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COMMODITY REPORT

01/27/2022

WEEKLY COMMODITY REPORT: January 27th 2022.

 

  • Corn and soybean prices and volumes again fluctuated over a wide range of up to 1.0 percent of value daily during the past five trading days but settled higher on January 27th. The trend was influenced by rumors and data concerning orders from China coupled with domestic demand and the release of the January 12th WASDE Report, indicating higher ending stocks. The CME quotation for corn was up 1.6 percent and soybeans were up 4.0 percent, adding to the trend of the previous week. Soybean Meal was 1.3 percent higher compared to Thursday January 19th but will soon reflect the present escalation in the price of soybeans.

 

  • Factors influencing prices in either direction included:-
    • Anticipation of orders from China despite projections for reduced domestic demand. (transitory upward pressure)
    • Soybeans up on demand for soy oil (upward pressure on soybeans and meal)
    • Geopolitical tensions threatening wheat and corn exports from Ukraine (upward pressure on corn)
    •  Trend of increasing weekly ethanol production despite lower domestic demand (upward pressure on corn)
    • Persistent drought in Brazil despite some rainfall, with predictions of lowered yields. (downward pressure)
    • Reports of COVID in the Port of Rosario reducing shipments from Argentine (Small upward pressure)
    • Imports of corn by Mexico (transitory upward pressure)
    • Release of the January 12th WASDE  #620. Projections for corn and soybean yield, acreage production were little changed, exports were reduced but ending stocks, were increased for the 2022 harvest. (transitory downward pressure).

 

  • Based on CME quotations U.S. farmers are now receiving and conversely livestock producers and ethanol refiners in the Midwest will pay above $6.25 per bushel for corn in March, up 1.6 percent from last week. Crushers will pay $14.50 per bushel for soybeans plus transport and basis during March 2022, up 4.0 percent from the January 19th quotation for March delivery. Soybean meal was $5 per ton (1.3 percent) higher for March delivery compared to last week, reflecting higher domestic supply but with profitable export of soy oil.

 

  • The FAS Export Report released on January 27th for the week ending January 20th reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 25.55 million metric tons (1,007 million bushels) with 18.4 million metric tons (724 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 1.40 million metric tons (55.1 million bushels) with 1.44 million metric tons (56.7 million bushels) shipped.  For market year 2022-2023 outstanding sales amounted to 1.45 million metric tons (57.1 million bushels), with 0.17 million metric tons (6.9 million bushels) cancelled this past week)

    (conversion 39.36 bushels per metric ton)

 

  • The FAS Export Report released on January 27th 2022 for the week ending January 20th reflecting market year 2021-2022, recorded outstanding export orders for soybeans amounting to 9.1 million metric tons (334.3 million bushels) with 33.03 million metric tons (1,287 million bushels) actually shipped. Weekly soybean orders attained 1.03 million metric tons (37.8 million bushels) with 1.59 million metric tons (58.4 million bushels) shipped. For market year 2022-2023 outstanding sales amounted to 1.20 million metric tons (44.1 million bushels), with 0.20 million metric tons (7.4 million bushels) ordered this past week)

    (conversion 36.74 bushels per metric ton)

 

  • For the week ending January 20th 2021, 330,100 metric tons of soybean meal and cake were ordered for the market year 2021-2022, up 4.8 percent from the previous week. During the past week 327,100 metric tons of meal and cake was shipped, up 25.8 percent from the previous week and representing 8.3 percent of the total 3,937,200 metric tons shipped during the current marketing year to date.

 

  • Projected harvests and ending stocks were documented in the January 12th WASDE providing projections on quantities harvested and the effect of trade and domestic consumption on ending stocks that were increased from the November report.

 

The following quotations for delivery in the months as indicated were posted by the CME at 14H00 on January 27th 2022, compared with values posted at close of trading on January 19th 2021  (in parentheses):-

 

COMMODITY

 

Corn (cents per bushel)

March 622   (612).

May 620   (612).

Soybeans (cents per bushel)

March 1,446   (1,390).

May 1,452   (1,400)

Soybean meal ($ per ton)

March 399   (406).

May 404  (397)

 

Changes in the price of corn, soybeans and soybean meal over five trading days this past week were:-

Corn:

March quotation up 10 cents per bushel

(+1.6 percent)

Soybeans:

March quotation up 56 cents per bushel

(+4.0 percent)

Soybean Meal:

March quotation down $5 per ton

(-1.3percent)

 

The USDA weekly wholesale feedstuffs prices per short ton for January 26th 2022 were:-

 

  • Corn: $218 ($211), Chicago
  • Soybean Meal: $407 ($408), Central Illinois
  • Meat and Bone Meal: $355 ($355), Central Midwest
  • DDGS: $197 ($197), Eastern corn belt
  • Wheat Middlings: $150 ($140), Minneapolis
    • For each $1 per ton (2.8 cents/bushel) change in corn the cost of egg production would change by 0.11 cent per dozen
    • For each $10 per ton change in the price of soybean meal the cost of egg production would change by 0.44 cent per dozen

 

The respective changes in the prices of corn and soybean meal for January 26th compared with January 18th USDA weekly quotations would increase nest-run production cost for eggs by 0.7 cents per dozen.

 

Over the past 54 weeks the algebraic escalation in the prices of major ingredients has added 7.2* cents per dozen to eggs. Year-to-date feed cost has declined by 1.2 cents per dozen

*(rounded to 0.1cent)

 

According to the January 12th WASDE, corn harvested in calendar 2022 will be 15,115 million bushels with ending stocks projected at 1,540 million bushels compared to the December 2021 WASDE Report. Total corn stocks on December 1st 2021 amounted to 11.6 billion bushels up 3 percent from December 1st 2020.

 

Compared with the January 9th value, the CME quotation for corn at 14H00 on January 27th for March 2022 delivery was up 10 cents per bushel to 622 per bushel adding to the increase from the previous week.

 

The social restrictions imposed in the U.S. as a result of COVID-19, that are now being lifted, were projected to reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2021 requirement, accepting a nominal ten percent addition to gasoline. This past week 90.3 percent of the U.S. ethanol fermentation volume was operational, based on the September 2021 U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on higher domestic demand in addition to increasing the proportion of production that is exported. According to the U.S. EIA, for the week ending January 21st 2021 the industry produced on average 1,035,000 barrels per day, down 1.7 percent from the week ending January 14th 2022, and the 15th consecutive week above one million gallons per day after thirteen successive weeks under this benchmark. On January 21st ethanol stock was up 3.8 percent from the previous week to 24.5 million barrels, representing an approximately 21-day reserve but confirming a decrease in demand given a lower increase in stock relative to higher production during the week.

 

Ethanol quoted on the CBOT was priced at $2.14 per gallon on January 26th down 6 cents per gallon (2.7 percent) from the previous week and compared to a 52-week range of $1.65 to $2.48 per gallon. Concurrently RBOB gasoline at $2.51 per gallon was up 6 cent per gallon (2.5 percent) from the previous week, with a 0.5 percent lower WTI crude price of $86.87 per barrel at noon on January 26th. Gasoline is now 37 cents per gallon more expensive than ethanol but with a 63 percent higher BTU rating.

 

With most plants among the 197 that were operational on January 1st 2021 functioning, DDGS is freely available but commands a higher price than in the first half of 2021. Eastern Corn-belt DDGS was priced at $197 per ton on January 26th 2022, unchanged from the previous week and $27 per ton less expensive than on January 19th 2020. It is anticipated that the cost of DDGS will rise reflecting the price of corn. Generally DDGS is currently incorporated at low inclusion levels in egg-production formulas based on high price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS fluctuates in price

 

 Soybeans continue to be the beneficiary of export demand by China and other nations in addition to domestic livestock production and demand for soy oil. The USDA projected a harvest of 4,435 million bushels in the January WASDE. Ending stocks were raised 2.9 percent to 350 million bushels. Total soybean stock on December 1st 2021 amounted to 3.15 billion bushels down 14 percent from December 1st 2020 indicating the extent of exports during the 2020-2021 market year.

 

The CME soybean price for March delivery at 14H00 on January 19th 2022 was higher by 15 cents per bushel to 1,390 cents compared to 1,375 cents per bushel for January delivery last week.

 

According to a release on January 15th by the National Oilseed Processors Association a record 186.4 million bushels of soybeans were crushed in December compared to an expectation of 185.0 million bushels. The December crush value was up 3.8 percent from the November value of 184.0 million bushels.

 

On January 26th 2022 soybean meal quoted central Illinois was $407 per ton, $1 per ton lower than the previous week and compared to $449 per ton on January 19th 2020.

 

On January 26th 2021 Meat and Bone meal was $355 per ton quoted Central U.S., unchanged from the previous week but compared to $380 per ton on January 19th 2020.

 

On January 26th the conversion of the CNY to the BRL was 0.85 BRL, up BRL 0.01 from the previous week. The conversion of the US$ to the CNY was 6.36, down CNY 0.02 from the previous week.

 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipated that soybean imports by China would attain 95 million metric tons during the 2020-2021 market year but in reality only 60.3 million tons was shipped through August 2021.

 

For the 2019/2020 market year China imported 2.1 million metric tons of corn from the U.S., 4.8 percent of total exports of 43.3 million tons, but 12 percent less than in the 2018/2019 market year. The USDA-FAS documented sales of U.S. corn to China through late August 2021 comprising the 2020/2021market year amounting to 73 million metric tons (2,876 million bushels) with 93 percent shipped.

 

COMMENTS

Subscribers are referred to the January 12th 2021 WASDE # and the USDA quarterly Grain Stocks Report  available under the STATISTICS tab.