COMMODITY REPORT

06/16/2022

Egg-NewsOver the past five trading days prices for corn and soybeans again fluctuated with a consistent downward trend for soybeans but up for corn. A similar intensity compared to the previous week was evident with an inter-day range of two percent in value for corn and soybeans. The market is still dominated by the consequences of the invasion of Ukraine and reinforced by the effects of drought in Brazil and neighboring producer nations. Prices were also influenced by fluctuations in the Dollar index and by orders placed by China coupled with increasing domestic U.S. demand for biofuels.

 

Factors influencing commodity prices in either direction included:-

  • Geopolitical tensions threatening wheat, corn, oilseeds and oil exports from Ukraine following the invasion together with evident restriction on Black Sea shipping. Russia has allegedly stolen in excess of 400,000 metric tons of grain from the Eastern occupied regions and is destroying agricultural infrastructure including elevators and crushing plants and placing landmines in fields. (upward pressure on corn and wheat and an indirect effect on soybeans)
  • A minimal effect from the June WASDE #625 that maintained planting area and yields but revised ending stocks for corn up by 2.9 percent and soybeans down by 9.7 percent. (slight upward pressure on soybeans)
  • Drought affecting Argentina, Paraguay and Brazil especially in that nation’s Southern states due to a prolonged La Nina The USDA-FAS projects that collectively the three Southern hemisphere nations will be short 8.7 million metric tons of soybeans in 2022. (upward pressure of intermediate intensity).
  • Increased orders from China for soybeans although consistent with projections of reduced domestic demand due to COVID restrictions and economic slowdown. (transitory upward pressure on soybeans)
  • Demand for soy oil to be diverted to biodiesel, exacerbated by concerns over shortages of sunflower oil from Ukraine but some easing with lifting of restrictions on export of palm oil by Indonesia (variable upward pressure on soybeans and meal)
  • Release of a higher RFS for 2022 and higher weekly ethanol demand coupled with successive weekly increases in production. Year-round E-15 has been authorized but with minimal uptake. (upward pressure on corn)
  • Planting although initially slower than in 2021, has attained 4-year average values. Delay was due to inclement weather and non-availability of fertilizer in some regions. (diminishing effect on corn but neutral on soybeans).
  • Volatility of the Dollar Index (DXY) that declined from 105 on May 12th to 101 on June 2nd but back to 105 on June 16th influencing placement of export orders (fluctuation in corn and soybean prices)
  • Purchase of commodities by hedge funds is declining amid fluctuating equity and a rise in the 10-year Treasury bond rate(upward pressure)

 

Based on CME quotations U.S. farmers are now receiving and conversely livestock producers and ethanol refiners in the Midwest will pay above $7.90 per bushel for corn delivered in July, up 6.8 percent from the June 9th quotation for July delivery. Crushers will pay $17.10 per bushel for soybeans plus transport and basis for July delivery, down 0.2 percent from the June 9th quotation for July delivery. Soybean meal was down 0.5 percent percent or $2 per ton, for July delivery, reversing the trend of the previous week and reflecting soybean price and current crush volume, responding to both domestic and export demand for soy oil.

  • The FAS Export Report released on June 16th for the week ending June 9th reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 10.59 million metric tons (417.0 million bushels) with 48.1 million metric tons (1,931 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 0.14 million metric tons (5.5 million bushels) with 1.30 million metric tons (54.6 million bushels) shipped. For the current market year shipments of corn to date are 10.1 percent lower than at the corresponding week a year ago. For market year 2022-2023 outstanding sales this week amounted to 5.9 million metric tons (232.2 million bushels), with 0.14 million metric tons (5.5 million bushels) ordered for the following market year.

     (Conversion 39.36 bushels per metric ton)

  • The FAS Export Report released on June 16th 2022 for the week ending June 9th reflecting market year 2021-2022, recorded outstanding export orders for soybeans amounting to 9.49 million metric tons (348.6 million bushels) with 50.8 million metric tons (1,866 million bushels) actually shipped. Weekly soybean orders attained 0.32 million metric tons (11.7 million bushels) with 0.71 million metric tons (26.0 million bushels) shipped. For the current market year to date shipments of soybeans are 12.2 percent lower than for the corresponding week a year ago. For market year 2022-2023 outstanding sales amounted to 13.1 million metric tons (481.5 million bushels), with 0.41 million metric tons (15.0 million bushels) ordered this past week)

    (Conversion 36.74 bushels per metric ton)

  • For the week ending June 9th 2021, 286,300 metric tons of soybean meal and cake were ordered for the market year 2021-2022, up113.0 percent from the previous week. During the past week 224,500 metric tons of meal and cake combined was shipped, down 2.1 percent from the previous week and representing 2.7 percent of the total 8,462,300 metric tons shipped during the current marketing year to date. This quantity is 2.2 percent lower than the previous market year.
  • Projected harvests and ending stocks were documented in the June 10th WASDE #625,retrievable under the Statistics TAB. The anticipated WASDE #626 will be reviewed in ta mid-July edition of EGG-NEWS with projections on quantities harvested and the effect of trade and domestic consumption on ending stocks of corn updated from the June report. Data should take into account the late planting of corn in the U.S. and the predicted consequences of the invasion of Ukraine by Russia. These events will affect world trade and the negative effect on spring planting in the Ukraine currently in progress.

 

The following quotations for delivery for the months of delivery as indicated were posted by the CME at close of trading on June 16th 2022, compared with values posted at close of trading on June 9th 2022 (in parentheses):-

 

COMMODITY

Corn (cents per bushel)

July 788 (738).

Sept. 742 (745)

Soybeans (cents per bushel)

July 1,711 (1,708).

Sept. 1,565 (1,563)

Soybean meal ($ per ton)

July 429 (427). 

Sept. 404 (408)

 

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

Corn: July quotation up 50 cents per bushel (+6.8 percent)

Soybeans: July quotation down 3 cents per bushel (-0.2 percent)

Soybean Meal: July quotation down $2 per ton (-0.5 percent)

 

The NASDQ spot prices for feedstuffs per short ton for June 16th 2022 with prices for the previous week were:-

  • Corn (ZC): $276 was $261. 52-week range $177 to $292
  • Soybean Meal (ZM): $392 was $412. 52-week range $311 to $488

 

Values for other common ingredients per short ton:-

  • Meat and Bone Meal (ruminant, Central U.S.): $500 to $550 (wide range for this ingredient according to source and location)
  • DDGS, (MO.): $275 to $300 (was $285) Price varies according to plant and location
  • Wheat Middlings (MO): $250 to $270 (was $235reflecting surge in wheat price due to invasion of Ukraine and U.S. drought)
  • Bakery Meal (MO): $225 ($180)
  • 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 0.35 cent per dozen

 

The respective changes in the prices of corn and soybean meal for June 15th spot prices compared with June 8th would raise nest-run production cost for eggs by 0.8 cents per dozen.

*(rounded to 0.1cent)

 

According to the June 11th WASDE #625, corn harvested in calendar 2022 will attain 14,460 million bushels with ending stocks projected at 1,400 million bushels down 2.9 percent from the May 2022 WASDE Report. Total corn stocks on December 1st 2021 amounted to 11.6 billion bushels up 3 percent from December 1st 2020.

 

The social restrictions imposed in the U.S. as a result of COVID-19, that are now being eased, were projected to reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2022 requirement, accepting a nominal ten percent addition (E-10) to gasoline. This past week 93.2 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 June 10th 2022 the industry produced on average 1,060,000 barrels of ethanol per day. This was up 2.0 percent from the week ending June 3rd 2022, rising above the one-million gallon per day benchmark for the fourth consecutive week. On June 10th ethanol stock was down 1.7 percent from the previous week to 23.2 million barrels, representing an approximately 20-day reserve and confirming increased demand given a decrease in stock relative to increased production. The White House has allowed all-year round 15 percent addition to gasoline. Given that many light vehicles cannot use more than E-10 and drivers are curtailing mileage due to high fuel cost and with restraints imposed on fuel station storage and dispensing, the short-term prospects for increased domestic consumption are unfavorable. 

 

Ethanol quoted on the CBOT (EH) at close of trading on June 16th was priced at $2.16 unchanged from the previous week and compared to a 52-week range of $2.13 to $2.48 per gallon. Concurrently RBOB gasoline traded on NASDQ (RB) at $3.91 per gallon on June 16th down 13 cents per gallon from the previous week. The 52-week range for RBOB gasoline is $1.90 to $4.04. The CME WTI crude price of $119 per barrel at close of trading on June 16th was 7.4 percent lower than the previous week. Gasoline is now $1.75 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 now functioning, DDGS is freely available but commands a price consistent with corn. A Missouri plant priced a branded DDGS at $280 per ton on June 16th down $5 per ton from the previous week. Wide price variation exists depending on supplier and location. A plant in central Ohio offered DDGS at $250 per ton this past week. It is axiomatic that the cost of DDGS will reflect changes in the price of corn. Generally DDGS is currently incorporated at low inclusion levels in egg-production formulas based on price relative to the nutrient contribution of corn and other ingredients. This may change as corn and hence DDGS fluctuates in price.

 

Soybeans continue to be the beneficiary of export demand by China although lower than the previous market year. Exports are maintained by supplying other nations in addition to domestic livestock production and demand for soy oil. The USDA projected a harvest of 4,640 million bushels in the June WASDE #625. Ending stocks were decreased 9.6 percent from 310 to 280 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 July delivery at close of trading on June 16th was lower by 3 cents per bushel to 1,711 cents compared to 1,708 cents per bushel for July delivery quoted last week. The decrease in the price of soybeans continues a trend from the previous week and is attributed to the invasion of Ukraine with disruption of the winter harvest and spring planting in that Nation. Predictions of lower yields in Argentina, Paraguay and Brazil vary but a conservative USDA estimate of a reduction of 0.66 billion bushels (24 million metric tons) was provided.

 

According to a release on June 15th by the National Oilseed Processors Association 171.1 million bushels of soybeans were crushed in May 2022. This crush value was up 0.7 percent from April 2022 at 169.8 million bushels.

 

 Soybean oil fell to 72.8 cents per lb. on June 16th from 83.9 cents per lb. last week. This follows the decision by Indonesia to lift a disruptive short-term moratorium on the export of some palm oil products. Lower prices this past week are despite the realization that world oilseed supply will be limited by a sharply diminished crop and availability of sunflower from Ukraine, the world’s largest exporter with barriers to exports imposed by Russia. During calendar 2022, it is anticipated that 43 percent of U.S. soy oil will be diverted from fuel to biodiesel.

 

On June 15th 2022 soybean meal was quoted on NASDAQ at $415 per ton, $3 per ton higher than the spot price last week and compared to a 52-week range of $312 to $500 per ton.

 

On June 15th 2022 Ruminant Meat and Bone meal was priced over a range of $500 to $550 per ton quoted from Central U.S. plants but with a wide range of prices based on composition, source and location. Price fluctuation reflects changes in soybean meal and other oilseed meals.

 

On June 16th the conversion of the CNY to the BRL was 0.75 BRL, down CNY 0.02 from the previous week. The conversion of the US$ to the CNY was CNY 6.70, up CNY 0.02 against the USD 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 95.0 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.

 

For 2021 the U.S. exported corn to the value of $17,473 million, 112 percent more than in 2020 and comprising 10 percent of the value of all U.S. agricultural exports.

 

For 2021 the U.S. exported soybeans to the value of $26,476 million 48 percent more than in 2020 and 15 percent of the value all U.S. agricultural exports.

 

COMMENTS

Subscribers are referred to the May 12th 2021 WASDE # 624 and the USDA quarterly Grain Stocks Report available under the STATISTICS tab. To be revised when WASDE # 625 released.










































































































































































































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