Limit Up

By Tori Uhland

December 7, 2022

The corn and wheat markets were down sharply last week and soybeans were back and forth. Many headlines to consider including crop progress/condition reports, weather forecasts around the world, EPA mandates and China’s Zero-Covid policy.

The December USDA World Agriculture Supply & Demand report (WASDE) will be released on Friday, December 9th at 10 a.m. MST.


China softening their Covid restrictions has helped limit losses in the grain markets. The energy markets are mostly higher to start the week as crude oil is gaining support from the easing of Covid policies in China, which should increase their demand.

Last Friday, corn closed below the 200 day moving average. However, the EPA released their new biofuel mandates and we could see an increase in ethanol which would create more demand for corn.

The rail strike has been averted and rail freight and car values are down. River levels are still declining and forecasts aren’t inspiring, but export demand is also slipping. China still has not purchased its typical share of what the USDA has forecasted for total US corn exports, and they retain a 8.5 mmt (or 330 million bushel) lag versus their purchases at this time last year. There likely won’t be a change in what the USDA has forecasted for demand until the January WASDE report.


The main headline that is dragging wheat to start the week is that Australia will produce a record wheat crop despite flooding. However, there are still some quality issues due to the floods and export capacity issues, so this won’t necessarily change the world market, it will just add to this year’s carryout bushels.

U.S. export commitments .9 million metric tons behind last year and Russian wheat is still about $80 a metric ton cheaper than U.S. wheat.

Last week, we started trading nearby futures off of the March contract and the December futures went into delivery. This is a complicated process that I won’t even attempt to explain, but to summarize: there were surprise deliveries against the Kansas City Hard Red Winter Wheat December 2022 contract. Those deliveries indicated that there were enough supplies in existence to deliver, which made the trade rethink just how tight the U.S. market actually is on wheat. Values have since fallen to levels that would make wheat work into livestock rations competitively against corn.


Soybeans haven’t been hammered as hard as the corn and wheat markets, though there was a selloff last week, export sales helped support the market. China is carrying the U.S. export commitments with 22.6 million metric tons on the books, 2.2 mmt over the same week a year ago. Overall, with the USDA’s lower export projection, commitments are 1.77 mmt ahead of pace. China typically slows down its buying of U.S. products as we get closer to the end of the calendar year.

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The government in the Netherlands is forcibly shutting down (or “buying out”) 3,000 farms in an attempt to cut down nitrogen emissions by half in order to meet the country’s climate goals. Several thousand farms will have to close and several thousand additional farmers will have to downsize their livestock operations to meet the targets. The Netherlands is the second largest agricultural exporter, by value, in the world, following the U.S. They help supply the rest of Europe with flowers, meat, dairy, eggs, vegetables and other vital products. The shutdowns come as grocery prices have risen all over the world and leaders are warning about a food crisis caused by the war in Ukraine and rising input costs from the energy crisis.

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