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Ukrainian shipping paces trigger corn, wheat losses

morning market recap.jpg
Morning report: Soybeans stumble on favorable weekend weather and cool short-term forecasts. (Comments are updated by 7:30 a.m. Central Time.)

  •  Corn down 3-8 cents
  • Soybeans down 3-8 cents; Soymeal down $1.60/ton; Soyoil up $0.85/lb
  • Chicago wheat down 8-9 cents; Kansas City wheat down 11-12 cents; Minneapolis wheat down 6-12 cents

*Prices as of 6:50am CDT.

Feedback from the Field updates! How does your farm’s crop conditions stack up against other farms around the country? Click this link to take the survey and share updates about your farm’s crop development. I review and upload results daily to the FFTF Google MyMap, so farmers can see others’ responses from across the country – or even across the county!

Farm Futures releases 2022 yield estimates

On Friday, our team released the yield findings from our latest farmer survey. In an online survey conducted from July 13 – August 1, 692 farmer respondents provided insights about their 2022 yields. And despite current market worries about soybean health, growers suggested more optimism is afoot for soybean yields than corn.

High soybean yields projected

The survey found that growers expect 2022 soybean yields to notch a new record high of 52.5 bushels per acre (bpa). The estimate is surprisingly optimistic considering current crop conditions and the impending hot and dry weather expected during the middle of the month as the crop approaches peak pod fill stages.

If realized – and if USDA keeps its current 2022 soybean harvested acreage unchanged at 87.5 million acres – 2022 soybean production will rise to 4.59 billion bushels, up nearly 90 million bushels from USDA’s current estimate.

It will set a new record high for U.S. soybean production and will loosen 2022/23 ending supplies to 320 million bushels if USDA leaves its current usage estimates unchanged. That translates to an ending stocks-to-use ratio of 7.1%, which is a 2% increase from current supply estimates.

While that may not seem like a significant supply increase at first glance, a 52.5 bpa soybean yield would ease 2022/23 U.S. soybean ending stocks from the current ranking of 11th tightest on record to the 20th tightest of all time. It would be the largest domestic soybean stockpile since the 2019/20 marketing year, if realized.

If USDA does indeed trend high on its 2022 soybean yield estimate, farmers should brace for bearish price reactions. U.S. soybean supplies have hovered at historically tight volumes for the past two years. During that same time, global stocks have also been unusually tight yet global demand has soared to new heights, which has contributed to high soybean prices since August 2020.

But a large 2022/23 U.S. soybean crop could upend that price run. Top global producer and export Brazil suffered severe crop losses due to drought following its harvest earlier this spring. But 2022/23 production prospects are once again high and if weather permits improving yields this year, U.S. farmers should begin to prepare now for potentially lower soybean price dynamics.

Bearish corn yields could feed the price bulls

Farmer responses from the Farm Futures survey indicated that growers are currently forecasting national corn yields at 174.8 bpa for the 2022 season. If realized, that will represent a 2.2-bpa drop from 2021’s record-setting yield of 177.0 bpa. It would be the fourth-largest yield on record.

If USDA keeps 2022 harvested corn acreage steady at 81.9 million acres in the August WASDE report, 2022 corn production will likely fall 183 million bushels to 14.32 billion bushels. That equates to the fifth largest corn crop on record.

If USDA does not change its current usage estimates, that means that the stocks-to-use ratio for the 2022/23 will fall to 8.8% from its current level of 10.1%. The smaller corn crop will result in the 7th tightest corn supply on record. That could have bullish implications for corn prices following USDA’s report release next Friday.

For further analysis, check out my article outlining our survey findings on our website.

Markets will gain a better understanding of the 2022/23 yield forecasts after USDA releases its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) report next Friday, August 12 at 11am CDT. Stay tuned to the Farm Futures website and social platforms as our team covers the report’s release and provides real-time market analysis.

Corn

Oil prices traded lower overnight, dragging corn futures $0.07-$0.08/bushel with them. The nearby September 2022 contract rested at $6.03/bushel at last glance, with the December 2022 contract not far behind.

Favorable weekend rains and moderate temperatures in the Upper Midwest today bode favorably for crop development in the region, which helped stave off yield concerns in the market as the extended forecasts continue to predict hot and dry weather for mid-August. Plus, increasing shipping paces out of the Black Sea are also having a bearish impact on corn and wheat prices.

“Wheat and corn are falling today as ever more ships sail from Ukraine,” StoneX commodity risk manager Matt Ammermann told Reuters overnight. “The question now is if and how fast we will see high-volume grain exports developing from Ukraine."

Ammermann told Reuters that “the market does not yet have full confidence in the safe-shipping corridor, but developments in recent days suggest the situation might improve more rapidly than previously expected.”

Managed money funds may have slowed their recent selling spree on Chicago corn and soybeans thanks to last week’s rallies in both futures markets. Friday’s latest round of Commitment of Trader data released by the CFTC found that the week ending July 2nd marked only the third time since late May 2022 that outside funds have not been net sellers of the ag commodities.

“Although buying in the most recent week was lighter, it proved that buying in the big ‘up’ days can still outweigh selling in ‘down’ days, something that has not been happening in recent weeks,” Reuters global agriculture columnist Karen Braun surmised of the situation.

For more insights about trader activity, I highly recommend reading Braun’s latest column on Reuters’ website.

Today’s Crop Progress report will likely get a fair amount of market traction today, as it is the last time USDA will provide updates about crop development before it releases its first farmer-surveyed look at 2022 corn and soybean yields on Friday. Today’s updates will likely provide the last key data point market watchers around the world will use in their models to help calculate the yield estimates.

So what can be expected? The Upper Midwest received bountiful rains over the weekend and rains were forecast to hover around the Eastern Corn Belt for most of late last week, so there is a chance that condition ratings will continue to linger around the 61% good to excellent mark for a third straight week.

Ukrainian grain

Two more ships have set sail from Ukrainian port facilities in the Black Sea overnight. In the past week, a total of 10 ships have left Ukrainian Black Sea ports without being tampered by the Russian naval blockade.

Last night’s shipments were carrying 404,140 bushels of soybeans to Italy and 1.9 million bushels of corn to Turkey. So far, corn, soybeans, sunflower oil, and sunflower meal seem to be the top priority for items to be shipped out of war-torn Ukraine.

Four ships departed from the Black Sea yesterday and will likely be inspected in Turkey by this evening. A ship that left the Black Sea on Friday arrived in northwestern Turkey this morning to be unloaded, marking the first time since February a complete grain shipment has been transacted via Ukraine’s Black Sea ports.

Markets have not met the news with an abundance of bearish sentiments just yet, as the shipping rates remain too low to significantly alter global supply outlooks at this time. However, all eyes will be on USDA’s WASDE report at the end of the week that could shed more light on a potential shipping forecast for Ukrainian grain supplies.

Soybeans

Soybean prices edged $0.03-$0.08/bushel lower this morning on favorable weather prospects for Midwestern crops through the weekend and today. Slowing hedge fund activity help limit the morning’s losses, as well as favorable demand prospects for the U.S. on the horizon.

"But soybeans are also supported by expectations the U.S. climate change, healthcare and tax bill will raise demand for soyoil," Ammermann told Reuters. "With Brazilian soybeans selling out, Chinese demand for soybeans is also expected to be transferred to the United States from the second half of September."

The weekend’s rains were likely well-received by soybean plants across the Heartland. Soybean condition ratings improved 1% in last week’s Crop Progress report, rising to 60% good to excellent through the week ending July 31.

Markets are likely to be more price responsive to any potential soybean condition changes USDA may implement in today’s Crop Progress report. The crop is currently underway in its peak pod filling stages, which is one of the most significant factors for determining soybean yields. The weekend rains were favorable for crop development.

Wheat

The dollar weakened slightly overnight, which helped limit wheat’s losses as Ukraine tries to ramp up shipping efforts in the Black Sea. Hot and dry weather in the U.S. Pacific Northwest has helped wheat harvest paces to accelerate, which could likely keep bearish price action at play for the wheat complex during today’s trading session.

With soft red winter wheat harvest largely completed, market focus is likely to shift to completion rates for the hard red winter and white wheat crops.

“With hot, dry conditions, the HRW harvest is moving fast,” U.S. Wheat Associates noted in their most recent Harvest Report, issued last Friday. HRW harvest is nearly complete in Colorado, Nebraska, Wyoming, and South Dakota. Focus will now be centered on harvesting speeds the Northern Plains and the Pacific Northwest, which are likely to remain accelerated as dry weather continues to linger in both regions.

Sample data from soft red winter wheat testing points to quality metrics that meet or exceed the five-year average. Data compiled by the Great Plains Analytical Laboratory points to slightly higher protein readings and test weights for the soft red winter wheat crop, which reconciles with Feedback from the Field farmer reports of excellent yields.

080822 wheat data.png

The soft white wheat crop in the Pacific Northwest continues to benefit from hot and dry conditions in the Pacific Northwest. Harvest is underway for winter varieties in Oregon (36%), Idaho (14%), and Washington (10%), while the spring varieties continue to develop favorably in the heat. More hot and dry weather this week should keep harvest and plant growth rates steady.

And just like that, we are harvesting hard red spring wheat in South Dakota! U.S. Wheat Associates reported that harvest is advancing quickly in the state, which was 50% complete as of late last week. Protein levels are reportedly “excellent.” Top producers North Dakota and Minnesota are likely still two to four weeks from starting harvest following spring planting delays.

Test cuttings began last week for the durum wheat harvest in Montana. North Dakota’s crop continue to look good despite planting delays but the state’s durum harvest is still a few weeks away from ramping up. Hot and dry summer weather should accelerate maturation rates, however.

All of this intel suggests that spring wheat conditions will likely remain strong in today’s Crop Progress report. Winter wheat harvest speeds are likely to inch a little closer to five-year average historical benchmarks. It’s all good news for wheat farmers, but it likely means there will be little price gains to be realized in this evening’s trading sessions due to the USDA data updates.

Weather

Moderate temperatures are forecast for the Upper Midwest today after the weekend’s heavy rain showers, according to NOAA’s short-range forecasts. The weekend’s system will continue to linger over the Eastern Corn Belt today, dropping between a quarter inch to 1.25 inches of precipitation between Oklahoma to Michigan and Ohio over the next 24 hours. The system will largely remain in place over the next 24 hours as well.

Above average temperatures continue to plague NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday. The persistent dryness in the Heartland is expected to continue through the first half of August. These extended forecasts are increasingly hot and dry, which is putting a floor under the price losses in the corn and soybean markets this morning.

Financials

S&P 500 futures rose 0.41% overnight to $4,163.75 at last glance on optimism ahead of today’s latest round of corporate earnings. Friday’s monthly jobs report found an uptick in monthly job creation, which still indicates the economy is not yet responding to increasing interest rates from the Federal Reserve. The Treasury bond market had largely recovered from a selloff on Friday triggered by the jobs report.

“Investors have been watching the difference between yields on short- and long-dated Treasuries closely this year, because of its reputation as an accurate recession indicator,” the Wall Street Journal noted this morning.

What else I’m reading this morning on our website, FarmFutures.com:

  • Farm Futures yield results from our latest farmer survey!
  • Roger Wright explains how to maximize income potential from selling put options.
  • AgMarket.Net’s Brian Splitt examines historical outcomes of USDA’s August yield reports and how farmers can prepare their marketing plans ahead of the reports.
  • Advance Trading’s Brian Basting explores the accuracy of USDA’s August yield estimates vs. final harvest estimates published in January 2023.
Morning Ag Commodity Prices - 8/8/2022
Contract Units High Low Last Net Change % Change
SEP '22 CORN $ / BSH  6.1025 6.0225 6.03 -0.0725 -1.19%
DEC '22 CORN $ / BSH  6.1025 6.02 6.025 -0.075 -1.23%
MAR '23 CORN $ / BSH  6.18 6.0975 6.1075 -0.0725 -1.17%
MAY '23 CORN $ / BSH  6.225 6.1425 6.145 -0.08 -1.29%
JUL '23 CORN $ / BSH  6.2325 6.155 6.1575 -0.075 -1.20%
SEP '23 CORN $ / BSH  5.91 5.88 5.9 -0.0225 -0.38%
DEC '23 CORN $ / BSH  5.81 5.74 5.74 -0.0825 -1.42%
AR2 '24 CORN $ / BSH  5.8875 5.8225 5.8225 -0.0775 -1.31%
MAY '24 CORN $ / BSH  5.8625 5.8625 5.8625 -0.07 -1.18%
AUG '22 SOYBEANS $ / BSH  16.075 #N/A 16.1475 0 0.00%
SEP '22 SOYBEANS $ / BSH  14.7875 14.565 14.6 -0.0325 -0.22%
NOV '22 SOYBEANS $ / BSH  14.21 13.9375 14.0175 -0.07 -0.50%
JAN '23 SOYBEANS $ / BSH  14.285 14.0175 14.0975 -0.0725 -0.51%
MAR '23 SOYBEANS $ / BSH  14.285 14.0325 14.1 -0.07 -0.49%
MAY '23 SOYBEANS $ / BSH  14.2925 14.045 14.115 -0.065 -0.46%
JUL '23 SOYBEANS $ / BSH  14.2625 14.02 14.08 -0.0725 -0.51%
AUG '23 SOYBEANS $ / BSH  13.9775 #N/A 13.9025 0 0.00%
SEP '23 SOYBEANS $ / BSH  0 #N/A 13.4325 0 0.00%
NOV '23 SOYBEANS $ / BSH  13.3175 13.1125 13.22 -0.02 -0.15%
AN2 '24 SOYBEANS $ / BSH  0 #N/A 13.2725 0 0.00%
AUG '22 SOYBEAN OIL  $ / LB 67.7 #N/A 68.59 0 0.00%
SEP '22 SOYBEAN OIL  $ / LB 66.76 65.23 65.88 0.88 1.35%
AUG '22 SOY MEAL $ / TON 498.3 498.1 498.1 -1 -0.20%
SEP '22 SOY MEAL $ / TON 440.4 431.5 435.4 -2.1 -0.48%
OCT '22 SOY MEAL $ / TON 408.1 400 403.4 -4.3 -1.05%
DEC '22 SOY MEAL $ / TON 405.6 399.5 400.8 -4.3 -1.06%
JAN '23 SOY MEAL $ / TON 402.6 396.5 397.7 -4.6 -1.14%
SEP '22 Chicago SRW $ / BSH  7.8475 7.6075 7.6525 -0.105 -1.35%
DEC '22 Chicago SRW $ / BSH  8.0425 7.805 7.85 -0.1025 -1.29%
MAR '23 Chicago SRW $ / BSH  8.23 7.99 8.0425 -0.0975 -1.20%
MAY '23 Chicago SRW $ / BSH  8.34 8.125 8.1475 -0.115 -1.39%
JUL '23 Chicago SRW $ / BSH  8.355 8.1375 8.16 -0.115 -1.39%
SEP '23 Chicago SRW $ / BSH  8.385 8.175 8.175 -0.145 -1.74%
DEC '23 Chicago SRW $ / BSH  8.4375 8.2675 8.2675 -0.1025 -1.22%
SEP '22 Kansas City HRW $ / BSH  8.56 8.2975 8.36 -0.1225 -1.44%
DEC '22 Kansas City HRW $ / BSH  8.6325 8.37 8.435 -0.125 -1.46%
MAR '23 Kansas City HRW $ / BSH  8.6925 8.4375 8.5 -0.125 -1.45%
MAY '23 Kansas City HRW $ / BSH  8.7175 8.475 8.5225 -0.1325 -1.53%
JUL '23 Kansas City HRW $ / BSH  8.65 8.475 8.475 -0.1075 -1.25%
SEP '23 Kansas City HRW $ / BSH  8.59 #N/A 8.5625 0 0.00%
DEC '23 Kansas City HRW $ / BSH  8.6125 #N/A 8.58 0 0.00%
SEP '22 MLPS Spring Wheat $ / BSH  8.935 8.7475 8.8025 -0.0625 -0.71%
DEC '22 MLPS Spring Wheat $ / BSH  9.0675 8.8775 8.905 -0.1 -1.11%
MAR '23 MLPS Spring Wheat $ / BSH  9.165 9.01 9.01 -0.125 -1.37%
MAY '23 MLPS Spring Wheat $ / BSH  9.265 9.205 9.265 0.0425 0.46%
JUL '23 MLPS Spring Wheat $ / BSH  9.3075 #N/A 9.25 0 0.00%
SEP '23 MLPS Spring Wheat $ / BSH  9.0175 #N/A 9.01 0 0.00%
DEC '23 MLPS Spring Wheat $ / BSH  0 #N/A 9.05 0 0.00%
SEP '21 ICE Dollar Index $ 106.67 106.115 106.305 -0.185 -0.17%
 SE '21 Light Crude $ / BBL  90.17 87.22 87.7 -1.31 -1.47%
 OC '21 Light Crude $ / BBL  89.24 86.33 86.79 -1.29 -1.46%
SEP '22 ULS Diesel $ /U GAL 3.2329 3.1424 3.1523 -0.0636 -1.98%
OCT '22 ULS Diesel $ /U GAL 3.2004 3.1167 3.125 -0.0606 -1.90%
SEP '22 Gasoline $ /U GAL 2.8932 2.8288 2.8578 0.0022 0.08%
OCT '22 Gasoline $ /U GAL 2.6407 2.5771 2.5939 -0.0089 -0.34%
AUG '22 Feeder Cattle $ / CWT 0 #N/A 179.525 0 0.00%
SEP '22 Feeder Cattle $ / CWT 0 #N/A 183.425 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 137.875 0 0.00%
CT2 '21 Live Cattle $ / CWT 0 #N/A 143.875 0 0.00%
AUG '22 Live Hogs $ / CWT 0 #N/A 120.825 0 0.00%
OCT '22 Live Hogs $ / CWT 0 #N/A 98.4 0 0.00%
AUG '22 Class III Milk $ / CWT 19.97 #N/A 20.02 0 0.00%
SEP '22 Class III Milk $ / CWT 19.58 19.45 19.45 0.15 0.78%
OCT '22 Class III Milk $ / CWT 20.2 20.08 20.2 0.14 0.70%

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