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Grain Production Estimates, Export Sales, Put Options, Markets & Rain Days Update 5/20/22

Highlights


June grain options expire today.


China says they have found a gene which will improve wheat’s drought tolerance and nitrogen efficiency, thus improving yield greatly, especially on marginal quality soil. There is a lot of marginal quality soil in the world.


The Winter Wheat Tour wrapped up yesterday with the yield average estimated at 39.7 bpa vs. the five-year average of 47.4 bpa. Total production for Kansas is estimated at 261 million bushels vs. 271 million by the USDA.


When the United Nations General Secretary told Russia’s Putin he wanted to negotiate the release of Ukrainian grain into the world marketplace in exchange for lifting some sanctions on Russia, Putin responded the discussions Russia is willing to have must include all topics involving the relationship between Ukraine and Russia.


The International Grains Council (IGC) lowered their world corn production from 1.197 billion mt to 1.184 billion mt. The USDA is at 1.181 billion mt. IGC lowered global wheat production estimate 11 million mt to 769 million mt. That is a lot of less wheat, but the bulls were not impressed. USDA is at 774.83 million mt tons.


India’s farm ministry lowered their wheat production estimate to 106.41 from 111.32 million mt.


Today, India’s customs authority permitted four vessels to resume loading the balance of their wheat cargoes after a temporary pause of the loading process due to confusion about the export ban. These four vessels will take a total of 255,000 mt of Indian wheat to Brazil, Bangladesh, Oman and Indonesia.


Slugs in soybean fields are becoming a problem in PA.


It is going to get cold tonight from Minnesota to the Texas Panhandle and Utah. Snow is likely in some areas. Take a look:


 

Export Sales Update


Weekly corn export sales were reported at 17 million bushels yesterday with just 9.7 million bushels needed each week to meet USDA projection for the marketing year. The soybean sales were 27 million bushels, more than enough sales already to exceed the USDA projection. The bean carryover is already down to a 19 day supply and it will get quite a bit smaller with three and half months left in the marketing year and Brazil’s short crop. Price has yet to ration corn or beans.


 

Wheat Put Discussion

After the Close Thursday May 19th.

September 2022 CBOT wheat futures settled at $12.06, down 27 cents. All puts should have increased in value since the futures price was down significantly.

  • The $9 put gained ¾ of a cent, +$37.50.

  • The $10 put gained 1¼ cents, +$62.50.

  • The $11 put gained 3¾ cents, +$187.50. Settlement price was 57 cents.

  • A short futures position gained $1,350.

  • The wheat in the field or bin lost about $1,350 because cash price = futures plus basis.


 

Market Data


This morning:

Crude oil is at $110.85, down $1.36

The dollar index is at 102.83, up 0.11

July palm oil is at 6,526 MYR, up 230. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton is at $128.03, down $0.19 per cwt. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas is at $8.140, down 0.260. The contract high was made May, 6th at $9.052. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $3.6606 per gallon, down 0.0065. The contract high was made May, 5th at $3.9282. ULSD stands for Ultra Low Sulfur Diesel.


 

Rain Days Update


The Western Corn Belt has 5 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 6 less rain daysthan yesterday.


The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/

Explanation of Rain Days


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