Morning Market Review for September 22, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Grains inch higher on export hopes. (Comments are updated by 7:30 a.m. Central Time.)

Wheat claws back the biggest gains on a round of bargain buying

  • Corn up 1-3 cents
  • Soybeans up 2-3 cents; Soymeal down $0.70/ton; Soyoil up $0.60/lb
  • Wheat up 6-9 cents

*Prices as of 6:55 am CDT.

Good morning! Happy First Day of Autumn! Have you started combining on your farm yet? 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.

Corn

Despite advancing harvest pressures adding to domestic supplies, U.S. corn prices clawed back a $0.01-$0.03/bushel gain this morning on improving export prospects in the U.S. Gulf. But 2022 futures prices suffered a $0.01/bushel loss on rising concerns about increasing supplies and rising input costs.

China’s state planner announced early this morning that it would increase domestic fertilizer production, release potash supplies from state reserves, and expand fertilizer import capacity in an effort to stabilize rising input prices in China. U.S. farmers are facing similar issues as fertilizer availability struggles to keep up with global acreage expansion.

But from where does China expect it can source inputs in an era of tight global supplies? That is the question high on U.S. producers’ minds as costs soar and retailers run increasingly dry on input supplies as plans are hatched for the 2022 growing season.

Markets have closely watched grain prices take a hit over the last month on exporting concerns in the U.S. Gulf of Mexico following Hurricane Ida’s destruction in late August. But growers in the Plains are feeling a tighter squeeze on their profit margins as they begin to try to source inputs for the 2022 growing season.

Bayer’s glyphosate plant in Louisiana – the country’s largest source of the key ingredient for Roundup herbicides – has not yet resumed production after Hurricane Ida inflicted damage late last month. And in an era of expanding global crop acreage and tight input supplies, life just got a little harder.

"Ida was like a heavyweight boxer going 15 rounds, and threw a hard upper-cut at the farmer," Caleb Ragland, a Kentucky corn and soybean farmer, told Reuters after scrambling to source inputs this year amid scarce input supplies. "Things were already bad. Ida made it worse."

USDA forecasts a 2.2% increase in corn input expenses in 2022. But the rise in production costs and increasing scarcity of input supplies could alter 2022 acreage allocations, especially if export revenues continue to stall on damage from Hurricane Ida. The U.S. Gulf facilitates transport for 60% of U.S. exports.

"At the current prices for nitrogen, it's making me take a hard look at my corn acres," Ragland said. "It makes me think we might grow soybeans on some of those acres."

Speaking of 2022 crops – have you thought about booking any sales yet for crops that won’t be planted for another six months, at least? Farm Futures contributing analyst Bryce Knorr encourages growers to take a look at making sales sooner rather than later.

In the latest Ag Marketing IQ column, Knorr examines potential 2022 supply conditions. Spoiler alert – there will likely be higher supplies next year, which could lower prices.

“Current futures prices are within my forecast for the top third of their expected selling ranges,” Knorr explains, “so make sure you can afford to wait for a rally to buy acres if you hold off on starting sales for next year’s production.”

Soybeans

Chicago soybean prices rose $0.02-$0.03/bushel overnight as markets await further news of Chinese demand prospects. Rumors of China booking another large sale loomed large over the market yesterday – expect USDA to confirm the export sale later this morning.

But a stronger dollar, South American production prospects, and uncertainty about loading paces at the U.S. Gulf continue to limit gains in the soy complex.

"Right now, export sales are not sufficient to give confidence to the market, that's why we've seen soybeans trickling below $13," Michael Magdovitz, commodity analyst with Rabobank, told Reuters overnight.

Argentine 2020/21 soy sales continue to lag behind 2019/20 paces, due in large part to smaller 2020/21 crops harvested earlier this year in the South American country. Argentina suffered a massive drought exacerbated from a La Niña weather pattern experienced in the Pacific Ocean over the past year.

Argentina’s Ministry of Agriculture reported yesterday that growers had already sold 1.1 billion bushels of soybeans as of September 15, down 5% from selling paces of a year ago which totaled nearly 1.2 billion bushels.

Local focus in Argentina will now turn to sowing rates for the 2021/22 crop, which is due to begin planting in October. Planting in neighboring Brazil is already off to the races, with soybean sowing taking off in top producer Mato Grosso last week.

Argentina’s Buenos Aires Grains Exchange expects to harvest 1.6 billion bushels of soybeans in the 2021/22 marketing campaign. USDA’s outlook for new crop Argentine production is rosier, coming in at 1.9 billion bushels.

Wheat

Wheat prices rose by $0.06-$0.09/bushel overnight despite a higher dollar. Bargain buying was likely at play after the complex hit a one-week low yesterday. Higher corn prices also helped lift the wheat complex ahead of today’s trading session.

Russia’s leading agricultural consultancy, Sovecon, issued updated 2021 wheat production forecasts yesterday after better-than-expected yields in Siberia. Sovecon added 7.3 million bushels to its 2021 production estimate, raising it to 2.8 billion bushels. USDA’s current estimate for 2021 Russian wheat output stands at 2.7 billion bushels.

Siberia is Russia’s largest spring wheat producer and experienced an 18% annual increase in yields this year due in large part to ample rains. But Siberia is thousands of miles away from Russia’s other key growing regions further west where the lion’s share of its wheat crops are grown.

Many of those areas experienced drought this year. Neighboring Kazakhstan, which trades wheat with China, also saw yield shortfalls on dry weather this year, opening up trade opportunities between China and Russian spring wheat producers in Siberia which could potentially help offset some of the high shipping costs for the Siberian spring wheat crop.

Weather

Cooler temperatures are slated for much of the Heartland today, according to NOAA’s short-range forecasts. Temperatures are likely to dip into the 60s and 70s today as we usher in the first day of the fall season.

Heavy rains are likely to continue dousing the Eastern Corn Belt today, with over two inches of accumulation forecasted in Indiana, Ohio, and Southern Michigan over the next 24 hours. Eastern Illinois could also see some precipitation as part of that system, though total accumulation is expected to be much lighter in comparison.

Financials

Coronavirus cases in the U.S. rose to 42,415,398 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 678,517 deaths as of press time as the pandemic continues to deal devastating blows to individuals unvaccinated against the virus.

According to the CDC, nearly 77% of U.S. adults have received at least one COVID-19 vaccine as workplace mandates help boost immunity rates. Over 182 million Americans (55%) are fully vaccinated. Over 5.9 billion vaccine doses have been administered worldwide.

The U.S. Federal Reserve is expected to issue updated guidance about interest rates today and markets are giddy with anticipation this morning about where the Fed may be taking this circus.

Stock futures in the U.S. and Europe climbed overnight as worries about a default on a bond interest payment from China’s Evergrande Group. Chinese markets resumed trading today following the Mid-Autumnal holiday break, lifted by the prospects of a cash infusion from the country’s central bank though the fate of Evergrande remains increasingly uncertain.

Better than expected retail data, inflation readings, and improving unemployment statistics in the U.S. last week suggested the Fed could shorten its timeline for easing its monetary easing policies.

But the looming Chinese debt crisis, rising global COVID-19 cases, and ever-present global economic uncertainty are likely to play into the Fed’s narrative today with many market watchers expecting that the Fed will hold off on moving interest rates in today’s announcement.

Energy futures advanced on easing concerns surrounding China’s Evergrande Group. S&P 500 futures rose 0.53% to $4,366.25 on the overarching sentiments.

Morning Ag Commodity Prices - 9/22/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.225 5.16 5.1975 0.0275 0.53%
MAR '22 CORN $ / BSH  5.3025 5.2425 5.2775 0.0275 0.52%
MAY '22 CORN $ / BSH  5.35 5.2925 5.3275 0.0275 0.52%
JUL '22 CORN $ / BSH  5.345 5.29 5.3225 0.0275 0.52%
SEP '22 CORN $ / BSH  5.0375 5.005 5.025 0.015 0.30%
DEC '22 CORN $ / BSH  4.9875 4.9625 4.97 0 0.00%
MAR '23 CORN $ / BSH  5.06 5.03 5.0375 -0.005 -0.10%
NOV '21 SOYBEANS $ / BSH  12.78 12.7025 12.765 0.025 0.20%
JAN '22 SOYBEANS $ / BSH  12.8675 12.7925 12.8575 0.03 0.23%
MAR '22 SOYBEANS $ / BSH  12.91 12.83 12.8925 0.02 0.16%
MAY '22 SOYBEANS $ / BSH  12.97 12.9 12.965 0.03 0.23%
JUL '22 SOYBEANS $ / BSH  13.0075 12.95 12.995 0.0225 0.17%
AUG '22 SOYBEANS $ / BSH  12.915 #N/A 12.8875 0 0.00%
SEP '22 SOYBEANS $ / BSH  12.645 12.645 12.645 0.02 0.16%
NOV '22 SOYBEANS $ / BSH  12.515 12.4575 12.51 0.02 0.16%
JAN '23 SOYBEANS $ / BSH  12.505 #N/A 12.4925 0 0.00%
OCT '21 SOYBEAN OIL  $ / LB 56.03 55.21 56 0.68 1.23%
DEC '21 SOYBEAN OIL  $ / LB 56 55.17 55.94 0.65 1.18%
OCT '21 SOY MEAL $ / TON 338.6 336.6 337.3 -0.6 -0.18%
DEC '21 SOY MEAL $ / TON 342.6 340.5 341.1 -0.7 -0.20%
JAN '22 SOY MEAL $ / TON 344.9 343 343.8 -0.6 -0.17%
MAR '22 SOY MEAL $ / TON 347.7 346 346.8 -0.5 -0.14%
MAY '22 SOY MEAL $ / TON 351.4 349.7 350.5 -0.5 -0.14%
DEC '21 Chicago SRW $ / BSH  6.9975 6.88 6.975 0.0725 1.05%
MAR '22 Chicago SRW $ / BSH  7.105 6.9925 7.0825 0.0725 1.03%
MAY '22 Chicago SRW $ / BSH  7.145 7.03 7.1275 0.0775 1.10%
JUL '22 Chicago SRW $ / BSH  7.01 6.9025 6.98 0.055 0.79%
SEP '22 Chicago SRW $ / BSH  7.035 6.9375 7.0175 0.065 0.93%
DEC '21 Kansas City HRW $ / BSH  7.02 6.885 6.9975 0.0925 1.34%
MAR '22 Kansas City HRW $ / BSH  7.11 6.98 7.0775 0.08 1.14%
MAY '22 Kansas City HRW $ / BSH  7.1625 7.0375 7.135 0.085 1.21%
JUL '22 Kansas City HRW $ / BSH  7.0925 6.96 7.06 0.07 1.00%
SEP '22 Kansas City HRW $ / BSH  7.1275 7.085 7.085 0.0525 0.75%
DEC '21 MLPS Spring Wheat $ / BSH  8.965 8.8375 8.94 0.0625 0.70%
MAR '22 MLPS Spring Wheat $ / BSH  8.8425 8.7475 8.825 0.0575 0.66%
MAY '22 MLPS Spring Wheat $ / BSH  8.6475 8.6475 8.6475 -0.0075 -0.09%
JUL '22 MLPS Spring Wheat $ / BSH  8.5 8.5 8.5 -0.0175 -0.21%
SEP '22 MLPS Spring Wheat $ / BSH  7.84 7.79 7.84 0.0425 0.55%
DEC '21 ICE Dollar Index $ 93.285 93.145 93.2 0 0.00%
 NO '21 Light Crude $ / BBL  71.8 70.64 71.58 1.09 1.55%
 DE '21 Light Crude $ / BBL  71.41 70.27 71.23 1.09 1.55%
OCT '21 ULS Diesel $ /U GAL 2.2036 2.1755 2.2009 0.0271 1.25%
NOV '21 ULS Diesel $ /U GAL 2.2006 2.1723 2.1978 0.0268 1.23%
OCT '21 Gasoline $ /U GAL 2.1353 2.1105 2.1297 0.0245 1.16%
NOV '21 Gasoline $ /U GAL 2.0893 2.0651 2.085 0.0252 1.22%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 154.85 0 0.00%
OCT '21 Feeder Cattle $ / CWT 0 #N/A 156.625 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 122.45 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 127.8 0 0.00%
OCT '21 Live Hogs $ / CWT 0 #N/A 84.375 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 73.6 0 0.00%
SEP '21 Class III Milk $ / CWT 16.6 16.6 16.6 0 0.00%
OCT '21 Class III Milk $ / CWT 17.49 17.42 17.49 0.07 0.40%
NOV '21 Class III Milk $ / CWT 17.2 17.2 17.2 0.05 0.29%

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