Morning Market Review for November 30, 2021

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Grains tumble on omicron concerns. (Comments are updated by 7:30 a.m. Central Time.)

Another omicron-fueled selloff is likely to keep commodity prices in the red today

  • Corn down 5-8 cents
  • Soybeans down 9-15 cents; Soymeal down $1.80/ton; Soyoil down $1.61/lb
  • Chicago wheat down 11-16 cents; Kansas City wheat down 14-15 cents; Minneapolis wheat down 12-13 cents

*Prices as of 6:55am CST.

Corn

Corn futures prices fell $0.05-$0.08/bushel overnight as omicron fears blanketed the larger market space in losses. A selloff in the energy market was a direct contributor to corn’s losses this morning. Potential La Niña effects in South America could provide some bullish price potential, but at current the system has not yet developed enough for those price gains to be realized.

Today marks the first notice day for December 2021 corn futures contracts for the Chicago Board of Trade. But traders and analysts are not expecting many – if any – corn contracts to be delivered today due to strong cash market prices.

Smaller delivery numbers during a delivery period supports current price levels. A large number of deliveries typically pressures nearby futures prices, which act like the cash market when the contract enters its 2–3-week delivery period.

USDA released its last weekly Crop Progress report of the 2021 growing cycle yesterday afternoon. With at least 95% of the 2021 corn crop harvested as of last week, no data on corn harvest was released by USDA this week as the crop is largely finished across the country.

Soybeans

Soybean futures fell $0.09-$0.15/bushel overnight on lower energy prices due to omicron concerns. Bullish estimates for October 2021 U.S. soy crush volumes to be released tomorrow kept further losses at bay.

The soybean market will likely trade on weather in South America over the coming weeks, which has already been largely favorable in terms of rainfall for the Brazilian and Argentine soybean crops. But the South American soybean crop is not made just yet.

Bear in mind that another La Niña weather pattern is forecast for the Western Hemisphere this winter, which typically results in abnormal dryness in South America. Brazil’s southernmost state, Rio Grande do Sul, is already experiencing dry weather which could severely limit yields in the country’s third largest soybean producing state.

Brazil’s top soybean producing state, Mato Grosso, continues to enjoy bountiful rainfall with some scattered showers yesterday and will likely continue to see that pattern persist for the next week and a half. Southern Argentina will also benefit from the scattered showers.

But drier weather conditions are likely on the way for Central and Southern Brazil in the next week. Forecasts peg few showers for the region in the 6-10 day forecast with dryness persisting in Central Brazil as far out as into the 11–15-day forecast.

Similar to that of corn, USDA did not release soybean harvest information in yesterday’s Crop Progress report. Last week’s report saw 95% of anticipated 2021 acres harvested, so with the completion of the growing season USDA discontinued its reporting on the soybean crop until the 2022 season begins next spring.

Wheat

Wheat prices tumbled $0.10-$0.16/bushel lower overnight fueled primarily by virus concerns, but also by improved outlooks for Australia’s wheat crop, which Australian forecaster ABARES now pegs at a record setting 1.26 billion bushels.

"These figures are above expectations and confirm that rains have been beneficial on volumes," consultancy Agritel told Reuters this morning. The easing supply pressure, even with excess rains during peak harvest time in Australia, will likely prevent wheat prices from reaching nine-year highs hit earlier this month in Chicago.

USDA reported that 92% of winter wheat sown in the U.S. this fall has emerged as of November 28. Condition ratings held steady at 44% good to excellent for a second straight week, bucking market analyst projections that had previously pegged yesterday’s rating at 43% good to excellent.

The better-than-expected winter wheat condition rating sent Chicago and Kansas City futures $0.11-$0.16/bushel lower in overnight trading, where even a weaker dollar could not reverse the night’s losses.

Weather

It should be another day of mostly clear skies across the Heartland today, according to NOAA’s short-range forecasts. A chance of a wintery precipitation mix is in place for Northern Michigan this evening and over the next 24 hours, a winter mix system is forecast to move through the Upper Midwest. Any accumulation is likely to be light over that time period.

Inputs (global)

Yara, a fertilizer producer headquartered in Norway, announced yesterday it would restart operations at plants in the Netherlands following closures for maintenance. Yara had previously announced in September that high natural gas prices in the European Union would lead the company to scale back ammonia production in the region.

"We have started up some of the plants and fertiliser prices have also gone up, but when all is said, this has consequences that worry me," Svein Tore Holsether told Reuters overnight. "It means more expensive products for farmers in the first place and later on more expensive food for people."

Yara continues to leave other plants across the European Union shuttered due to the high cost and lack of availability of natural gas supplies across the E.U. That means that farmers in the E.U. will be more likely to engage in stiffer price competition for available fertilizer supplies against farmers across the world, especially U.S. farmers.

Several reports have surfaced over the last 24 hours of Chinese cities, specifically in China’s northern regions, implementing stricter restrictions to curb the spread of recent COVID-19 outbreaks and last week’s announcement of the virus’ latest omicron variant. Yesterday, China suspended Russian imports of non-containerized goods at its border city of Suifenhe.

That means that goods requiring manual loading, such as coal, fertilizer, and agricultural products, will not be able to pass between the two countries until further notice. Suifenhe officials have labeled the restrictions as “temporary control measures” although there is little information to suggest when the measures will end, and trade flows will resume.

Other Northern Chinese and Mongolian towns bordering Russia are implementing similar measures. China is taking a zero-tolerance approach to rising COVID-19 cases, even though the clusters in China are significantly less than in other regions across the world.

But there could be some severe implications for the global fertilizer market if these border closures persist. The products limited between the China and Russia due to these measures are key inputs for fertilizer production in China. Should these border closures persist, it will likely reduce China’s fertilizer output and add additional stress to tight fertilizer supplies across the world.

Financials

S&P 500 futures dipped 39.75 points (-0.85%) to $4,611.25 at last glance on concerns that the omicron variant of COVID-19 can circumvent vaccines and spread more rapidly than previous virus variants. Comments from Moderna CEO raised concerns about current vaccine effectiveness against omicron and fueled the market upheaval in the overnight trading session.

Federal Reserve Chairman Jerome Powell announced yesterday the Fed may push back its timeline on raising interest rates following the new variant’s discovery. Regardless, equity and commodity prices tumbled overnight, with crude oil headed towards its largest monthly loss of 2021.

Powell and Treasury Secretary Janet Yellen will appear in front of a Senate Banking Committee hearing today, which could provide more insights as to how the U.S. economy is preparing to withstand the omicron variant.

On the bright side, gold is up. Which, my new husband just reminded me, is not a good reason to consider pawning off our newly acquired wedding jewelry for a profit. While he has a point, he remains unimpressed with my jokes this morning. Ah married life….

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

Morning Ag Commodity Prices - 11/30/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.82 5.71 5.74 -0.07 -1.20%
MAR '22 CORN $ / BSH  5.8325 5.7225 5.75 -0.0725 -1.25%
MAY '22 CORN $ / BSH  5.865 5.7625 5.785 -0.0725 -1.24%
JUL '22 CORN $ / BSH  5.8725 5.7725 5.79 -0.075 -1.28%
SEP '22 CORN $ / BSH  5.6575 5.57 5.5825 -0.0675 -1.19%
DEC '22 CORN $ / BSH  5.5725 5.49 5.505 -0.0575 -1.03%
MAR '23 CORN $ / BSH  5.6325 5.57 5.585 -0.05 -0.89%
JAN '22 SOYBEANS $ / BSH  12.4475 12.26 12.2825 -0.1325 -1.07%
MAR '22 SOYBEANS $ / BSH  12.55 12.36 12.38 -0.14 -1.12%
MAY '22 SOYBEANS $ / BSH  12.64 12.4525 12.4725 -0.14 -1.11%
JUL '22 SOYBEANS $ / BSH  12.705 12.5225 12.5375 -0.1425 -1.12%
AUG '22 SOYBEANS $ / BSH  12.6525 12.48 12.4975 -0.1275 -1.01%
SEP '22 SOYBEANS $ / BSH  12.4175 12.3 12.3 -0.1175 -0.95%
NOV '22 SOYBEANS $ / BSH  12.3175 12.18 12.2 -0.09 -0.73%
JAN '23 SOYBEANS $ / BSH  12.3125 12.2 12.2 -0.0975 -0.79%
MAR '23 SOYBEANS $ / BSH  12.0625 12.01 12.015 -0.0875 -0.72%
DEC '21 SOYBEAN OIL  $ / LB 58.16 56.58 56.65 -1.61 -2.76%
JAN '22 SOYBEAN OIL  $ / LB 58.25 56.21 56.36 -1.92 -3.29%
DEC '21 SOY MEAL $ / TON 350.2 344.2 345.7 -2 -0.58%
JAN '22 SOY MEAL $ / TON 343.7 338.1 339.2 -3.5 -1.02%
MAR '22 SOY MEAL $ / TON 342.8 337.8 338.6 -2.8 -0.82%
MAY '22 SOY MEAL $ / TON 344.9 340.5 341.1 -2.3 -0.67%
JUL '22 SOY MEAL $ / TON 348.9 344.8 345.1 -2.1 -0.60%
DEC '21 Chicago SRW $ / BSH  8.0825 7.8725 7.915 -0.16 -1.98%
MAR '22 Chicago SRW $ / BSH  8.2425 8.025 8.08 -0.1425 -1.73%
MAY '22 Chicago SRW $ / BSH  8.3 8.1025 8.1475 -0.1375 -1.66%
JUL '22 Chicago SRW $ / BSH  8.185 8.0125 8.0625 -0.1125 -1.38%
SEP '22 Chicago SRW $ / BSH  8.1625 8.005 8.055 -0.1025 -1.26%
DEC '21 Kansas City HRW $ / BSH  8.525 8.35 8.395 -0.145 -1.70%
MAR '22 Kansas City HRW $ / BSH  8.57 8.35 8.4025 -0.17 -1.98%
MAY '22 Kansas City HRW $ / BSH  8.555 8.3475 8.395 -0.155 -1.81%
JUL '22 Kansas City HRW $ / BSH  8.375 8.1975 8.25 -0.125 -1.49%
SEP '22 Kansas City HRW $ / BSH  8.3425 8.1775 8.22 -0.13 -1.56%
DEC '21 MLPS Spring Wheat $ / BSH  10.42 10.42 10.42 -0.0025 -0.02%
MAR '22 MLPS Spring Wheat $ / BSH  10.45 10.2775 10.34 -0.1125 -1.08%
MAY '22 MLPS Spring Wheat $ / BSH  10.3225 10.1625 10.24 -0.1025 -0.99%
JUL '22 MLPS Spring Wheat $ / BSH  10.0125 9.8975 9.91 -0.1025 -1.02%
SEP '22 MLPS Spring Wheat $ / BSH  9.3275 9.22 9.22 -0.1225 -1.31%
DEC '21 ICE Dollar Index $ 96.235 95.665 95.795 -0.543 -0.56%
 JA '21 Light Crude $ / BBL  71.22 67.06 68.15 -1.8 -2.57%
 FE '21 Light Crude $ / BBL  70.86 66.75 67.78 -1.84 -2.64%
DEC '21 ULS Diesel $ /U GAL 2.174 2.085 2.1109 -0.0412 -1.91%
JAN '22 ULS Diesel $ /U GAL 2.1738 2.0723 2.1073 -0.0409 -1.90%
DEC '21 Gasoline $ /U GAL 2.1036 2.034 2.0417 -0.0354 -1.70%
JAN '22 Gasoline $ /U GAL 2.0589 1.9561 1.9895 -0.0435 -2.14%
JAN '22 Feeder Cattle $ / CWT 0 #N/A 165.725 0 0.00%
MAR '22 Feeder Cattle $ / CWT 0 #N/A 166.55 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 136.925 0 0.00%
 FE '21 Live Cattle $ / CWT 0 #N/A 139.3 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 72.4 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 80.925 0 0.00%
NOV '21 Class III Milk $ / CWT 18.01 #N/A 18.02 0 0.00%
DEC '21 Class III Milk $ / CWT 18.26 18.17 18.26 0.1 0.55%
JAN '22 Class III Milk $ / CWT 18.45 18.45 18.45 0.07 0.38%

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