COMMODITY REPORT

01/06/2022

WEEKLY COMMODITY REPORT: January 6th 2022.

 

  •  Commodity prices and volumes again fluctuated over a wide range of up to 2.5 percent of value daily during the first five trading days in 2022 but settled higher on January 6th. The trend was influenced more by rumors on Tuesday 4th concerning projected large orders from China and domestic demand rather than the release of the December 9th WASDE Report, now in the rearview mirror. The CME quotation for corn was up 1.0 percent and soybeans were up 3.5 percent, Soybean Meal gained 1.9 percent, compared to Thursday December 30th.

 

  • Factors influencing prices in either direction included:-
    • Anticipation of substantial orders from China. (transitory upward pressure)
    •  Trend of increasing weekly ethanol production (upward pressure on corn)
    • The Central Government of China authorized a buying cycle for soybeans as demand and crush margins improve. (upward pressure on soybeans)
    • Imports of corn by Mexico (transitory upward pressure)
    • Release of the December 9th WASDE with the 2021 corn and soybean harvests completed at the time of publication. The December WASDE projections for corn and soybean yield, acreage production and ending stocks, were unchanged from November. (transitory and minor 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 $6.00 per bushel for corn in March, up 1.0 percent from last week. Crushers will pay $13.70 per bushel for soybeans plus transport and basis during January 2022, up 3.5 percent from the December 30th quotation for January delivery. Soybean meal was $8 per ton (1.9 percent) higher for January delivery compared to last week, reflecting higher domestic demand and export of soy oil coupled with the rise in the price of soybeans during past weeks.

 

  • The FAS Export Report released on January 6th for the week ending December 30th reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 26.34 million metric tons (1,037 million bushels) with 14.65 million metric tons (577 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 0.3 million metric tons (10.1 million bushels) with 1.0 million metric tons (39.4 million bushels) shipped.  For market year 2022-2023 outstanding sales amounted to 1.51 million metric tons (59.4 million bushels) with no orders this past week.                                                                                  (conversion 39.36 bushels per metric ton)

 

  • The FAS Export Report released on January 6th 2022 for the week ending December 30th 2021 reflecting market year 2021-2022, recorded outstanding export orders for soybeans amounting to 11.1 million metric tons (407.4 million bushels) with 30.6 million metric tons (1,125 million bushels) actually shipped. Weekly soybean orders attained 0.38 million metric tons (14.1 million bushels) with 1.7 million metric tons (62.5 million bushels) shipped.

(conversion 36.74 bushels per metric ton)

 

  • For the week ending December 30th 2021, 31,500 metric tons of soybean meal and cake were ordered for the market year 2021-2022, down 55 percent from the previous week. With restoration of operations covering most of the lower Mississippi terminals after damage from Hurricane Ida, 174,300 metric tons of meal and cake was shipped, up 2.2 percent from the previous week and representing 5.7 percent of the total 3.060,400 metric tons shipped during the current marketing year to date.

 

  • Projected harvests and ending stocks were documented in the December WASDE allowing clarity on quantities harvested and the effect of trade and domestic consumption on ending stocks that were unchanged from the November report.

 

The following quotations for delivery in the months as indicated were posted by the CME at noon on January 6th 2022, compared with values posted at close of trading on December 30th 2021  (in parentheses):-

 

COMMODITY

 

Corn (cents per bushel)

March 602      (596).

May        603      (597).      

Soybeans (cents per bushel)

Jan.   1,374   (1,327).

March 1,385  (1,338).

Soybean meal ($ per ton)

Jan.      421       (413). 

March    411      (404).

 

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

 

COMMODITY CHANGE FROM PAST WEEK FOR MONTH OF DELIVERY  AS INDICATED

Corn: March quotation up 6 cents per bushel (+1.0 percent)
Soybeans: Jan. quotation up 47 cents per bushel (+3.5 percent)
Soybean Meal: Jan. quotation up $8 per ton (+1.9 percent)

 

The USDA weekly wholesale feedstuffs prices per short ton for January 5th 2022 were:-

 

  • Corn: $214 ($212), Chicago
  • Soybean Meal: $439 ($424), Central Illinois
  • Meat and Bone Meal: $345 ($330), Central Midwest
  • DDGS: $187 ($187), Eastern corn belt
  • Wheat Middlings: $130 ($145), 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 4th compared with December 28th USDA weekly quotations would increase nest-run production cost for eggs by 0.9 cents per dozen.

 

Over the past 52 weeks the algebraic escalation in the prices of major ingredients has added 11.6* cents per dozen to eggs

*(rounded to 0.1cent)

 

According to the December 9th WASDE, corn harvested in calendar 2021 will be unchanged from the November report at 15,062 million bushels with ending stocks projected at 1,493 million bushels unchanged from the November 2021 WASDE Report. The corn harvest was completed by the last week in November. Total corn stocks on September 1st amounted to 1.24 billion bushels down 36 percent from September 1st 2020.

 

Compared with the December value, the CME quotation for corn at noon on January 6th for March 2022 delivery was up 6 cents per bushel to 602 per bushel reversing the decrease 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 91.5 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 December 31st 2021 the industry produced on average 1,048,000 barrels per day, down 1.0 percent from the week ending December 24th 2021, and the 12th consecutive week above one million gallons per day after thirteen successive weeks under this benchmark. On December 31st ethanol stock was up 3.4 percent from the previous week to 21.4 million barrels, representing an approximately 20-day reserve but confirming a decrease in demand given a higher stock relative to production during the week.

 

Ethanol quoted on the CME was priced at $2.30 per gallon on January 5th and compared to a 52-week range of $1.59 to $3.21per gallon. Concurrently RBOB gasoline at $2.29 per gallon (CME. Chicago) was up 2 cent per gallon (0.9 percent) from the previous week, consistent with a 2.0 percent higher WTI crude price of $76.99 per barrel on January 5th. Gasoline is now 1cent per gallon less 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 $187 per ton on January 4th 2022, unchanged from the previous week and $17 per ton less expensive than on December 29th 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 confirmed a harvest of 4,425 million bushels in the December WASDE. Ending stocks were unchanged from November at 340 million bushels. Total soybean stock on September 1st amounted to 256 million bushels down 51 percent from September 1st 2020 indicating the extent of exports during the 2020-2021 market year.

 

The CME soybean price for January delivery at noon on January 6th 2022 was higher by 47 cents per bushel to 1,374 cents compared to 1,327 cents per bushel on December 30th.

 

According to a release on December 15th by the National Oilseed Processors Association, 179.5 million bushels of soybeans were crushed in November compared to an expectation of 181.6 million bushels. The previous monthly crush value was184.0 million bushels.

 

On January 4th 2022 soybean meal quoted central Illinois was $439 per ton, $15 per ton higher than the previous week and compared to $420 per ton on December 29th 2020.

 

On December 14th 2021 Meat and Bone meal was $330 per ton quoted Central U.S., unchanged from the previous week but compared to $340 per ton on December 15th 2020.

 

On January 6th the conversion of the CNY to the BRL was 0.89 BRL, down BRL 0.01 from the previous week. The conversion of the US$ to the CNY was 6.25, up CNY 0.13 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 December 9th 2021 WASDE #619 under the STATS tab. The USDA quarterly Grain Stocks Report and WASDE #620 will be released on January 12th 2022.

 






































































































































































































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