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Grains claw back gains on bargain buying

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Morning report: Wheat sees biggest gains. Plus – updates on South American planting progress. (Comments are updated by 7:30 a.m. Central Time.)

  • Corn up 1-3 cents
  • Soybeans up 7-11 cents; Soymeal up $1.60/ton; Soyoil up $0.37/lb
  • Chicago wheat up 14-16 cents; Kansas City wheat up 13-14 cents; Minneapolis wheat up 12-14 cents

*Prices as of 6:55am CDT.

Feedback from the Field updates! Are you combining yet?! Click this link to take the survey and share updates about your farm’s harvest 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!

I published an updated Feedback from the Field column to our site last week and am working on an updated one to be published today. So far, few of our respondents have crops that are ready for harvest, but with warm and dry weather on the horizon, that is not likely to remain the trend. Check out the latest article for all of the top market insights!

Corn

Slower than expected early harvesting speeds lifted corn prices $0.01-$0.03/bushel higher during the overnight trading session. A bargain buying spree in the broad financial markets also had some slight spillover into the grain and oilseed complexes this morning.

"Agricultural markets have faced pressure in the last few sessions due to concerns over global recession," a Singapore-based trader told Reuters. "But we have a slight strength today as the U.S. harvest is slow."

Corn harvest remains in the early stages across the top producing corn states as of September 25, according to USDA’s latest Crop Progress report released yesterday afternoon. Through the week ending Sunday, 12% of the U.S. corn crop had been harvested.

That figure trended 2% lower than the five-year average benchmark, though it was a 5% increase from the previous week’s harvest reading. Market watchers had been expecting more progress to be made last week, as the analyst estimates ranged between 11%-16% complete with an average guess of 13% calculated ahead of the report’s release.

Crop maturation rates continue to linger just a few points behind historical averages due to the cold and slow start to the growing season as well as some heat stress in the middle of the cycle as well. As of September 25, 92% of the crop had dented, 2% below the five-year average. About 58% of the crop had reached maturity as of Sunday, just 3 points behind historical benchmarks for the same reporting period.

USDA kept corn condition ratings at 52% good to excellent for a second straight week, in line with analyst expectations. As more of the crop reaches maturity and even harvest, the condition ratings for both corn and soybeans are likely to have less of an impact on price activity through at least the next two to three weeks.

Soybeans

Soybeans gained $0.07-$0.11/bushel overnight on slower than expected harvest speeds. Some bargain buying was likely also at play after soybean prices flirted with a two-week low in yesterday’s trading session. Gains in the financial markets also helped support soybean gains this morning.

Soybean harvest is still gaining momentum, according to yesterday’s Crop Progress report from USDA. As of September 25, 8% of the anticipated 2022 U.S. soybean crop had been harvested, up from 3% the previous week.

Trade guesses from market analysts largely fell short of USDA progress rates this week, with the average trade guess of 11% complete missing USDA’s mark. Estimates ranged between 7%-13% complete during the earliest days of soybean harvest, as market watchers appeared to have overestimated early harvest progress across the Midwest last week.

As of September 25, 63% of the crop had dropped leaves, 2% behind the five-year average for the same reporting period. Similar to corn, soybean conditions held steady at 55% good to excellent for a second straight week. The rating was consistent with average analyst guesses for the week.

Planting season is heating up in South America. Brazilian agricultural consultancy Safras & Mercado projects that 2% of Brazil’s anticipated 2022/23 soybean acreage, totaling 105.9 million acres, has already been planted. That’s over twice as fast as the same planting paces a year ago as well as five-year average benchmarks.

Safras calculates that planting progress is most advanced in the southern Brazilian state of Parana, where 9% of the crop was in the ground as of last Friday. Progress for top producing state Mato Grosso was held to 2% complete. The 2% completion rate also held true for other prominent soy producing states of Mato Grosso do Sul and Sao Paulo.

So far, clear skies and dry weather have allowed for faster sowing rates in Brazil. October is expected to bring cooler weather to Mato Grosso, with more rains expected for the northern three-quarters of the country. However, areas in Southern Brazil plagued by drought last year, including Rio Grande do Sul, could face continued dryness during that time. Both scenarios pose risks to the young crop if the weather events err to extreme conditions.

Brazil is expected to plant its largest soybean acreage on record this year, and subsequently harvest a record crop – if Mother Nature cooperates. The Brazilian government expects the country will produce 5.51 billion bushels (150MMT) of soybeans by next spring. USDA currently has the crop forecast at 5.47 billion bushels.

This year’s Brazilian crop is important because global stocks are so tight. Global soybean supplies, as measured by the stocks-to-use ratio, are expected to grow 0.8% by the end of the 2022/23 marketing year to 18.1%. But this global metric continues to linger well below the previous high of 23.1% set at the end of the 2018/19 marketing campaign, representing only 6% supply growth between the two periods.

For perspective, after spending 2014-2020 at above trendline volumes (relative to the past 20ish years), global soybean supplies have fallen short of trendline growth projections the in past two growing cycles. Global soybean usage rates have been outpacing production estimates by an increasingly wide margin over the past decade, offering farmers lucrative returns as supplies trend tighter.

092722 global soybean supplies.png

After last year’s La Niña-riddled crop shortfalls, a bumper soybean crop this year in Brazil would go a long way to ease tight global supply pressures. However, a third consecutive La Niña weather pattern expected this fall could upend those supply projections and make for another year of tight global soybean supplies.

"If this were a race, farmers are starting in last position with trouble in their engine," Cristian Russo, the Rosario Grains Exchange's head agronomist, told Reuters. "The situation is extremely complex, the most complex season we've had this century so far."

That means soybean prices will be especially volatile as news about South American planting progress and crop development rolls in over the next few months. And any potential damage to South American soybeans could disrupt 2023 planting intentions for U.S. farmers, who are currently going all in on corn acres next spring.

Brazil is the world’s largest soybean producer and exporter, which is a key reason why its crop news has such a significant impact on global grain and oilseed prices.

Wheat

Wheat prices were the most significant benefactor of the financial markets taking a breather from the constant recession fears that continue to pervade the broader global financial markets. The dollar eased back from yesterday’s new 20-year high, increasing the attractiveness of U.S. wheat on the global market. Reports of a larger than expected Russian spring wheat crop were largely offset by lingering concerns about Black Sea trade flow viability.

Spring wheat harvest is rapidly coming to close across the Northern Plains, according to yesterday’s Crop Progress report from USDA. Markets were expecting a 97% completion rate for spring wheat harvest progress, but USDA’s readings came up 1% short at 96% complete as early season delays continue to plague growers in North Dakota and Minnesota.

But the quality of this year’s spring wheat crop exceeds last year’s, based on recent harvest reports from U.S. Wheat Associates. The group’s sources have found the crop to be of “good quality overall,” reporting “above average yields with pockets of low yielding fields in drought areas.”

Dry soils in the Plains are making quick progress for 2023 winter wheat sowing. As of September 25, 31% of next year’s winter wheat crop had been planted, up 10% from a week ago and 1% higher than the five-year average benchmark.

But once again, USDA’s readings fell short of analyst expectations. Markets had been expecting 33% of the crop to have been planted by last Sunday. USDA also reported emergence rates at 9% for the week, 3% ahead of the five-year average.

Russia & Ukraine

Farmers will not be exempt from Russia’s new military conscription, according to President Vladimir Putin, which will take some growers away from their fields during peak harvest activities.

"I would also like to address regional heads and the heads of agricultural enterprises. As part of the partial mobilisation, agricultural workers are also being drafted. Their families must be supported. I ask you to pay special attention to this issue," Putin said in a televised meeting overnight.

This is Russia’s first draft since World War II. Putin called upon 300,000 Russian reservists to serve in Ukraine. Drafts have historically proved to be devastating for Russians soldiers and citizens alike, so there is growing unrest in Russia surrounding Putin’s latest proclamation.

As the world braces for Putin’s retaliation following recent losses in Ukraine, Ukraine is pleading with the European Union to bolster the safety and permanency of emergency food routes out of the country.

“Ukraine's agriculture minister Mykola Solsky told EU counterparts and the European Commission his country needed financial support to reduce its reliance on Black Sea exports that Russia had blocked and could hinder again,” Philip Blenkinsop reported for Reuters overnight following conference proceedings in Brussels.

"We think these corridors should become stable and permanent," Solsky emphasized. “To have an alternative route is a must, routes through friendly democratic countries in order to continue business."

Weather

Clear skies are likely to pave the way for favorable harvest speeds this week, according to NOAA’s short-range forecasts. Mostly sunny skies are likely to persist through at least the end of the week.

The 6-10-day NOAA outlook continues to forecast high heat and excessive dryness for most of the Heartland through the end of September. The 8-14-day NOAA outlook is also trending warmer, much like the 6-10-day forecast.

The beginning of October is likely to be drier across the country, which will aid harvesting progress, which is likely to hit its peak activity over the next couple weeks. The 8-14-day forecast is beginning to show increased chances of moisture for the Central Rockies (which is great news for my new little grass seedlings!).

Financials

The S&P 500 hit a new low for 2022 during yesterday’s trading session amid growing concerns about a looming global recession. The Dow fell into a bear market yesterday on the sentiments. But bargain buyers swooped in overnight to lift both indices over 1% higher this morning. At last glance, the S&P 500 traded 1.44% to $3,722.75 on the buying spree.

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

  • Bryce Knorr explains how rising interest rates increase storage costs and market risks.
  • Harvest is ramping up across the Heartland! Our upcoming Farm Progress 365 session has the latest insights to help farmers maximize yields and time sales effectively – join online from September 27 – September 29!
  • Commstock’s Matthew Kruse asks, “is $8/bushel corn high enough for you to sell?”
  • Davon Cook provides two new ways to think about next-gen farmers.
Morning Ag Commodity Prices - 9/27/2022
Contract Units High Low Last Net Change % Change
DEC '22 CORN $ / BSH  6.7025 6.6625 6.695 0.0325 0.49%
MAR '23 CORN $ / BSH  6.7475 6.7075 6.7425 0.035 0.52%
MAY '23 CORN $ / BSH  6.7525 6.7125 6.7425 0.0275 0.41%
JUL '23 CORN $ / BSH  6.69 6.6525 6.68 0.0275 0.41%
SEP '23 CORN $ / BSH  6.2375 6.215 6.23 0.015 0.24%
DEC '23 CORN $ / BSH  6.14 6.1025 6.1275 0.0175 0.29%
AR2 '24 CORN $ / BSH  6.205 6.175 6.1925 0.015 0.24%
AY2 '24 CORN $ / BSH  6.2175 6.2125 6.2175 0.0175 0.28%
JUL '24 CORN $ / BSH  6.1725 6.17 6.1725 0.0025 0.04%
NOV '22 SOYBEANS $ / BSH  14.245 14.1025 14.215 0.1025 0.73%
JAN '23 SOYBEANS $ / BSH  14.285 14.155 14.255 0.0925 0.65%
MAR '23 SOYBEANS $ / BSH  14.31 14.1775 14.2825 0.095 0.67%
MAY '23 SOYBEANS $ / BSH  14.3375 14.21 14.3075 0.09 0.63%
JUL '23 SOYBEANS $ / BSH  14.3225 14.21 14.2975 0.0875 0.62%
AUG '23 SOYBEANS $ / BSH  14.1125 14.0375 14.1125 0.08 0.57%
SEP '23 SOYBEANS $ / BSH  13.735 13.65 13.735 0.0875 0.64%
NOV '23 SOYBEANS $ / BSH  13.59 13.4825 13.565 0.07 0.52%
AN2 '24 SOYBEANS $ / BSH  11.5 #N/A 13.5175 0 0.00%
AR2 '24 SOYBEANS $ / BSH  11.5 #N/A 13.45 0 0.00%
AY2 '24 SOYBEANS $ / BSH  13.49 #N/A 13.415 0 0.00%
OCT '22 SOYBEAN OIL  $ / LB 67.01 66 66.4 0.29 0.44%
DEC '22 SOYBEAN OIL  $ / LB 63.32 62.31 62.85 0.39 0.62%
OCT '22 SOY MEAL $ / TON 435 431.6 434 1.4 0.32%
DEC '22 SOY MEAL $ / TON 420.5 417.4 419.8 2.3 0.55%
JAN '23 SOY MEAL $ / TON 415 412.3 414.4 1.8 0.44%
MAR '23 SOY MEAL $ / TON 408.4 405.9 407.5 1.2 0.30%
MAY '23 SOY MEAL $ / TON 404.7 402.7 404 1.2 0.30%
DEC '22 Chicago SRW $ / BSH  8.7525 8.57 8.73 0.15 1.75%
MAR '23 Chicago SRW $ / BSH  8.885 8.705 8.8625 0.15 1.72%
MAY '23 Chicago SRW $ / BSH  8.945 8.7875 8.92 0.1425 1.62%
JUL '23 Chicago SRW $ / BSH  8.8075 8.6325 8.8025 0.1475 1.70%
SEP '23 Chicago SRW $ / BSH  8.7775 8.6375 8.7775 0.1425 1.65%
DEC '23 Chicago SRW $ / BSH  8.7975 8.7225 8.7975 0.1275 1.47%
AR2 '24 Chicago SRW $ / BSH  8.75 8.6925 8.75 0.1225 1.42%
DEC '22 Kansas City HRW $ / BSH  9.46 9.2825 9.435 0.14 1.51%
MAR '23 Kansas City HRW $ / BSH  9.42 9.2825 9.395 0.135 1.46%
MAY '23 Kansas City HRW $ / BSH  9.3975 9.26 9.3775 0.14 1.52%
JUL '23 Kansas City HRW $ / BSH  9.245 9.11 9.245 0.145 1.59%
SEP '23 Kansas City HRW $ / BSH  9.1575 9.1575 9.1575 0.105 1.16%
DEC '23 Kansas City HRW $ / BSH  9.175 9.175 9.175 0.09 0.99%
AR2 '24 Kansas City HRW $ / BSH  0 #N/A 9.0425 0 0.00%
DEC '22 MLPS Spring Wheat $ / BSH  9.445 9.3125 9.445 0.1325 1.42%
MAR '23 MLPS Spring Wheat $ / BSH  9.49 9.38 9.49 0.1125 1.20%
MAY '23 MLPS Spring Wheat $ / BSH  9.435 9.435 9.435 0.0175 0.19%
JUL '23 MLPS Spring Wheat $ / BSH  9.3875 9.3875 9.3875 0.0175 0.19%
SEP '23 MLPS Spring Wheat $ / BSH  9.12 #N/A 9.0675 0 0.00%
DEC '23 MLPS Spring Wheat $ / BSH  9.005 #N/A 8.98 0 0.00%
AR2 '24 MLPS Spring Wheat $ / BSH  0 #N/A 8.5825 0 0.00%
DEC '21 ICE Dollar Index $ 113.875 113.26 113.48 -0.54 -0.47%
 NO '21 Light Crude $ / BBL  78.39 76.42 78.01 1.3 1.69%
 DE '21 Light Crude $ / BBL  77.81 75.88 77.44 1.26 1.65%
OCT '22 ULS Diesel $ /U GAL 3.2234 3.124 3.2234 0.0943 3.01%
NOV '22 ULS Diesel $ /U GAL 3.1365 3.0408 3.1355 0.0891 2.92%
OCT '22 Gasoline $ /U GAL 2.4423 2.3847 2.4211 0.0369 1.55%
NOV '22 Gasoline $ /U GAL 2.346 2.2892 2.3302 0.0414 1.81%
SEP '22 Feeder Cattle $ / CWT 0 #N/A 176.875 0 0.00%
OCT '22 Feeder Cattle $ / CWT 0 #N/A 177.075 0 0.00%
CT2 '21 Live Cattle $ / CWT 0 #N/A 143.475 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 147.35 0 0.00%
OCT '22 Live Hogs $ / CWT 0 #N/A 90.375 0 0.00%
DEC '22 Live Hogs $ / CWT 0 #N/A 79.4 0 0.00%
SEP '22 Class III Milk $ / CWT 19.87 #N/A 19.87 0 0.00%
OCT '22 Class III Milk $ / CWT 21.01 20.88 21.01 0.19 0.91%
NOV '22 Class III Milk $ / CWT 20.56 20.46 20.56 0.26 1.28%

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