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Weekly Commodity Market Update

Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.

This Week’s Topics:

  • Market recap
  • Corn, soybean production estimates drop
  • Chinese soybean stock changes
  • Wheat exports
  • Record soybean crush
  • Reports to watch

Market recap (Changes on week as of Monday’s close):

  • December 2023 corn up $.02 at $4.90
  • December 2024 corn up $.01 at $5.17
  • November 2023 soybeans up $.22 at $12.86
  • November 2024 soybeans up $.05 at $12.55
  • December soybean oil up 2.97 cents at 55.90 cents/lb
  • December soybean meal up at $390.20/short ton
  • December 2023 wheat up $.05 at $5.77
  • July 2024 wheat down $.06 at $6.34
  • November WTI Crude Oil up $1.10 at $85.70/barrel

Weekly Highlights

  • US crude oil stocks excluding the strategic petroleum reserve increased 427 million gallons on the week while gasoline, distillate, and ethanol stocks all declined.
  • Ethanol production declined just slightly week over week- down 2 million gallons to 295. However, US gasoline consumption was up nearly 7% during the first week over October. With the increase in use and the moderate decline in production ethanol stocks declined 15 million gallons.
  • It was a neutral week for US ag export sales. Corn sales were roughly half what they were the week prior but slightly above all expectations while soybeans also cleared rather low expectations. Soft red winter wheat export sales continue to support the wheat complex on global price competitiveness.
  • USDA cut both US corn and soybeans national average yields in October by 0.8 and 0.5 bushels respectively. For both, the decrease in production was either partially or fully offset with declines in demand categories.
  • The most surprising number in Thursday Supply and Demand Report came from the global soybean balance sheet where a drop in Chinese beginning stocks and an increase in expected feed use helped create a bullish global ending stocks picture.
  • Open interest in Chicago corn and soybean futures and options positions increased week over week. Producer and merchants doubled their short position of corn contracts while slightly selling soybean contracts.
  • Managed money traders bought back 46.7 thousand positions of Chicago corn to shrink their net short- this was someway surprising after daily estimates had estimated they would increase their net short.
  • USDA Ag Export Inspections were bullish for soybeans while bearish for corn. At nearly 74 million bushels, soybean exports were the highest since early January.
  • The National Oilseed Processors Association reported their members crushed 165.5 million bushels of soybeans in September- setting a new record for the month of September. Soybean oil stocks fell to its lowest level since December 2014.
  • Harvest production in the US moved along this week- corn was up 11% to 45% and soybean harvest was up 19% to 43%.

Weekly Commodity Market Update

Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.

This Week’s Topics:

  • Market recap
  • Crude oil price swings
  • USDA report preview
  • Corn ending stocks
  • U.S. export positioning
  • Reports to watch

 

Market recap (Changes on week as of Monday’s close):

  • December 2023 corn flat at $4.88
  • December 2024 corn down $.01 at $5.16
  • November 2023 soybeans down $.13 at $12.64
  • November 2024 soybeans down $.17 at $12.50
  • December soybean oil down 3.5 cents at 53.93 cents/lb
  • December soybean meal down flat at $374.60/short ton
  • December 2023 wheat up $.08 at $5.72
  • July 2024 wheat up $.09 at $6.40
  • November WTI Crude Oil down $2.64 at $84.60/barrelWeekly Highlights
  • It was announced last week that the Argentina Government will expected their “soy dollar” program through October 25
  • US Crude oil stocks minus the strategic petroleum reserve fell another 93 million gallons this week along with distillate stocks, while gasoline stocks were up 272 million gallons.
  • Ethanol production was flat at 297 million gallons produced on the week using an estimated 99.9 million bushels of corn.
  • It was a solid week for agricultural export sales last week with corn and soybeans at the top end of their respective expectations and highest weekly volumes since April and January, respectively.

Weakening Crop Prices and High Production Costs Weigh on Farmer Sentiment

Source: James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture

Click here to listen

Agricultural producers’ sentiment declined for the second month in a row during September as the Purdue University-CME Group Ag Economy Barometer fell 9 points to a reading of 106. Producers expressed concern about both their current situation as well as future prospects for their farms. The Current Conditions and Futures Expectations Indices both declined 10 points in September leaving the Current Conditions Index at a reading of 98 while the Future Expectations Index stood at 109. Weakening prices for major crops and ongoing concerns about high production costs and interest rates weighed on producers’ minds this month. September’s declines left all three indices below year-ago levels. This month’s Ag Economy Barometer survey was conducted from September 11-15, 2023.

Figure 1. Purdue/CME Group Ag Economy Barometer, October 2015-September 2023.
Figure 1. Purdue/CME Group Ag Economy Barometer, October 2015-September 2023.
Figure 2. Indices of Current Conditions and Future Expectations, October 2015-September 2023.

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Weekly Commodity Market Update

Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.

This Week’s Topics:

  • Market recap
  • U.S. grain stocks adjustments
  • U.S. harvest
  • Corn and soybean storage
  • Reports to watch

Market recap (Changes on week as of Monday’s close):

  • December 2023 corn up $.07 at $4.88
  • December 2024 corn up $.08 at $5.17
  • November 2023 soybeans down $.20 at $12.77
  • November 2024 soybeans up $.06 at $12.67
  • December soybean oil flat at 57.43 cents/lb
  • December soybean meal down $15.50 at $374.30/short ton
  • December 2023 wheat down $.25 at $5.64
  • July 2024 wheat down $.12 at $6.31
  • November WTI Crude Oil down $2.38 at $87.24/barrel

Weekly Highlights

  • For the most recent week of data- US crude oil stocks were down (-91 mil. gals) while US gasoline (+43.1 mil. gal.), Distillate (16.7 mil. gal.) and ethanol (16.7 mil. gal.) were all up.
  • Ethanol production rebounded to 297 million gallons produced on the week using an estimated 99.9 million bushels of corn.
  • US Ag Export sales were up for most commodities week over week including corn, soybeans, grain sorghum, and all wheats. US wheat sales were bullish coming in above pre-report estimates.
  • It was the third consecutive week producers and merchants decreased their net short in Chicago futures and options positions by more than 40%- this week 49%. Producers and merchants also reduced the net long in soybeans for the fourth consecutive week.
  • Managed money traders of Chicago commodities were mixed. They were net buyers of wheats and net sellers of corn and soybeans.
  • Weekly ag export inspections were down week over week for corn and wheat, but up week over week for soybeans and grain sorghum. All were within pre-report trade expectations.
  • US Grain stocks on September 1 were all within trade expectations but toward the top end for soybeans and below the average trade guess for corn. Both corn and soybean stocks were down from September 1, 2022.
  • The quarterly Hogs and Pigs report showed that there were 74.3 million hogs and pigs in the US- up slightly from last September.
  • Soybeans crushed for crude oil in August was 169 million bushels- down from 183 million in July, 175 million last August and pre-report expectations of 171.6 million bushels.
  • Corn crushed in August totaled 490 million bushels- below July 2023 but up 1% from August 2022. Corn for fuel alcohol at 443 million bushels, was down 3% from July but up 3% from last August.
  • US corn harvest is now 23% complete with corn crop conditions showing some slight improvement as combines roll along. Weekly increases were pretty consistent across the country.
  • US soybean harvest is now 23% complete up 11% week over week. Conditions improved on the week after declining last week.
  • 40% of the Winter wheat crop has been planted so far- slightly ahead last years pace but behind the average pace.

Weekly Commodity Market Update

Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.

This Week’s Topics:

  • Market recap
  • U.S. harvest overview
  • U.S. wheat planting
  • Ukraine production estimate up
  • The Fed holds interest rates steady… but
  • Reports to watch

Market recap (Changes on week as of Monday’s close):

  • December 2023 corn up $.10 at $4.81
  • November soybeans down $.19 at $12.97
  • October soybean oil down 3.64 cents at 58.75 cents/lb
  • October soybean meal up $1.60 at $392.00/short ton
  • December 2023 wheat down $.02 at $5.89
  • July 2024 wheat up $.03 at $6.43
  • September WTI Crude Oil up $0.36 at $89.62/barrelWeekly Highlights
  • US energy stocks dropped across the board this week: crude oil (-90 million gallons), gasoline (35 million gallons), and distillate supplies (-120 million gallons).
  • Ethanol production dropped 17 million gallons to 288 million gallons on the week- the lowest volume in nearly 5 months.
  • The Federal Reserve kept short term rates at a range between 5.25-5.5 during their September meeting.
  • It was a disappointing week for US ag export sales. Corn and wheats were on the low end of trade expectations while soybean sales were below the most bearish estimate. The deficit for export sales is growing fast.
  • Open interest positions of Chicago commodities were mostly up again this week. Corn, soybeans, soybean meal, and wheats saw increases. Rough rice and soybean oil were down.
  • Similar to last week, producers and merchants were active buyers of Chicago corn on the week decreasing their net short position of futures and options by nearly 42% after 42% the week before. Conversely, managed money traders were net sellers increasing their net short by nearly 10,000 positions. For soybeans, producers and merchants sold off 17.6% of their net long position with money managers also shedding 28,000 positions.
  • Friday afternoon’s USDA Cattle on Feed Report showed all US cattle on feed as of September 1 at 11.094 million head, or 97.8% of last year. The estimate was just above the average trade estimate of 97.7%. August placements were higher while marketings were lower.
  • US agricultural export inspections were up week over week for soybeans and wheat, but down for corn and grain sorghum. All were within trade expectations.
  • US corn harvest is now 15% complete with corn crop conditions showing some slight improvement as combines roll along. While it is unlikely that precipitation is having an impact on crop conditions at this point in the season- yield monitors (or reports from monitors) might. Illinois and Iowa both saw noticeable increases.
  • US soybean harvest is now 12% complete up 7% week over week. Conditions declining only slightly.
  • 26% of the Winter wheat crop has been planted so far- slightly behind last years pace and the average pace. Plantings are being the most in the eastern corn belt due to slow fall harvest. This is where most of the soft red winter wheat is planted.

Weekly Commodity Market Update

Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.

This Weeks Topics:

  • Market recap
  • USDA WASDE review
  • Tightness in soybean market
  • Soybean crush down
  • Harvest picks up
  • Reports to watch

Market recap (changes on week as of Monday’s close):
• December 2023 corn down $.14 at $4.71
• November soybeans down $.53 at $13.16
• October soybean oil up 1.05 cents at 62.39 cents/lb
• October soybean meal down $15.60 at $390.40/short ton
• December 2023 wheat up $.07 at $5.91
• July 2024 wheat up $.03 at $6.40
• September WTI Crude Oil up $3.41 at $89.28/barrel

Continue reading Weekly Commodity Market Update →

Best practices for buying farm inputs

Source: Jonathan LaPorte, Michigan State University Extension

Are farm input prices better now or should you wait to make a purchase?

Answering that question presents quite a challenge. Historically, farms that prioritize purchasing inputs early, on average lower total input costs. But this past year revealed better input prices were realized in the spring. As input prices continue to fall, largely driven by lower prices in commodity markets, last year’s strategy may still be a viable option. To decide which approach is right for your farm requires thinking strategically about your buying options.

Understanding market conditions

Understanding market conditions is essential when buying farm inputs. Markets are influenced by a number of different factors, such as supply chains and commodity prices. Recent improvements in supply chains and product availability certainly favor purchases now. Especially when purchases are compared to recent production years.

Declines in commodity market prices have also driven demand for lower input costs. But as market prices decline, concerns of eroding farm profits may increase further demand for lowering costs. If demand is strong enough, it may make waiting to buy a better option.

Long-term commodity projections lean towards lower prices unless production estimates significantly change. A significant change is often brought on by global or domestic events. These events can include global trade, wars, or poor weather, such as drought. Many parts of the country experienced drought in the early summer months. But it remains unclear how drought conditions will impact commodity prices.

When uncertainty exists in the markets, other options to assist decision-making should be explored. One such option is to compare differences between current and historical prices. For fertilizer purchases, a crop to fertilizer price ratio helps consider short-term profits compared to product use. The fertilizer nutrient price ($/lb.) is divided by the crop price. Crop prices are then adjusted to a per pound value. For example, corn prices are divided by 56, while soybeans are divided by 60. A higher price ratio indicates a more expensive fertilizer (see Figure 1 below).

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Farmer Sentiment Dips Amid Weaker View of Current Conditions

Source: James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture

U.S. farmers’ sentiment weakened in August compared to July as the Purdue University-CME Group Ag Economy Barometer dipped 8 points to a reading of 115. This month’s decline was fueled by producers’ weaker perception of current conditions both on their farms and in U.S. agriculture as the Current Conditions Index fell 13 points to a reading of 108. The Future Expectations Index also declined in August to a reading of 119, 5 points below a month earlier. This month’s Ag Economy Barometer survey was conducted from August 14-18, 2023. Although producer sentiment weakened in August, producers’ rating of farm financial conditions changed little this month, as the Farm Financial Performance Index declined just one point to a reading of 86. However, producers’ perspectives on farm financial conditions were noticeably weaker than a year earlier when the index stood at 99. Weaker producer sentiment this month did translate into a decline in the Farm Capital Investment Index. The investment index fell to 37, eight points lower than in July and two points lower than a year earlier. Among producers with a negative view of the investment climate, the increase in prices for farm machinery and new construction along with rising interest rates were the two most commonly cited reasons for their negative view. In a related question, over half (60%) of producers in this month’s survey said they expect interest rates to rise in the upcoming year.

When asked about top concerns for their farming operations in the next 12 months, producers continue to point to higher input prices and rising interest rates as their top two concerns. Higher input prices was chosen by one out of three (34%) and rising interest rates was chosen by one out of four (24%) survey respondents as a top concern. Even though crop prices weakened significantly this summer, producers ranked declining commodity prices as their number three concern, chosen by one out of five (20%) producers.

Click here to download the full report

 

 

Weekly Commodity Market Update

Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.

This weeks topics include:

  •  Market recap
  • Harvest market outlook
  • Hot, dry weather impacting soybeans
  • Wishlist for new marketing year
  • Reports to watch

Market recap (changes on week as of Monday’s close):
– December 2023 corn down $.15 at $4.81
– November soybeans down $.42 at $13.63
– October soybean oil down 1.00 cent at 63.97 cents/lb
– October soybean meal up $.50 at $400.20/short ton
– December 2023 wheat down $.19 at $5.98
– July 2024 wheat down $.19 at $6.49
– September WTI Crude Oil up $4.04 at $83.74/barrel

Weekly Highlights:
– US crude oil stocks were down again last week continuing a trend over the last month. The hurricanes hitting the US southeast have cause some temporary shutdowns that are expected to tighten domestic stocks again next week.
– Ethanol production pulled back to 296 million gallons on the week- the lowest level in just over 3 ½ months. The reduction in ethanol production and higher gasoline use decreased ethanol stocks another 50 million gallons providing support to ethanol prices.
– Ag export sales were mixed, supportive for feed grains while being bearish for soybeans. There were 39 million bushels of 2023/24 corn export sales- the largest volume of the marketing year. For soybeans, there were net cancelations of soybean sales for the current marketing year with below average new crop sales.
– Total corn consumed for fuel in July totaled 454 million bushels up 3% from June and 2% from July 2022.
– Soybeans crushed for crude oil in July totaled 184.8 million bushels up 10 million from June and 4 million from July 2022. The July 2023 volume was also above the average trade guess of 181.2.
– Open interest positions of Chicago futures and options were mixed on the week: Chicago wheats-flat, corn- -12.7%, soybeans- +1.2%, cotton- +4.4%, and rough rice- +3.8%.
– Managed money traders bought 18.8 thousand net corn contracts after being big sellers the last couple weeks. Money managers also bought net positions of soybeans to increase their net long 32.8 thousand contracts.

Farmers Remain Cautiously Optimistic About Agricultural Economy

Source: James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture

Click here to download the full report.

Agricultural producer sentiment improved slightly in July as the Purdue University-CME Group Ag Economy Barometer rose two points above its June reading to an index value of 123. This month’s two-percent rise in the barometer was primarily the result of farmers’ improved perception of current conditions on their farms as the Index of Current Conditions rose 5 points to a reading of 121. The Index of Future Expectations changed little compared to June, rising just one point to 124. This month’s Ag Economy Barometer survey was conducted from July 10-14, 2023.

Farmers’ rating of financial conditions on their farms was virtually unchanged in July, compared to June, as the Farm Financial Conditions Index rose just one point to 87 vs. a reading of 86 in June. Looking back to May, however, the percentage of producers rating their farm’s financial performance as better than last year improved from 14% to 17%, while those rating financial performance as worse than a year ago fell from 38% to 30% of respondents. When asked to look ahead one year, there was a one percentage point increase in farmers expecting farm financial conditions to improve in July vs. June and, correspondingly, a one-point decline in the percentage of farmers expecting conditions to worsen. And farmers’ longer-term perspective on the U.S. agricultural economy improved somewhat in July, as the percentage of respondents expecting bad times in the upcoming 5 years fell from 41% in June to 39% in July.

Figure 1. Purdue/CME Group Ag Economy Barometer, October 2015-July 2023.
Figure 1. Purdue/CME Group Ag Economy Barometer, October 2015-July 2023.
Figure 2. Indices of Current Conditions and Future Expectations, October 2015-July 2023.
Figure 2. Indices of Current Conditions and Future Expectations, October 2015-July 2023.
Figure 3. In a year, will your farm operation be better off financially, worse off, or about the same as now?, October 2015–July 2023
Figure 3. In a year, will your farm operation be better off financially, worse off, or about the same as now?, October 2015–July 2023

Continue reading Farmers Remain Cautiously Optimistic About Agricultural Economy →