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Morning Market Review for October 22, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Minneapolis wheat flirts with $10/bushel. (Comments are updated by 7:30 a.m. Central Time.)

Global spring wheat demand, weaker dollar lifts Minneapolis futures

  • Corn up 1-5 cents
  • Soybeans up 1-4 cents; Soymeal down $2.30/ton; Soyoil up $0.04/lb
  • Chicago wheat up 6-8 cents; Kansas City wheat up 8-14 cents; Minneapolis wheat up 5-10 cents

*Prices as of 6:50am CDT.

Good Morning! How is harvest progressing on your farm? Tell us all about it! Click here to take our ongoing Feedback from the Field survey on 2021 crop conditions to share your harvest progress (or hunting plans!). Our Google Map, updated daily, provides all past responses for farm readers, from farmers.

Mark your calendars: USDA releases crop insurance pricing information today.

Inputs

The recent surge in energy prices continues to wreak havoc on the fertilizer industry. Anhydrous ammonia was the most recent casualty of higher natural gas prices, rising by a third over the last two weeks on the higher raw materials cost for natural gas.

Yesterday’s bi-weekly retail fertilizer price sheet compiled by USDA’s Illinois Department of Ag Market News Service saw fertilizer prices continue to climb, with anhydrous prices leading the way. Illinois anhydrous ammonia prices are now at $1,135/ton, 2.6 times the price quoted the same time a year ago. The quotes ranged between $935 - $1,250/ton in various areas of the state.

Illinois bi-weekly production costs 2020-2021

Virtually all crop inputs have doubled in price from last year’s lows as a rapid global expansion and supply chain bottlenecks have outpaced fertilizer market expansion signals and quickly used up much of the available input supply on the world market.

Potash prices rose by $50.77/ton from the previous report to $775.71/ton, 2.4 times higher than year ago prices. Urea and MAP prices increased 9% over the past two weeks on rising natural gas prices and dwindling global stocks.

To be sure, some of the price upticks in the bi-weekly report are due in part to seasonal demand increases. But soil temperatures in Illinois have not yet dropped to levels where anhydrous ammonia application will be adequately retained in the soil. With little activity reported so far this fall, it seems possible that seasonal buying patterns may still have room to push anhydrous prices higher in Illinois.

If this trend continues, farmers may benefit from examining the feasibility other nitrogen fertilizer options. For example, UAN prices – while still 128% higher than a year ago – are likely more competitive than urea prices if farmers are willing to forgo anhydrous applications this year due to warm fall weather, timing, etc.

Corn

Corn prices rose $0.01-$0.05/bushel overnight as traders bought back into the markets following yesterday’s selloff on a higher dollar. Weaker dollar prices overnight played a big role in the overnight price gains, as did a rebound to ethanol production over the past few weeks, offsetting a rapidly advancing U.S. harvest season.

U.S. cattle marketings for the month of September 2021 are likely to slip in today’s monthly Cattle on Feed report from USDA. Analysts expect USDA’s total to range between 1.79 million – 1.83 million head with an average guess of 1.80 million head anticipated in this afternoon’s report.

It will be the third straight month of lower slaughtering speeds if realized. However, that is not exactly unusual. September marketings are typically among the lowest in the marketing year, usually following seasonal lows set in March.

Cattle inventories inched up last month for the first time in five months on seasonal shifts though it seems unlikely that pattern will continue in today’s report. Trade analysts expect that as of October 1, between 11.55 million – 11.72 million head of cattle were counted on feedlots across the country with an average guess of 11.65 million head.

Cattle inventories usually begin to see seasonal rebuilding patterns as of October 1. But with drought and high feed prices forcing many herds in the Plains to liquidate over the summer, today’s report may see a break in those seasonal patterns as the herd begins to rebuild.

Cattle placements on feedlots over 1,000 head during September are likely to come in at 2.26 million head in today’s report with an average trade range of 2.17 million – 2.32 million head. If realized, it would surpass August as the highest monthly placement rate at large feedlots in the U.S.

Soybeans

Chicago soybean futures traded $0.01-$0.04/bushel higher in the overnight trading session with some optimism spilling over from yesterday’s weekly Export Sales report from USDA, which featured better than expected soybean export sales thanks to large orders booked by China.

Soy’s gains were capped by a rapidly advancing U.S. soybean harvest, beneficial rains to the young Brazilian crop, and profit-taking in the global edible oil complex.

Tight global edible oil stocks sent soyoil futures on China’s Dalian Exchange to 10-year highs this week, especially as global demand continues to rebound as the world emerges from peak pandemic sheltering. The rally has helped pull Chinese soy crush margins out of the red to its highest point since March 2021.

A shrinking sow herd in China has also eased demand pressures on the soymeal complex, but the uptick in soyoil seems to be having a more generous effect for processors especially with fewer soybeans and more corn and wheat being fed to China’s pigs.

"Soybean crushing margins are recovering mainly thanks to the rising soybean oil prices," Teng Hao, agriculture analyst with Chinese commodity consultancy Mysteel, told Reuters. "While pig prices fluctuate around low levels, demand for soymeal is not very good. Crushers would try to ensure profits from soyoil."

Chinese soy processors typically produce soymeal for livestock feed and soyoil for human consumption at an 80-20 ratio. Factory closures earlier this month due to tight energy supplies in China have limited production of soy products. Earlier this week, Bangladesh reported a cessation of its edible oil exports, which further tightened already small global edible oil supplies and cut off a source of soyoil supplies for China.

"Soybean oil inventories are low at crushing plants in general, and we should have (soyoil) shortage through second half of the year," a Chinese crush plant manager told Reuters. “Profit from soybean oil is so good at the moment, I think crushers all want to produce and sell as much soyoil as possible. But that means soybean meal stocks are building up on the other hand.”

Wheat

Wheat futures soared on a lower dollar this morning, with market players buying back in following yesterday’s losses. International wheat demand remains strong, with several North African countries continuing to book orders for delivery this year.

Despite engaging in a trade war with Australia and cutting off barley sourcing from the Land Down Under, tight global wheat stocks have led China to cozy up to the Aussies, if only for their spring wheat supplies.

Rising Black Sea wheat prices have increased the appeal of Australian spring wheat harvests to global buyers at a rapid pace. Australian’s ports are completely booked until early 2022 as global buyers race to snap up the cheaper priced Australian spring wheat, which will be harvested beginning in November.

A second straight year of bumper wheat crops for Australia will likely land it as the world’s fourth-largest exporter this year.

Weather

Mostly clear skies are in the forecast for the Heartland today, according to NOAA’s short-range forecasts. Cooler temperatures are settling into the Upper Midwest, which will likely spur anhydrous applications over the weekend.

Chances of scattered showers are possible in pockets across the Heartland over the next 24 hours, but any accumulation will be light.

Financials

Deere & Co. received a temporary injunction from an Iowa judge against workers striking to protest wages, benefits, and working conditions. While the ruling will not likely end the strike soon, it will limit the number of picketers allowed to protest in front of Deere’s facilities every day to four.

U.S. stock indices were mixed this morning as social media companies evaluated the potential regulatory and revenue impacts on advertising spending following a whistleblower’s report about the innerworkings of Facebook’s social media platforms.

Easing concerns about China’s Evergrande Group and a weaker dollar brought the S&P 500 index up 0.11% to $4,546.75 at last glance.

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

China has faced slower than expected growth in the third quarter due to an array of economic disturbances, as I’ve written about extensively over the past month.

  • Those issues all directly impact China’s ag economy and as a result, U.S. row crop farmers.
    • In my latest E-corn-omics column, I examine these issues, tie them back to U.S. agriculture, and reexamine the Phase 1 trade deal.
    • The punchline? China probably is more likely to import less – not more – grain bushels from the U.S. in the 2021/22 marketing year.
    • Is Farm Country ready for the fallout? Read my column to find out!
  • I outlined soymeal shortages in a recent morning report. Naomi Blohm expands on the dilemma and outlines the global scale of tight soymeal supplies in the latest Ag Marketing IQ column.
  • Could foliar fertilizers boost your soybean yields?
  • U.S. ethanol production is staging a pre-pandemic comeback.

 

Morning Ag Commodity Prices - 10/22/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.375 5.32 5.365 0.0425 0.80%
MAR '22 CORN $ / BSH  5.46 5.4075 5.4525 0.0375 0.69%
MAY '22 CORN $ / BSH  5.5 5.45 5.4925 0.035 0.64%
JUL '22 CORN $ / BSH  5.505 5.455 5.495 0.035 0.64%
SEP '22 CORN $ / BSH  5.3325 5.295 5.33 0.015 0.28%
DEC '22 CORN $ / BSH  5.31 5.28 5.3075 0.0075 0.14%
MAR '23 CORN $ / BSH  5.355 5.35 5.355 -0.0075 -0.14%
NOV '21 SOYBEANS $ / BSH  12.305 12.23 12.27 0.03 0.25%
JAN '22 SOYBEANS $ / BSH  12.405 12.3225 12.3625 0.0275 0.22%
MAR '22 SOYBEANS $ / BSH  12.4975 12.4225 12.465 0.03 0.24%
MAY '22 SOYBEANS $ / BSH  12.585 12.515 12.555 0.0275 0.22%
JUL '22 SOYBEANS $ / BSH  12.64 12.5675 12.6025 0.015 0.12%
AUG '22 SOYBEANS $ / BSH  12.585 12.55 12.585 0.0225 0.18%
SEP '22 SOYBEANS $ / BSH  12.4 12.3675 12.385 0.0025 0.02%
NOV '22 SOYBEANS $ / BSH  12.3275 12.2575 12.3025 0.005 0.04%
JAN '23 SOYBEANS $ / BSH  12.32 12.31 12.32 0.0075 0.06%
DEC '21 SOYBEAN OIL  $ / LB 63 61.93 62.64 0.06 0.10%
JAN '22 SOYBEAN OIL  $ / LB 62.5 61.55 62.22 0.07 0.11%
DEC '21 SOY MEAL $ / TON 327.1 323 326.2 2.2 0.68%
JAN '22 SOY MEAL $ / TON 325.8 321.5 325 1.9 0.59%
MAR '22 SOY MEAL $ / TON 326.3 321.5 325.5 1.9 0.59%
MAY '22 SOY MEAL $ / TON 329.4 326 328.7 2.4 0.74%
JUL '22 SOY MEAL $ / TON 333.2 330 332.6 2.4 0.73%
DEC '21 Chicago SRW $ / BSH  7.5125 7.435 7.5 0.0875 1.18%
MAR '22 Chicago SRW $ / BSH  7.6275 7.56 7.6125 0.0775 1.03%
MAY '22 Chicago SRW $ / BSH  7.65 7.5925 7.6375 0.0675 0.89%
JUL '22 Chicago SRW $ / BSH  7.5275 7.475 7.5125 0.045 0.60%
SEP '22 Chicago SRW $ / BSH  7.5375 7.5 7.525 0.045 0.60%
DEC '21 Kansas City HRW $ / BSH  7.63 7.5 7.62 0.1425 1.91%
MAR '22 Kansas City HRW $ / BSH  7.6475 7.555 7.6375 0.0975 1.29%
MAY '22 Kansas City HRW $ / BSH  7.6375 7.545 7.6375 0.0825 1.09%
JUL '22 Kansas City HRW $ / BSH  7.53 7.46 7.53 0.055 0.74%
SEP '22 Kansas City HRW $ / BSH  7.5025 7.4675 7.5 0.015 0.20%
DEC '21 MLPS Spring Wheat $ / BSH  9.975 9.855 9.96 0.1075 1.09%
MAR '22 MLPS Spring Wheat $ / BSH  9.7575 9.6775 9.7475 0.07 0.72%
MAY '22 MLPS Spring Wheat $ / BSH  9.5225 9.505 9.5125 0.05 0.53%
JUL '22 MLPS Spring Wheat $ / BSH  9.22 9.21 9.21 0.0175 0.19%
SEP '22 MLPS Spring Wheat $ / BSH  8.2875 8.2875 8.2875 0 0.00%
DEC '21 ICE Dollar Index $ 93.78 93.57 93.605 -0.153 -0.16%
 DE '21 Light Crude $ / BBL  83.28 81.76 83.26 0.76 0.92%
 JA '21 Light Crude $ / BBL  82.11 80.62 82.09 0.73 0.90%
NOV '21 ULS Diesel $ /U GAL 2.567 2.5274 2.567 0.0179 0.70%
DEC '21 ULS Diesel $ /U GAL 2.5586 2.5181 2.5559 0.0152 0.60%
NOV '21 Gasoline $ /U GAL 2.5036 2.4524 2.501 0.0209 0.84%
DEC '21 Gasoline $ /U GAL 2.443 2.3924 2.4418 0.0228 0.94%
OCT '21 Feeder Cattle $ / CWT 0 #N/A 156.25 0 0.00%
NOV '21 Feeder Cattle $ / CWT 0 #N/A 159.075 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 124.975 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 129.55 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 73.2 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 76.675 0 0.00%
OCT '21 Class III Milk $ / CWT 17.9 #N/A 17.9 0 0.00%
NOV '21 Class III Milk $ / CWT 19.85 19.64 19.64 -0.27 -1.36%
DEC '21 Class III Milk $ / CWT 19.5 19.43 19.46 -0.18 -0.92%

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