0049 0.20%
JAN '22 Feeder Cattle $ / CWT 0 #N/A 158.475 0 0.00%
MAR '22 Feeder Cattle $ / CWT 0 #N/A 161.25 0 0.00%
 FE '21 Live Cattle $ / CWT 0 #N/A 136.325 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 140.075 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 86.325 0 0.00%
APR '22 Live Hogs $ / CWT 0 #N/A 95.325 0 0.00%
JAN '22 Class III Milk $ / CWT 20.28 #N/A 20.3 0 0.00%
FEB '22 Class III Milk $ / CWT 20.39 20.36 20.36 -0.09 -0.44%
MAR '22 Class III Milk $ / CWT 21.4 21.4 21.4 -0.15 -0.70%

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