Wheat soars to new heights on Indian export ban

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Morning report: Corn closes in on $8/bushel and soybeans surpass $16/bushel on delayed planting progress. (Comments are updated by 7:30 a.m. Central Time.)

  • Corn up 9-14 cents
  • Soybeans up 11-14 cents; Soymeal up $6.50/ton; Soyoil up $0.32/lb
  • Chicago wheat up 44-50 cents; Kansas City wheat up 46-50 cents; Minneapolis wheat up 39-43 cents

*Prices as of 6:55am CDT.

Feedback from the Field is live! I have received few Feedback from the Field responses over the past few days, which leads me to believe that planting activities are in full swing across the Heartland! Want to see how your farm’s progress tacks up against other growers across the country?

Just click this link to take the survey and share updates about your farm’s spring progress. 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!

Corn

Corn continues to trade at the whims of weather forecasts as more scattered showers are expected to develop through the week. Markets are waiting for today’s Crop Progress report to see how much substantial planting progress was made over the past week. If delays are larger than expected, more bullish price action will likely settle into the corn complex during the overnight trading session.

Today may be one of the most significant Crop Progress reports the market will see all year. Somewhat clear skies over the Heartland last week allowed planting progress to accelerate to what could possibly be its fastest rate of the year this week.

Farmers are going to continue dodging scattered showers through this week. A cross country precipitation system is currently developing in the Central Rockies and will likely create a series of shower systems that will bring some drought relief to the Western Plains tomorrow and Wednesday.

Corn planting at my family’s dairy farm in Northern Illinois ramped up this weekend. They had to wait for the manure lagoon pumpers to arrive late last week before any meaningful progress could be made. Which has obviously left everyone very antsy, to say the least!

Mid-May is widely viewed as the final window for planting times that will guarantee an optimal yield response for corn crops. Last week was the first time soils had warmed and dried enough and skies were (somewhat) clear enough for Midwestern growers to make meaningful planting progress. So today’s report could not only see the one of the largest weekly planted progress rates for corn on record, but it will also help markets to reconcile last week’s USDA corn yield cut anticipated for the 2022 crop.

To be sure, there are a multitude of other factors that affect final yield counts throughout the growing season, so remember that it is not solely the planting date that dictates yield, but rather a multitude of compounding factors. “A good share of the variability in yields depends on what happens after planting,” Bob Nielsen, an agronomist at Purdue University, points out.

Last week’s Crop Progress report from USDA saw 22% of anticipated 2022 U.S. corn acres planted as of May 8, up 8% from the previous week, but a staggering 28% behind the five-year average benchmark for the same reporting period.

Will we see 50% or more of the 2022 corn crop planted in today’s report? That is the hope. More rapid progress will be needed today to keep hopes alive for the 2022 corn crop. Production is already forecast to be significantly lower than last year both at home and abroad, so any crop shortfalls will add bullish pressure to the corn complex.

Also – keep an eye on planting progress in Upper Midwest states (Minnesota, the Dakotas). The planting delays in this region have been more pronounced this spring due to cooler soil temperatures, excessive flooding in the Red River Valley, and late season snowfall. There is more potential for some of these acres to potentially fall into prevent plant acreage, which would add even more bullish sentiments to corn.

Soybeans

Soybean prices edged $0.11-$0.14/bushel higher overnight. The August 2022 contract rose past the $16/bushel benchmark as U.S. planting delays and optimism over 2022/23 Chinese demand kept soy markets running with the bulls this morning.

Today’s National Oilseed Processors Association monthly crush readings could also feed the bulls if April 2022 crush rates land on the higher end of analyst estimates (169.448 million – 177.0 million bushels, average guess of 172.37M bu.).

Soybeans may start to feel some bullish pressure from planting delays in today’s Crop Progress report, especially if corn sowings are farther behind than expected. Soybean acres are not in as much danger of incurring yield losses yet, but if corn sowings continue to see delays that could hold back planting progress for soybeans as well.

Last week’s Crop Progress report saw soybean sowing progress come in behind average analyst estimates. Through the week ending May 8, 12% of anticipated 2022 soybean crops were planted. It was only a 4% increase from the previous week, whereas market watchers were expecting an 8% rise on the week as some growers were able to start planting in between rain showers over the Corn Belt last week.

Soybean acreage was already expected to be higher than that of corn this spring due to high input costs and crush capacity expansions. But persistent delays in the Upper Midwest could begin to force corn acres into soybeans.

This is not likely to be a terribly bearish omen for soy prices. Demand is hot enough than any extra 2022 soybean bushels will likely be quickly snapped up by export buyers and domestic crush plants. The only worrisome price factor currently at play for soybeans is growers’ ability to finish planting the 2022 crop in a timely manner this spring.

Wheat

Chicago wheat soared back past the $12/bushel benchmark overnight for the first time since March 9 after India announced it would officially ban wheat exports going forward. Kansas City wheat futures jumped to $13/bushel on the news, nearing a February 2008 life-of-contract high. Minneapolis wheat also rose to a 14-year high after the ban was announced.

India announced overnight that it would ban wheat exports effective immediately as hot and dry weather has heightened concerns about India’s 2022/23 wheat crop. Shipments that were already financed through letters of credit, as well as cargoes destined for countries in need of wheat “to meet their food security needs,” are still being allowed to be shipped.

Prior to the export ban, India was on track to export 367 million bushels of wheat – a new record high export volume for the Asian country. Export volumes accelerated rapidly after Russia invaded Ukraine because Indian supplies were affordable, available, and close enough for other Asian, North African, and Middle Eastern buyers to access (and pay for freight costs).

But the soaring export volumes were not held in check against domestic food prices. "We don't want wheat trade to happen in an unregulated manner or hoarding to happen," commerce secretary BVR Subrahmanyam told reporters in New Delhi.

“It was not wheat alone. The rise in overall prices raised concerns about inflation and that’s why the government had to ban wheat exports,” another senior government official told Reuters. The official asked not to be named as discussions about export curbs were private. “For us, it’s abundance of caution.”

Markets responded this morning by soaring to the highest price levels since early March 2022 as the Indian wheat export ban once again threw global wheat availability into question. Supplies were already going to be tight before Russia’s invasion of Ukraine, but the war as further constricted the supply issue. Indian wheat was seen as an option to reduce some of that pressure, but

"The ban is shocking," a Mumbai-based dealer with a global trading firm said. "We were expecting curbs on exports after two to three months, but it seems like the inflation numbers changed the government's mind."

India is the world’s second-largest wheat producer behind China. It does not typically export much of its wheat, as the government sets a domestic price that tends to be more favorable than what is realized by the markets to ensure domestic availability. But the Russian war in Ukraine sent prices soaring high enough this spring and India had enough exportable supplies on hand this year following five consecutive bumper crops to take advantage of market closures in the Black Sea.

Persistent spring wheat planting delays in the Northern Plains and a dry week for winter wheat in the Plains dominated wheat market headlines last week. Those factors will likely rear their head again in today’s Crop Progress report from USDA, which could lead to even more bullish price action for the wheat complex by the time Asian markets open tonight.

Weather

Farmers are going to continue dodging scattered showers through this week according to NOAA’s short-range forecasts. A cross country precipitation system is currently developing in the Central Rockies and will likely create a series of shower systems that will bring some drought relief to the Western Plains (my lawn is ELATED) tomorrow and Wednesday.

By Wednesday, the showers will move into the Mississippi River Valley and shift into the Eastern Corn Belt by Wednesday evening. NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are shifting cooler for the Upper Midwest and wetter for the Eastern Corn Belt.

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

  • Roger Wright concludes a four-part series on buying put options, pointing out that buyers will never have to add money to margin positions by using this strategy.
  • In the latest South American Crop Watch column, Julio Bravo explains how fuel and fertilizer in Brazil are being impacted by the Russian-Ukrainian war.
  • The Farm Futures team’s coverage of the May 2022 WASDE reports.
  • Naomi Blohm weighs the odds of a corn market rally amid spring planting delays.
  • High prices cure high prices, right? Yes, but in the U.S. that implies an acreage expansion that has not happened.
  • Mike Downey helps growers evaluate the fair market value of a family farm corporation.
  • Bryce Knorr weighs the odds of $11/bushel corn after looking at options prices ahead of the mid-May benchmark for corn planting progress.
Morning Ag Commodity Prices - 5/16/2022
Contract Units High Low Last Net Change % Change
JUL '22 CORN $ / BSH  8.0375 7.9275 7.9675 0.155 1.98%
SEP '22 CORN $ / BSH  7.7575 7.6625 7.7 0.125 1.65%
DEC '22 CORN $ / BSH  7.66 7.5575 7.6 0.1125 1.50%
MAR '23 CORN $ / BSH  7.68 7.5875 7.63 0.1125 1.50%
MAY '23 CORN $ / BSH  7.655 7.5675 7.6 0.1025 1.37%
JUL '23 CORN $ / BSH  7.575 7.485 7.5175 0.0975 1.31%
SEP '23 CORN $ / BSH  6.81 6.75 6.7925 0.0475 0.70%
JUL '22 SOYBEANS $ / BSH  16.68 16.565 16.6025 0.1375 0.84%
AUG '22 SOYBEANS $ / BSH  16.18 16.055 16.0925 0.1375 0.86%
SEP '22 SOYBEANS $ / BSH  15.555 15.4275 15.4725 0.14 0.91%
NOV '22 SOYBEANS $ / BSH  15.1925 15.075 15.1275 0.145 0.97%
JAN '23 SOYBEANS $ / BSH  15.2025 15.08 15.155 0.16 1.07%
MAR '23 SOYBEANS $ / BSH  15.02 14.93 14.97 0.13 0.88%
MAY '23 SOYBEANS $ / BSH  14.99 14.86 14.935 0.135 0.91%
JUL '23 SOYBEANS $ / BSH  14.915 14.85 14.8975 0.1325 0.90%
AUG '23 SOYBEANS $ / BSH  10.75 #N/A 14.58 0 0.00%
MAY '22 SOYBEAN OIL  $ / LB 0 #N/A 88.34 0 0.00%
JUL '22 SOYBEAN OIL  $ / LB 84.48 83.43 84.2 0.41 0.49%
JUL '22 SOY MEAL $ / TON 416.8 412.9 415.3 6 1.47%
AUG '22 SOY MEAL $ / TON 411.2 407.7 410.1 6.1 1.51%
SEP '22 SOY MEAL $ / TON 406.3 403.2 405.7 5.7 1.43%
OCT '22 SOY MEAL $ / TON 401.6 398.4 401.2 5.4 1.36%
DEC '22 SOY MEAL $ / TON 403 399.7 402.6 5.6 1.41%
JUL '22 Chicago SRW $ / BSH  12.475 12.2225 12.3275 0.5525 4.69%
SEP '22 Chicago SRW $ / BSH  12.51 12.2425 12.33 0.52 4.40%
DEC '22 Chicago SRW $ / BSH  12.55 12.2725 12.3475 0.4975 4.20%
MAR '23 Chicago SRW $ / BSH  12.525 12.2 12.26 0.435 3.68%
MAY '23 Chicago SRW $ / BSH  12.31 11.9175 11.96 0.35 3.01%
JUL '22 Kansas City HRW $ / BSH  13.52 13.25 13.3625 0.5425 4.23%
SEP '22 Kansas City HRW $ / BSH  13.5375 13.255 13.3675 0.53 4.13%
DEC '22 Kansas City HRW $ / BSH  13.55 13.2475 13.3175 0.4675 3.64%
MAR '23 Kansas City HRW $ / BSH  13.2575 13.19 13.1925 0.4325 3.39%
MAY '23 Kansas City HRW $ / BSH  12.785 12.6675 12.785 0.3475 2.79%
JUL '22 MLPS Spring Wheat $ / BSH  13.85 13.5625 13.665 0.415 3.13%
SEP '22 MLPS Spring Wheat $ / BSH  13.7875 13.52 13.625 0.4375 3.32%
DEC '22 MLPS Spring Wheat $ / BSH  13.73 13.45 13.5425 0.4125 3.14%
MAR '23 MLPS Spring Wheat $ / BSH  13.62 13.615 13.62 0.5425 4.15%
MAY '23 MLPS Spring Wheat $ / BSH  11.55 #N/A 12.905 0 0.00%
JUN '21 ICE Dollar Index $ 104.7 104.385 104.49 -0.131 -0.13%
 JU '21 Light Crude $ / BBL  111.71 108.11 109.31 -1.18 -1.07%
 JU '21 Light Crude $ / BBL  109.82 106.27 107.46 -1.17 -1.08%
JUN '22 ULS Diesel $ /U GAL 3.9608 3.8372 3.8664 -0.0548 -1.40%
JUL '22 ULS Diesel $ /U GAL 3.7966 3.6802 3.707 -0.0538 -1.43%
JUN '22 Gasoline $ /U GAL 4.0111 3.9146 3.9614 0.0036 0.09%
JUL '22 Gasoline $ /U GAL 3.8287 3.739 3.7807 -0.0041 -0.11%
MAY '22 Feeder Cattle $ / CWT 0 #N/A 157.875 0 0.00%
AUG '22 Feeder Cattle $ / CWT 0 #N/A 168.025 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 132.075 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 132.35 0 0.00%
JUN '22 Live Hogs $ / CWT 0 #N/A 100.75 0 0.00%
JUL '22 Live Hogs $ / CWT 0 #N/A 101.2 0 0.00%
MAY '22 Class III Milk $ / CWT 24.94 24.9 24.9 -0.07 -0.28%
JUN '22 Class III Milk $ / CWT 23.75 23.51 23.6 -0.23 -0.97%
JUL '22 Class III Milk $ / CWT 23.74 23.64 23.64 -0.1 -0.42%

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