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Soy’s hot streak ends on sluggish Chinese GDP data

morning market recap.jpg
Morning report: Brazilian rains also weigh heavily on soy. Plus, broad macroeconomic concerns take a bite out of corn, wheat prices. (Comments are updated by 7:30 a.m. Central Time.)

*Prices as of 6:50 am CST.

Good morning! I will be presenting at the Farm Futures Business Summit on Thursday, January 19! I will announce 2023 acreage estimates from our January 2023 Farm Futures survey and explore crop budget implications for falling fertilizer prices that could shake up 2023 rotations.

If you’re in the Iowa City, IA area, come stop by and say hi! If you’re snowed in, the Summit has a virtual option, and my presentation will be broadcast at 3pm CST on Thursday. I hope to see you in person or virtually on Thursday!

Corn

Corn prices fell $0.03-$0.05/bushel this morning as nearby futures hovered between $6.60-$6.70/bushel. Much of the weakness is stemming from the expectation of upcoming rains in drought-riddled Argentina as well as dry areas of Southern Brazil, though lingering broad macroeconomic concerns also pulled the complex lower this morning.

"Markets are adjusting to better Argentina forecasts and a softer macro environment after the long holiday weekend," Peak Trading Research said in a note, as reported by Reuters.

Soybeans

Soybean prices fell $0.07-$0.09/bushel this morning on favorable rain forecasts for Brazil and Argentina. Nearby futures prices ranged between $15.17-$15.20/bushel on the sentiment.

The favorable growth prospects in South America coincide with slowing U.S. export paces as more of the freshly harvested Brazilian crop begins to come to the market. Weaker than expected 2022 GDP growth reported out of China overnight also took a bearish bite out of the soy complex this morning.

Brazil’s southern regions, which have endured abnormally dry weather during this growing season, are forecast to receive moderate precipitation volumes over the next two weeks. That forecast bodes well for late-season soybean growth and increases the likelihood that Brazil will harvest a record-setting crop this year.

The National Oilseed Processors Association (NOPA) will release its December 2022 soybean crush estimate today. The late December 2022 cold snap is expected to send this month’s estimate lower than the same time a year ago after cold weather during the holidays slowed production and transport across the Midwest and Plains.

Analysts expect that between 174.38 million – 188 million bushels were crushed by NOPA members in December 2022, with an average guess of 182.907 million bushels. If the trade estimates are to be believed, that would be the smallest December crush in the past three years.

Crush volumes are still expected to rise from the previous month, when 179.184 million bushels of soybeans were processed. Rapid processing rates offered farmers a lucrative alternative on the cash market this fall when export markets ground to a halt due to low water issues on the Mississippi. But those cash premiums offered by processors are beginning to weaken, especially across the Eastern Corn Belt.

Wheat

Wheat prices tumbled $0.09-$0.14/bushel this morning as prospects for the U.S. export market continue to dim. Snow expected across the U.S. Plains in the coming days is likely to give U.S. winter wheat crop conditions a much-needed boost after enduring over a year’s worth of drought. Overarching macroeconomic concerns also weighed on the wheat complex this morning.

A tender issued by Algeria (a leading global wheat importer) overnight was being closely watched by traders this morning in hopes of signs of export market competition between Russia and Ukraine.

Weather

A winter storm system building in the Central Rockies will push east into the Central Plains today, according to NOAA’s short-term forecasts. The system will also push a wintery mix and rain into the Southern Plains as well. That system is expected to bring up to a foot of snow to areas of the Central Plains and Upper Midwest in the next couple days.

The Great Lakes region will likely continue to see a wintery precipitation mix today. As the system moves into the East Coast, warm temperatures will likely convert some of that winter mix into rain.

NOAA’s 6-10-day forecasts are now trending cooler than usual for the entire continental U.S. west of the Rocky Mountains through early next week, with the greatest chances for warmth settling over the Eastern Corn Belt and New England. Chances for precipitation during that time are leaning above average for the entire country to the east of the Sierra Nevada mountains.

The cold temperatures will intensify in the 8-10-day outlook through late next week, especially in the Western U.S. Chances for moisture remain above average for the Plains and Eastern Corn Belt during that time as well, with the highest odds for moisture forecast in the Southeast.

Financials

China reported one of its slowest GDP growth rates in nearly 50 years overnight (only 3% GDP growth in 2022), which sent S&P 500 futures down 0.16% to $4,012.50 this morning. Additional weakness was also due to worries about bank earnings this week after Friday’s releases came in mixed.

Here’s what else I’m reading this morning on FarmFutures.com:

  • Our team’s coverage of the January 2023 USDA reports and my Farm Progress 365 webinar recapping the reports!
  • Naomi Blohm asks the question on everyone’s mind – when will cattle prices reach their top?
  • My latest E-corn-omics column points out several demand, input, and timing considerations that farmers may want to factor in to their 2023 acreage choices.
  • Pinion’s Davon Cook encourages farmers to address difficult topics related to family business strategies sooner rather than later.
  • Executive editor Mike Wilson interviews a Ukrainian ag economist to add up the devastation the Russian invasion has inflicted on Ukrainian agriculture.
  • Come to Farm Futures’ Business Summit 2023 this week to hear speakers including Howard Buffett, David Kohl, Jolene Brown, and Rob Saik (and your favorite morning newsletter author – me!) to learn how to run your business more effectively.
Morning Ag Commodity Prices - 1/17/2023
Contract Units High Low Last Net Change % Change
MAR '23 CORN $ / BSH  6.725 6.6875 6.7025 -0.0475 -0.70%
MAY '23 CORN $ / BSH  6.71 6.675 6.69 -0.0475 -0.71%
JUL '23 CORN $ / BSH  6.615 6.585 6.595 -0.0425 -0.64%
SEP '23 CORN $ / BSH  6.1225 6.1 6.1 -0.0425 -0.69%
DEC '23 CORN $ / BSH  5.9625 5.94 5.95 -0.035 -0.58%
AR2 '24 CORN $ / BSH  6.0325 6.0125 6.0175 -0.035 -0.58%
AY2 '24 CORN $ / BSH  6.0525 #N/A 6.08 0 0.00%
UL2 '24 CORN $ / BSH  6.0325 #N/A 6.0575 0 0.00%
SEP '24 CORN $ / BSH  0 #N/A 5.6325 0 0.00%
MAR '23 SOYBEANS $ / BSH  15.21 15.13 15.18 -0.0975 -0.64%
MAY '23 SOYBEANS $ / BSH  15.2025 15.135 15.18 -0.0925 -0.61%
JUL '23 SOYBEANS $ / BSH  15.1825 15.12 15.1575 -0.0925 -0.61%
AUG '23 SOYBEANS $ / BSH  14.8275 14.7775 14.8225 -0.075 -0.50%
SEP '23 SOYBEANS $ / BSH  14.18 14.1275 14.15 -0.1025 -0.72%
NOV '23 SOYBEANS $ / BSH  13.8725 13.805 13.8425 -0.0875 -0.63%
AN2 '24 SOYBEANS $ / BSH  13.8825 13.825 13.865 -0.0825 -0.59%
AR2 '24 SOYBEANS $ / BSH  13.725 13.72 13.725 -0.0875 -0.63%
AY2 '24 SOYBEANS $ / BSH  13.6625 #N/A 13.74 0 0.00%
UL2 '24 SOYBEANS $ / BSH  13.6925 13.655 13.6575 -0.0675 -0.49%
UG2 '24 SOYBEANS $ / BSH  0 #N/A 13.58 0 0.00%
MAR '23 SOYBEAN OIL  $ / LB 63.29 62.47 63.22 0.16 0.25%
MAY '23 SOYBEAN OIL  $ / LB 63.04 62.38 62.96 0.06 0.10%
MAR '23 SOY MEAL $ / TON 473.8 469.1 470.2 -6.1 -1.28%
MAY '23 SOY MEAL $ / TON 460.1 456.1 457.2 -5 -1.08%
JUL '23 SOY MEAL $ / TON 453.2 449.8 450.8 -4.3 -0.94%
AUG '23 SOY MEAL $ / TON 440.5 438.6 440.5 -2.5 -0.56%
SEP '23 SOY MEAL $ / TON 426.1 423.3 425.4 -1.6 -0.37%
MAR '23 Chicago SRW $ / BSH  7.4325 7.2875 7.33 -0.1075 -1.45%
MAY '23 Chicago SRW $ / BSH  7.5125 7.375 7.415 -0.105 -1.40%
JUL '23 Chicago SRW $ / BSH  7.53 7.3925 7.4325 -0.105 -1.39%
SEP '23 Chicago SRW $ / BSH  7.6 7.47 7.4875 -0.12 -1.58%
DEC '23 Chicago SRW $ / BSH  7.745 7.6175 7.65 -0.0975 -1.26%
AR2 '24 Chicago SRW $ / BSH  7.8125 7.735 7.735 -0.105 -1.34%
AY2 '24 Chicago SRW $ / BSH  7.82 7.73 7.73 -0.1275 -1.62%
MAR '23 Kansas City HRW $ / BSH  8.4375 8.28 8.3325 -0.105 -1.24%
MAY '23 Kansas City HRW $ / BSH  8.395 8.2575 8.285 -0.1175 -1.40%
JUL '23 Kansas City HRW $ / BSH  8.335 8.2125 8.235 -0.115 -1.38%
SEP '23 Kansas City HRW $ / BSH  8.285 8.26 8.26 -0.11 -1.31%
DEC '23 Kansas City HRW $ / BSH  8.375 8.2875 8.29 -0.1425 -1.69%
AR2 '24 Kansas City HRW $ / BSH  8.405 #N/A 8.4375 0 0.00%
AY2 '24 Kansas City HRW $ / BSH  8.29 #N/A 8.3725 0 0.00%
MAR '23 MLPS Spring Wheat $ / BSH  9.0925 8.9725 8.9975 -0.125 -1.37%
MAY '23 MLPS Spring Wheat $ / BSH  9.025 8.92 8.92 -0.14 -1.55%
JUL '23 MLPS Spring Wheat $ / BSH  8.98 8.9225 8.9225 -0.085 -0.94%
SEP '23 MLPS Spring Wheat $ / BSH  8.84 8.7125 8.7125 -0.11 -1.25%
DEC '23 MLPS Spring Wheat $ / BSH  8.8 8.8 8.8 -0.0725 -0.82%
AR2 '24 MLPS Spring Wheat $ / BSH  0 #N/A 8.905 0 0.00%
AY2 '24 MLPS Spring Wheat $ / BSH  0 #N/A 8.8 0 0.00%
MAR '21 ICE Dollar Index $ 102.325 101.87 101.89 -0.056 -0.05%
 FE '21 Light Crude $ / BBL  80.49 78.53 80.45 0.59 0.74%
 MA '21 Light Crude $ / BBL  80.76 78.8 80.72 0.61 0.76%
FEB '23 ULS Diesel $ /U GAL 3.2824 3.2437 3.254 -0.0019 -0.06%
MAR '23 ULS Diesel $ /U GAL 3.1897 3.15 3.1708 0.0059 0.19%
FEB '23 Gasoline $ /U GAL 2.5446 2.4919 2.5414 0.0086 0.34%
MAR '23 Gasoline $ /U GAL 2.5519 2.4977 2.5481 0.0088 0.35%
JAN '23 Feeder Cattle $ / CWT 0 #N/A 181.25 0 0.00%
MAR '23 Feeder Cattle $ / CWT 0 #N/A 182.875 0 0.00%
 FE '21 Live Cattle $ / CWT 0 #N/A 157.725 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 160.9 0 0.00%
FEB '23 Live Hogs $ / CWT 0 #N/A 78.65 0 0.00%
APR '23 Live Hogs $ / CWT 0 #N/A 87.275 0 0.00%
JAN '23 Class III Milk $ / CWT 19.37 19.37 19.37 -0.09 -0.46%
FEB '23 Class III Milk $ / CWT 18.64 18.52 18.57 -0.02 -0.11%
MAR '23 Class III Milk $ / CWT 18.36 18.32 18.35 0.06 0.33%

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