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3 Big Things Today, December 22, 2021

Soybeans, Grains Higher Overnight; Breakeven Costs Forecast to Be ‘Very High’

1. Soybeans, Grains Rise in Overnight Trading

Soybean and grain futures were higher in overnight trading on concerns about global weather.

Dry weather and crop stress is expected to continue in much of central and southern Brazil as dry conditions persist in the regions, said Don Keeney, an agricultural meteorologist with Maxar.

Some rain is forecast in northern growing areas of Brazil, but other areas will remain dry, the forecaster said.

In Argentina, dry weather in northeastern growing areas will increase stress on plants. Still, some southern and western areas have ample soil moisture, Keeney said.

In the U.S. Southern Plains, meanwhile, extremely dry weather continues, putting growing hard-red winter wheat at risk.

Little or no rain has fallen in southwestern Kansas and the Oklahoma and Texas panhandles in the past 60 days, according to the National Weather Service’s Advanced Hydrologic Prediction Service.

About 20.1% of Kansas, the biggest producer of wheat in the U.S., was seeing drought conditions, up from 19.4% a week earlier and 6.38% three months earlier, according to the U.S. Drought Monitor.

Soybean futures for March delivery jumped 10½¢ to $13.23¼ a bushel overnight on the Chicago Board of Trade. Soymeal was up $2.10 to $392.60 a short ton, while soy oil rose 0.52¢ to 54.46¢ a pound.

Corn futures for March delivery were up 3¼¢ to $6.01½ a bushel.

Wheat futures for March delivery added 5¾¢ to $8.04¾ a bushel, while Kansas City futures gained 2¢ to $8.43½ a bushel.

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2. Corn, Soybean Breakeven Expected to Be ‘Very High’ in 2022

Breakeven prices for corn and soybeans are expected be relatively high this year due to rising input costs, especially for fertilizer, according to a report from a group of agricultural economists.

The costs to break even in 2022 are $4.73 a bushel for corn and $11.06 a bushel for soybeans, said the report from University of Illinois economists Gary Schnitkey, Nick Paulson, and Krista Swanson and Ohio State University economist Carl Zulauf.

“Compared with historical levels, these break-even prices are very high,” the report said. “While current fall bids are above break-even levels, the high break-even levels present risks in 2022.”

Supply disruptions, high commodity prices and inflation all will contribute to the high cost of production next year, the economists said. The biggest increase in prices will be for fertilizer.

A separate report last week from economists at the universities said nitrogen prices will continue to increase. On Dec. 3, the price for anhydrous ammonia in Illinois was $1,434 a ton, a $91 increase from just two weeks earlier.

Anhydrous prices more than doubled in the past year, the report said.

The most-recent report from the economists said non-land costs to grow corn in Illinois are forecast at $755 an acre next year while cash rent costs are expected to be around $309 an acre.

That puts the cost of production at $1,064 an acre, easily surpassing last year’s record cost of $9.15 an acre, the economists said.

Soybean costs are projected at $785 per acre – $476 in non-land costs and $309 in cash rent. That’s up from $651 an acre a year earlier and easily a record high.

“High break-even price levels highlight the risk associated with crop production in 2022,” the economists said. “Current fall bids ... are above break-even levels. However, commodity prices will need to remain at historically high levels for profitable crop production to occur. Pricing some grain at current levels would be prudent.”


3. Dry Weather Increases Risk of Wildfires in Southern Plains

Fire-weather conditions are expected in much of the Oklahoma and Texas panhandles through the weekend amid extremely dry weather, according to the National Weather Service.

The driest weather will begin Thursday and last through Tuesday, the NWS said in a report early this morning.

A wind advisory is expected for Friday as sustained winds are forecast at 30 mph with gusts of up to 50 mph, the agency said.

“Strong winds, low relative humidity and critically dry fuels will result in critical fire weather conditions across most of the area on Friday,” the NWS said. “Elevated fire weather conditions will remain possible each afternoon through the weekend into early next week.”

Red-flag warnings have been issued for parts of western Nebraska due to extremely dry weather.

Winds will be sustained from 10 to 15 mph with gusts of up to 25 mph. Relative humidity will fall as low as 14% and any fires will spread rapidly, the agency said.  

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