COMMODITY REPORT

11/17/2022

WEEKLY COMMODITY REPORT: November 17th 2022.

 OVERVIEW

 

Over the past five trading days commodities were little changed. December corn was up 2.0 percent to 660 cents per bushel for January 2023 delivery. In contrast soybeans were almost unchanged compared to the previous week at 1,416 cents per bushel for January 2023 delivery. The market has adjusted to the projections of crop size and ending stocks as projected in the November 9th WASDE #630. Despite fluctuating economic sentiment, restoration of shipping from Black Sea ports has reduced price pressure on wheat and other grains although revocation by Russia or some marine incident is always possible. Commodity prices in the U.S. were influenced by a lower Dollar Index and orders placed by China and other importers.

 

 

Factors influencing commodity prices in either direction over the past

 weeks included:-

 

  • Renewed fears of a U.S. recession due to an aggressive Federal Reserve FOMC, followed the September 13th CPI release and the fourth successive monthly 0.75 percent upward rate adjustment on November 2nd. A rebound in equity markets was evident during the past two weeks albeit with inter-day fluctuations. (Transitory upward pressure on markets)
  • A reduction in the October CPI to 0.4 percent compared to 0.8 percent for September suggests that inflation may have plateaued. (Downward pressure)
  • Low water levels along the Mississippi River and tributaries caused by drought is still impeding barge traffic. A rail strike is also threatened. (Downward pressure and lower cash prices paid to farmers)
  • Hot and dry conditions in extensive areas of the Corn Belt reduced the yield and quality of the late-planted 2022 corn crop. The yields for the corn and soybean harvests were updated in the November WASDE. (Downward pressure with higher ending stocks for corn and soybeans)
  • Geopolitical tensions that impacted wheat, corn, oilseeds and vegetable oil exports from Ukraine persist. Restoration of Black Sea shipping was accomplished following security guarantees by Ukraine to the Russian Federation. Russia has inflicted extensive and deliberate damage on the agricultural and energy infrastructure of Ukraine including elevators and crushing plants and has placed landmines in fields. Ukraine corn yield for 2022 is down 18 percent from 2021 with 39 percent of the crop harvested. (Upward pressure on corn and wheat and an indirect effect on soybeans if Black Sea shipping is interrupted.)
  • Expectation of high soybean and corn crops from Brazil for the 2022-2023 season. (Lower prices in the future subject to favorable reports on planting and crop progress)
  • Volatility of the Dollar Index (DXY) that fell to 101 on June 2nd but peaked at 116 in late October, declined to 107 on November 17th The dollar index influences timing and volume of export orders. (contributes to fluctuation in corn and soybean prices, depresses U.S. sales)
  • Speculation in commodities by hedge funds declined consistent with falling equity prices in September with restoration in October but with a steady decline in the value of crypto currency with evidence of inadequate regulation. Concerns over a U.S. recession, reemerged in early October, as the Federal Reserve is intent on raising benchmark funds rates to suppress inflation. (Downward pressure)

 

Based on CME quotations on November 17th U.S. farmers are now receiving and conversely livestock producers and ethanol refiners in the Midwest will pay above $6.66 per bushel for corn delivered in December, up 2.0 percent from the quotation last week. Crushers will pay $14.16 per bushel for soybeans plus transport and basis for January 2023 delivery, almost unchanged from the previous week. December soybean meal was 0.2 percent lower compared to the quotation last week. Prices continued their moderate inter-day fluctuation and corn continued the upward trend from the previous week with soybeans little changed reflecting both domestic and export demand, projected new-crop harvest and ending stocks.

 

EXPORTS

The restored ‘legacy’ FAS Export Report released on November 17th for the week ending November 10th reflecting market year 2022-2023, confirmed that outstanding export orders for corn amounted to 10.93 million metric tons (430.2 million bushels) with 4.97 million metric tons (195.6 million bushels) actually shipped. During the past week net orders for the 2022-2023 market year increased sharply to 1.17 million metric tons (46.0 million bushels) with 0.56 million metric tons (22.2 million bushels) shipped for the past week. For the current market year outstanding sales of corn to date are 36.2 percent lower than at the corresponding week a year ago. For market year 2023-2024 outstanding sales this week amounted to 0.31 million metric tons (12.2 million bushels), with no orders for the 2023-2024-market year.

(Conversion 39.36 bushels per metric ton)

 

The FAS Export Report for the week ending November 10th reflecting market year 2022-2023, recorded outstanding export orders for soybeans amounting to 21.40 million metric tons (786.1 million bushels) with 14.59 million metric tons (535.9 million bushels) actually shipped. Net weekly soybean orders were sharply higher at 3.03 million metric tons (111.3 million bushels) with 2.08 million metric tons (76.5 million bushels) shipped for the past week. For the current market year to date outstanding sales of soybeans are 11.6 percent lower than for the corresponding week a year ago. Sales recorded for market year 2023-2024 are negligible (Conversion 36.74 bushels per metric ton)

 

For the week ending November 10th 2022 net orders of soybean meal and cake amounted to 267,100 metric tons for the market year 2022-2023. During the past week 213,800 metric tons of meal and cake combined was shipped, representing 20.7 percent of the total 1,033,100 metric tons shipped during the current marketing year. This quantity is 78.9 percent of the volume shipped during the corresponding weeks of the previous market year. For the next market year outstanding sales attained 2.0 million metric tons with cancellations of 200,00 metric tons this past week.

 

Projected harvests and ending stocks were documented in the November WASDE #630, posted under the STATISTICS Tab. Corn yield was projected at 172.3 bushels per acre with a crop of 13,930 million bushels. Soybean yield was projected at 50.2 bushels per acre with a crop of 4,346 million bushels This report took into account the late planting of corn in the U.S. and regional drought together with the predicted impact on world prices following invasion of Ukraine by Russia.

 

COMMODITY PRICES

The following quotations for the months of delivery as indicated were posted by the CME at 14H00 on November 17th 2022, compared with values at 14H00 on November 10th 2022 (in parentheses): -

COMMODITY

 

Corn (cents per bushel)

Dec. 666 ( 653).

March ‘23 668 (659)

Soybeans (cents per bushel)

Jan. ‘23 1,416 (1,422).

March ’23 1,422

Soybean meal ($ per ton)

Dec. 405 ( 404). 

March ‘23 404

 

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

Corn: Dec. quotation up 13 cents per bushel. (+2.0 percent)

Soybeans: Jan. quotation down 6 cents per bushel (-0.4 percent)

Soybean Meal: Dec. quotation down $1 per ton (-0.2 percent)

 

The NASDAQ spot prices for feedstuffs per short ton at noon on November 17th 2022 with prices for the previous week were:-

  • Corn (ZC): $238 (unchanged from previous week). 52-week range $177 to $292
  • Soybean Meal (ZM): $404 was $418. 52-week range $311 to $488

 

Values for other common ingredients per short ton:-

  • Meat and Bone Meal, (According to the USDA National Animal By-product Feedstuffs Report on November 11th): $375-$490; porcine $350 to $390 ruminant. Price varies according to plant and location
  • DDGS, (IA. and other states according to the University of Missouri Extension Service By-Product Feed Price Listing) $230 to $295 per ton. Price varies according to plant and location and is expected to fluctuate with the price of corn
  • Wheat Middlings according to the USDA National Mill-Feeds and Miscellaneous Feedstuffs Report on November 11th for MO. and other states: $225 to $250 per ton ($235 per ton in early June, with current price reflecting surge and subsequent fluctuation in wheat price following the invasion of Ukraine and from U.S. drought)
  • Bakery Meal, (MO & TX): $225 per ton (unchanged)
  • Rice Bran, (AR & TX): $180 to $220 per ton.

 

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 November 17th spot prices compared with November 10th would decrease nest-run production cost for eggs by 0.50 cents per dozen.  (Rounded to 0.1cent)

 

COMMENTARY ON AVAILABILITY AND PRICES OF FEED COMMODITIES

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 89.1 percent of the U.S. ethanol fermentation volume was operational, based on the January 2022 U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on unlikely higher domestic demand in addition to increasing the quantity that is exported. During September, net exports attained 100.4 million gallons (2.4 million barrels), up 35.6 percent from August with more shipments to China.

 

According to the U.S. EIA, for the week ending November 11th 2022 the industry produced on average 1,011,000 barrels of ethanol per day. This was down 3.8 percent from the week ending November 4th 2022 but above the one million gallon per day benchmark for the fifth week after ten consecutive weeks below the one- million level. On November 11th ethanol stock was down 0.4 percent from the previous week at 21.3 million barrels, representing an approximately 20-day reserve and confirming lower demand given relative changes in production and stock. The White House has allowed all-year round 15 percent addition to gasoline. Given that many older vehicles cannot use higher than an E-10 blend and drivers are curtailing mileage due to high fuel costs and the reality of restraints imposed on fuel station storage and dispensing high blends, the short-term prospects for increased domestic consumption are unfavorable. 

 

Energy Prices on November 17th

  • Ethanol quoted on the CBOT (EH) on November 17th was priced at $2.16 per gallon unchanged over previous months and compared to a 52-week range of $2.13 to $2.48 per gallon.
  • Concurrently RBOB gasoline traded on NASDAQ (RB) at $2.46 per gallon, down 2 cents per gallon (0.8 percent) from the previous week. The 52-week range for RBOB gasoline is $1.90 to $4.04.
  • The CME WTI crude price of $81.67 per barrel on November 17th was 11.4 percent lower than the previous week although with intra-week fluctuation in the energy market but with hydrocarbon sources still contributing to inflation.
  • The AAA national gasoline price declined progressively over thirteen weeks before rising for five weeks and on November 17th was down 8 cents (2.1 percent) to $3.73 per gallon for unleaded grade. Gasoline is now $1.57 per gallon more expensive than ethanol with a 63 percent higher BTU rating.
  • Diesel was $5.34 per gallon, down 2 cents per gallon (0.4 percent) from the previous week but with prospects of a rise in price due to 6-decade low stock level.
  • CME Henry Hub natural gas was priced at $6.39 per MM BTU on November 17th, up 45 cents (7.6 percent) from the previous week.
  • With most plants among the 198 that were operational on January 1st 2022 with a combined capacity of 1,134 million barrels per day functioning at 91.6 percent, DDGS is freely available but commands a price reflecting corn. The University of Missouri Extension Service By-Product Feed Price Listing) priced DDGS at $230 to $295 per ton on November 17th continuing price stability. Wide price variation exists depending on supplier, quantity and location. It is axiomatic that the cost of DDGS will reflect changes in the price of corn. Generally DDGS is currently incorporated at moderate inclusion levels in egg-production formulas based on price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS increases in price

 

The CME soybean price for January 2023 delivery at 14H00 on November 17th was almost unchanged at 1,430 cents per bushel compared to the previous week at 1,422 for March delivery. The price of soybeans is attributed to availability for domestic consumption and export orders consistent with the reality that the 2022 crop was spared the impact of the July and August heat and drought. World availability of oilseeds was reduced following the late February invasion of Ukraine. Prices are obviously influenced by projections of yield in the three major producing nations in South America.

 

According to a release on November 15th by the National Oilseed Processors Association, whose members process 95 percent of the U.S. crop, 184.5 million bushels of soybeans were crushed in October 2022. This value was up 16.7 percent from September, a one-year monthly low at 158.1 million bushels. The October 2022 crush was 0.3 percent higher than the October 2021 value of 184.0 million bushels.

 

On November 17th the spot price for soybean oil was down 7.4 percent from previous week to 69.91 cents per lb. Higher prices for vegetable oils were posted over past weeks reflecting a growing acceptance that total oilseed supply will eventually be limited by a sharply diminished crop of sunflower oil from Ukraine, the world’s largest exporter of this commodity. Ukraine is subject to restraints on cultivation and limits on crushing and exports due to hostilities following the invasion by Russia. During 2022, it is anticipated that 41 percent of U.S. soy oil will be diverted from fuel to biodiesel.

 

On November 17th 2022, the soybean meal spot price quoted on NASDAQ was $404 per ton, $14 per ton lower than the spot price last week and compared to a 52-week range of $312 to $500 per ton.

 

On November 17th 2022, Meat and Bone meal was priced over a range of $350 to $390 per ton according to the USDA National Animal By-product Feedstuffs Report, Prices were for central U.S. plants but with a wide range among prices based on composition, source and location. Price fluctuation reflects changes in soybean meal and other oilseed meals.

 

On November 17th the conversion of the CNY to the BRL was BRL 0.76 up BRL 0.05 from last week. The conversion of the CNY to the US$ was CNY 7.16, up CNY0.11 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 2021-2022 market year net export sales of corn were down 0.13 million tons (5.1 million bushels) compared to the previous market year with cumulative exports of 59.764 million tons (2,352 million bushels) 

 

For the 2021-2022 market year net export sales of soybeans were down 0.11 million tons (4.2 million bushels) compared to the previous market year with cumulative exports of 57.118 million tons (2,099 million bushels) 

COMMENT

Subscribers are referred to the November 9th 2022 WASDE # 630 and the USDA quarterly Grain Stocks Report available under the STATISTICS tab. Data will be revised when WASDE # 631 is released in mid-December with the harvest completed.

 

There is currently continuity of the free-passage agreement allowing Ukraine to ship commodities from Black Sea ports. Ukraine apparently exported the 2021 crop in storage to make room for the anticipated 2022 harvests of corn and other commodities in progress that will be lower compared to 2021.


































































































































































































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