First Thing Today | August 9, 2022

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Good morning!

Grains strengthen amid weaker crop ratings... USDA’s cuts to crop condition ratings Monday afternoon fueled buying in grain and soy markets overnight. As of 6:30 a.m. CT, corn futures are trading 12 to 14 cents higher, soybeans are mostly 26 to 29 cents higher and wheat futures are 13 to 18 cents higher. Front-month crude oil futures are slightly more than $1 higher and the U.S. dollar index is down around 265 points this morning.

Corn, soybean and spring wheat CCI ratings decline... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 3.9 points to 352.0. That was the fourth straight weekly decline for the corn CCI rating, which was 14.7 points (4.0%) below the five-year average for the date. The soybean crop dropped 2.7 points to 351.2, which was 5.0 points (1.4%) below average. The spring wheat crop fell 7.6 points to 367.8, though that was still 39.2 points above the five-year average, which included last year’s drought-ravaged crop and the lowly rated 2017 crop. Click here for more details.

Consultant leaves yield estimates unchanged... Rains during the weekend were beneficial and there are more rainfall chances the first half of this week. As a result, Crop Consultant Dr. Michael Cordonnier left his corn and soybean yield estimates at 174 bu. and 50.5 bu. per acre, respectively, though he has a neutral to lower bias toward both. Cordonnier also wanted to see USDA’s initial corn and soybean crop estimates before further lowering his forecasts.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Aug. 7.

  • Corn: 90% silking (93% average), 45% dough (49% average), 6% dented (9% average), 58% rated good/excellent (61% last week)
  • Soybeans: 89% blooming (88% average), 61% setting pods (66% average), 59% rated good/excellent (60% last week)
  • Spring wheat: 9% harvested (10% average) 64% rated good/excellent (70% last week)
  • Winter wheat: 86% harvested (91% average)
  • Cotton: 69% setting bolls (64% average), 9% bolls opening (9% average), 31% rated good/excellent (38% last week)

Two more grain ships leave Ukrainian ports... Two more ships left the Ukrainian port of Chornomorsk on Tuesday, Turkey’s defense ministry said, one carrying 64,720 MT of corn destined for South Korea and the other containing 5,300 MT of sunflower meal for Turkey. That brings the total number of ships to leave Ukrainian ports to 12 since Aug. 1. Four ships that left Ukraine on Sunday are anchored near Istanbul and will be inspected today, the defense ministry said.

Indonesia lowers palm oil export tax threshold... Indonesia on Tuesday lowered its threshold for applying export tax on crude palm oil to a reference price of $680 per MT, down from $750 per MT previously. The export tax goes up for every $50 price increase in the reference price, which is set periodically by the trade ministry. Indonesia’s customs office said the changes raised the current export tax for crude palm oil to $52 per MT from the previous $33 per MT, with the reference price currently set at $872.27.

Americans expecting less inflation in coming years... Respondents’ median expectation in July was for an annual inflation rate of 6.2% in one year, down from the 6.8% they expected in June, the Federal Reserve Bank of New York said Monday. Respondents expected inflation in three years to fall to 3.2%, down from the 3.6% they expected in June, and inflation in five years to be at 2.3%, down from a previous 2.8%. Economists don’t see consumer expectations as a formal forecast but pay attention to such surveys as a sign of popular psychology that can influence price pressures.

USDA ERP payouts edge higher... Phase 1 payments under the Emergency Relief Program (ERP) were $6.27 billion as of Aug. 7, up slightly from the initial total signaled by USDA last week. Payments include $5.49 billion for non-specialty crop growers and $782.2 million for specialty crop producers for losses suffered in 2020 or 2021. USDA’s initial announcement of ERP payments noted just over $6.2 billion in total payments, with $5.45 billion to non-specialty crop producers and $760 million for specialty crops.

Last week’s cash cattle trade more active than thoughts... Last week’s negotiated cash cattle trade totaled 103,000 head, the fourth highest of the year, while the average price firmed $1.01 to $140.84. Cash sources say last week’s cash trade may have started what should be a general seasonal strengthening as fed cattle supplies tighten.

October hogs nearing contract high but prices still too bearish... October lean hog futures on Monday got to within 7.5 cents of the contract high at $100.825 scored in late March. Solid cash market fundamentals and a bullish technical posture suggest still more upside in the near term. Plus, the contract is still trading more than $21.50 below the cash index.

Overnight demand news... Jordan made no purchases in its tender to buy 120,000 MT of milling wheat. Japan is seeking 82,955 MT of milling wheat in its weekly tender. The Philippines tendered to buy 120,000 MT each of wheat and feed barley.

See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.

Today’s reports

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