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Cooler temps, China worries trigger losses

morning market recap.jpg
Morning report: Rains across the Heartland, accelerating Ukrainian shipping paces, and worries about relations with China weigh grains and oilseeds lower. (Comments are updated by 7:30 a.m. Central Time.)

  • Corn down 5-9 cents
  • Soybeans down 11-19 cents; Soymeal down $4.90/ton; Soyoil down $0.47/lb
  • Chicago wheat down 12-13 cents; Kansas City wheat down 11-12 cents; Minneapolis wheat down 9-11 cents

*Prices as of 6:50am CDT.

Feedback from the Field updates! Our latest farmer updates were published on our website on Tuesday! Check out this article for all the latest on growing conditions around the country – which remain highly variable.

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!

Corn

Corn prices fell $0.05-$0.08/bushel overnight as weakening oil prices, a stronger dollar, calming weather worries, accelerating Ukrainian shipping progress, and diplomatic concerns between the U.S. and China cast an unfavorable light over the commodities space this morning.

"Weak economic data from China put a dampener on the commodities markets at the beginning of the week," Commerzbank said in a note. "In our view, problems in the real estate sector, plus the government's zero-Covid strategy, are likely to continue to weigh on the economy in the short to medium term."

Ukraine is hoping to ship 3 million metric tonnes (MMT) of grain out of its Black Sea ports during September 2022, according to Deputy Infrastructure Minister Yuriy Vaskov. A total of five ships loaded with wheat and corn sailed from the Black Sea during the night. Vaskov expressed optimism that up to 4MMT of grain could be shipped out per month before the “Grain Initiative” expires at the end of October.

Overnight, a ship departed Ukraine for the African country of Ethiopia. It was the first ship of the “Grain Initiative” that sailed to Africa, which is considered to be one of the most at-risk regions for global hunger. Most of the ships departing from Ukraine’s Black Sea ports over the past two weeks have not gone to hunger-stressed regions of the world like the Middle East and Africa. Instead, the ships have largely sailed to Turkey, China, and the European Union.

Yesterday’s Crop Progress report from USDA dipped another percentage point as scattered showers last week across the Heartland were largely offset by growing dryness in the Western Corn Belt. Through the week ending August 14, 57% of the U.S. corn crop was reported to be in good to excellent condition. The five-year average for the same reporting period stands at 64% good to excellent.

The cut was less severe than markets had been anticipating, which helped cap some of the morning’s price losses. Market watchers had been expecting the rating to fall to 56% good to excellent yesterday. USDA’s forecasts indicate that while heat stress is a problem for some parts of the country, some of the losses could be offset by great growing conditions elsewhere in the Corn Belt.

Crop development is slowly catching up with the five-year average benchmark even amid pockets of heat stress. Through Sunday, 62% of the crop had reached the doughing phase, up 17% from the previous week and just 1% ahead of the five-year average. Similarly, denting progress reached 16% complete as of August 14, just fractions of a percentage point behind the five-year benchmark.

Soybeans

Soybean prices fell $0.11-$0.19/bushel overnight, with new crop futures dipping below the pivotal $14/bushel benchmark during the overnight trading session. Easing weather concerns amid moderate temperatures across the Heartland today were the biggest driver in the selloff, though the soy market was also dealing with similar risks that the corn market was also facing this morning, especially regarding diplomatic relations between the U.S. and China.

"Additional moisture will be needed, but cooler weather to follow the rain will help conserve the moisture and support better crop development," Terry Reilly, senior analyst with Futures International in Chicago, told Reuters overnight.

The National Oilseed Processors’ Association released its monthly crush estimate for July 2022 yesterday and found soy crush volumes for the month to lag slightly behind average pre-report guesses as crushing rates slow amid dwindling supply volumes while the 2021/22 soybean marketing edges to a close.

NOPA forecasts that 170.2 million bushels of soybeans were processed in July 2022. That marks a 3% increase from the previous month’s crush and blew year ago crush volumes out of the water by a margin of 10%. Pre-report trade estimates had ranged between 168.5 million – 177 million bushels with an average guess of 171.5 million bushels.

Soybean crush volumes tend to taper off late in the marketing year as countrywide supplies begin to dry up ahead of the new crop’s harvest, so yesterday’s report didn’t generate a lot of market momentum. May through July 2022 crush rates are trending 6% higher than the same time a year ago, suggesting that an unseasonal uptick in exports is likely keeping basis offerings at soybean crush facilities competitive.

Expect to see more plants shut down for maintenance during the rest of this month. With a larger U.S. soybean crop expected this fall, soybean processors may begin to price their raw materials purchases more strategically – especially if diplomatic relations with China cannot be upheld in the coming months.

Soybean conditions as reported in yesterday’s Crop Progress report from USDA dropped another percentage point through the week ending August 14 to land at 58% good to excellent. The reading was in line with analyst estimates leading up to the report’s release yesterday afternoon.

About 26% of the crop has already set pods, up 12% from a week ago and 3% behind the five-year average. Surprisingly moderate temperatures this week will likely help stave off more severe heat stress for the soybean crop currently in its peak reproductive phase, especially in areas that were more susceptible to drought coming into August.

Wheat

A stronger dollar thwarted wheat prices overnight, dropping U.S. wheat prices by $0.09-$0.12/bushel at last glance. Reports of a larger Russian wheat crop fueled the losses, as well as accelerated shipping paces out of Ukraine.

Spring wheat conditions were reported by USDA as better than anticipated by the trade after a week of hot and dry weather in the Northern Plains. Through Sunday, 64% of the U.S. spring wheat crop was reported to be in good to excellent condition. Market analysts had been expecting that figure to come in at 63% in yesterday’s Crop Progress report.

Spring wheat harvest is ramping up in the Northern U.S., according to U.S. Wheat Associate’s latest Harvest Report. Yesterday’s Crop Progress report found 16% of the total U.S. spring wheat crop harvested as of Sunday, down from the five-year average of 31% for the same reporting period.

But harvest progress is ramping up in South Dakota, where 54% of the hard red spring wheat crop had been combined by late last week and “excellent protein levels” had been reported. Harvest progress was also accelerating in Montana. Some test cutting had been performed in Minnesota and North Dakota, but the early season delays will likely keep harvest activity from peaking for another two to three weeks.

Durum crops in North Dakota are still a couple weeks away from test cuttings, though last week’s heat wave helped coax along faster crop development. Montana’s durum crop was 9% harvested as of late last week.

Winter wheat harvest is largely wrapping up. USDA reported that 90% of the crop was harvested as of Sunday – still a few points behind the five-year average and two points behind pre-report trade estimates. Hard red winter harvest is officially complete from Texas to South Dakota. “Industry sources report Montana and PNW states range from 25% to 71% complete,” U.S. Wheat Associates shared in their latest report.

Weather

It will be another day of mostly moderate temperatures across the Heartland, according to NOAA’s short-range forecasts. Some heat is expected in western parts of North and South Dakota as well as the Southern Plains, though temperatures will be hard pressed to reach the 90s elsewhere in the Corn Belt.

Showers are forecast today in a band stretching from the Central Rockies to Missouri that is likely to edge lower into the Southern Plains as the day progresses. A chance of showers and thunderstorms are also forecast today in Northern Minnesota and the Red River Valley. Both systems are forecast to drop up to two inches over the next 24 hours, which will benefit crop development across the Heartland.

Plus, NOAA’s 6- to 10-day and 8- to 14-day forecasts updated yesterday are trending cooler for most of the Heartland by early next week. The Upper Midwest is trending drier and warmer during that time, but it could be just outside the narrow window for peak soybean reproductive activity.

Weather & water economics:

If you’ve been following this newsletter this year, you’ve likely been hanging on the edge of your seat waiting for updates about my lawn. Here’s the latest:

We finished installing our irrigation system in early July. My flowers and herbs are blooming in style thanks to the drip lines we added onto the irrigation system and our tomatoes – also thriving with the drip line system – are about ready to be harvested!

After we returned from our delayed honeymoon in late July, we started regrading the lawn so that it is more functional. Translation – our lawn was weirdly sloped and had random holes in it, so we adjusted the grade. Now we have more flat/useable space for a wiffle ball diamond/volleyball court/badminton court/other activities.

We finally finished grading over the weekend, so I laid down Bug B-gon to get rid of some of the ants that have been enjoying the open dirt field that our backyard has become. We have some cooler temperatures coming up, so we are gearing up to do some fall grass seeding in the coming weeks.

I spent the weekend calculating out herbicide, bio-stimulant, and fertilizer ratios and seed spreading rates (thank you to The Lawn Care Nut’s YouTube channel for the guidance!) so that we can start growing grass next weekend. Stay tuned to future newsletters for all the details about my chemical program – I can talk for DAYS about it!

No sprinkler lines or heads were damaged in the grading process, which is a testament to my husband, Chris’s, impressive yard management/skid steer/earthwork skills!

Luckily, we are not under any water restrictions right now and have good rain prospects ahead of us. We also have received favorable rain amounts over the past couple months that have helped stave off extreme drought conditions. It was a factor we seriously considered before working on growing grass earlier in the year.

And our consideration was not in atypical. Water economics are a serious issue here in Colorado and are becoming an increasingly significant issue for agriculture producers to the west of the Mississippi River. The team at Agricultural Economic Insights has just published a new podcast about the history of water rights and allocation in the West that I cannot recommend enough to farmers. Water is increasingly a scarce resource and how we handle it going forward will have significant impacts on farming as well as economic growth.

Financials

Oil prices are on track to notch a third consecutive day of losses amid ongoing concerns about a global economic slowdown. The S&P 500 dropped 0.13% overnight to $4,293.00 on similar sentiments – slowing economic growth in China and weakening manufacturing output as reported yesterday continued to loom large over the equities market this morning.

Retailer giants Walmart, Target, and Home Depot are releasing quarterly earnings results throughout the week and will likely provide more clear insights about the toll inflation is taking on U.S. consumers. These insights are likely to cause market volatility through the remainder of the week.

“It’s going to be about inventory levels, margins and pricing power and if consumers are still spending on discretionary, or if all their wages are going to food and energy,” Esty Dwek, chief investment officer at FlowBank, told the Wall Street Journal this morning.

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

  • Does it pay to second guess USDA? Bryce Knorr looks at five ways to estimate 2022 corn and soybean yields.
  • Our team’s coverage of Friday’s August 2022 WASDE reports.
  • Roger Wright cautions farmers that old crop to new crop basis loss happens every year and should be regarded as farmer marketing enemy number one.
  • Commstock’s Matthew Kruse recommends considering adjusting grain marketing strategies to accommodate for historically high basis levels.
  • AgMarket.Net’s Matt Bennett forecasts where the market will place its focus after Friday’s USDA reports.
Morning Ag Commodity Prices - 8/16/2022
Contract Units High Low Last Net Change % Change
SEP '22 CORN $ / BSH  6.2825 6.185 6.22 -0.0475 -0.76%
DEC '22 CORN $ / BSH  6.295 6.1925 6.22 -0.0625 -0.99%
MAR '23 CORN $ / BSH  6.365 6.27 6.295 -0.0625 -0.98%
MAY '23 CORN $ / BSH  6.395 6.305 6.33 -0.0575 -0.90%
JUL '23 CORN $ / BSH  6.3775 6.29 6.31 -0.06 -0.94%
SEP '23 CORN $ / BSH  6.07 5.99 6.0125 -0.045 -0.74%
DEC '23 CORN $ / BSH  5.9825 5.895 5.92 -0.0425 -0.71%
AR2 '24 CORN $ / BSH  6.035 5.9875 5.9875 -0.05 -0.83%
MAY '24 CORN $ / BSH  0 #N/A 6.0725 0 0.00%
SEP '22 SOYBEANS $ / BSH  14.945 14.695 14.7575 -0.1825 -1.22%
NOV '22 SOYBEANS $ / BSH  14.1375 13.9425 14.02 -0.1025 -0.73%
JAN '23 SOYBEANS $ / BSH  14.2075 14.025 14.085 -0.105 -0.74%
MAR '23 SOYBEANS $ / BSH  14.2075 14.0425 14.1 -0.1 -0.70%
MAY '23 SOYBEANS $ / BSH  14.2225 14.065 14.12 -0.095 -0.67%
JUL '23 SOYBEANS $ / BSH  14.2225 14.0425 14.11 -0.0925 -0.65%
AUG '23 SOYBEANS $ / BSH  13.9875 #N/A 13.9925 0 0.00%
SEP '23 SOYBEANS $ / BSH  0 #N/A 13.575 0 0.00%
NOV '23 SOYBEANS $ / BSH  13.44 13.2825 13.375 -0.055 -0.41%
AN2 '24 SOYBEANS $ / BSH  11.5 #N/A 13.4625 0 0.00%
AR2 '24 SOYBEANS $ / BSH  11.5 #N/A 13.385 0 0.00%
SEP '22 SOYBEAN OIL  $ / LB 69.47 67.98 68.41 -0.53 -0.77%
OCT '22 SOYBEAN OIL  $ / LB 68.05 66.53 66.93 -0.51 -0.76%
SEP '22 SOY MEAL $ / TON 454.2 447 448.9 -3.3 -0.73%
OCT '22 SOY MEAL $ / TON 411.4 406.9 409 -1.6 -0.39%
DEC '22 SOY MEAL $ / TON 406.4 401.4 403.4 -1.7 -0.42%
JAN '23 SOY MEAL $ / TON 401.2 397.8 399.5 -1.4 -0.35%
MAR '23 SOY MEAL $ / TON 393.1 389.2 391 -1.3 -0.33%
SEP '22 Chicago SRW $ / BSH  8.105 7.8625 7.905 -0.1025 -1.28%
DEC '22 Chicago SRW $ / BSH  8.2725 8.0325 8.0675 -0.11 -1.35%
MAR '23 Chicago SRW $ / BSH  8.4075 8.175 8.2075 -0.1075 -1.29%
MAY '23 Chicago SRW $ / BSH  8.4975 8.265 8.29 -0.1175 -1.40%
JUL '23 Chicago SRW $ / BSH  8.48 8.26 8.2875 -0.11 -1.31%
SEP '23 Chicago SRW $ / BSH  8.505 8.295 8.295 -0.1325 -1.57%
DEC '23 Chicago SRW $ / BSH  8.5525 8.3425 8.3425 -0.125 -1.48%
SEP '22 Kansas City HRW $ / BSH  8.9275 8.6925 8.725 -0.1025 -1.16%
DEC '22 Kansas City HRW $ / BSH  8.9475 8.7175 8.7525 -0.0975 -1.10%
MAR '23 Kansas City HRW $ / BSH  8.965 8.7375 8.77 -0.1025 -1.16%
MAY '23 Kansas City HRW $ / BSH  8.9725 8.7725 8.7725 -0.1175 -1.32%
JUL '23 Kansas City HRW $ / BSH  8.87 8.695 8.72 -0.0975 -1.11%
SEP '23 Kansas City HRW $ / BSH  0 #N/A 8.7775 0 0.00%
DEC '23 Kansas City HRW $ / BSH  8.845 #N/A 8.785 0 0.00%
SEP '22 MLPS Spring Wheat $ / BSH  9.1825 8.9975 8.9975 -0.11 -1.21%
DEC '22 MLPS Spring Wheat $ / BSH  9.295 9.0925 9.12 -0.105 -1.14%
MAR '23 MLPS Spring Wheat $ / BSH  9.355 9.2275 9.255 -0.085 -0.91%
MAY '23 MLPS Spring Wheat $ / BSH  9.4675 9.315 9.34 -0.0775 -0.82%
JUL '23 MLPS Spring Wheat $ / BSH  9.4825 #N/A 9.445 0 0.00%
SEP '23 MLPS Spring Wheat $ / BSH  9.25 9.1775 9.1775 -0.0575 -0.62%
DEC '23 MLPS Spring Wheat $ / BSH  0 #N/A 9.31 0 0.00%
SEP '21 ICE Dollar Index $ 106.84 106.33 106.82 0.387 0.36%
 SE '21 Light Crude $ / BBL  90.27 87.82 90.18 0.77 0.86%
 OC '21 Light Crude $ / BBL  89.68 87.3 89.6 0.75 0.84%
SEP '22 ULS Diesel $ /U GAL 3.496 3.4276 3.4937 0.0534 1.55%
OCT '22 ULS Diesel $ /U GAL 3.468 3.4054 3.468 0.0528 1.55%
SEP '22 Gasoline $ /U GAL 2.9609 2.9168 2.9531 0.0014 0.05%
OCT '22 Gasoline $ /U GAL 2.7151 2.6751 2.7105 0.0004 0.01%
AUG '22 Feeder Cattle $ / CWT 0 #N/A 179.925 0 0.00%
SEP '22 Feeder Cattle $ / CWT 0 #N/A 183 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 139.75 0 0.00%
CT2 '21 Live Cattle $ / CWT 0 #N/A 143.8 0 0.00%
OCT '22 Live Hogs $ / CWT 0 #N/A 100.575 0 0.00%
DEC '22 Live Hogs $ / CWT 0 #N/A 90.85 0 0.00%
AUG '22 Class III Milk $ / CWT 0 #N/A 20.16 0 0.00%
SEP '22 Class III Milk $ / CWT 20.4 20.35 20.4 0.05 0.25%
OCT '22 Class III Milk $ / CWT 20.5 #N/A 20.79 0 0.00%

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