Ahead of the Open | August 10, 2022

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GRAIN CALLS

Corn: 5 to 7 cents higher.

Soybeans: 10 to 12 cents higher.

Wheat: 13 to 17 cents higher.

 

GENERAL COMMENTS: Soybean futures reached the highest level in over a week and corn and wheat also rose amid concerns over hot, dry weather in the U.S. and Europe. Malaysian palm oil futures fell 0.3%, the first decline in four sessions, on higher supply data. Front-month crude oil futures are near unchanged after earlier trading more than $1.50 lower. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down sharply and near a five-week low.

USDA reported a sale of 196,000 MT of soybeans for delivery to China during the 2022-23 marketing year. Today’s announcement follows two previous soybean sales to China earlier this month totaling 264,000 MT.

U.S. inflation rose less than expected in July, suggesting consumers may finally be receiving some relief from soaring prices for gasoline and other goods and services. The Consumer Price Index (CPI) increased 8.5% during July compared to the same month a year ago, lower than expectations for a gain of 8.7% and down from a 9.1% year-over-year jump in June. On a monthly basis, prices were flat as gasoline prices tumbled 7.7%, offsetting a 1.1% increase in food prices.

Egg prices at grocery stores soared 47% over year-ago in July, according to retail analytics firm Information Resources Inc. Prices have been driven by bird flu outbreaks, killing more than 30 million commercial and wild birds. The crisis hurt egg-laying hens and turkeys the most. Although the outbreak has eased, growers are still repopulating their flocks, which is expected to bring prices down eventually. Other jumps in prices in the IRI data include butter (26%), packaged bread (15%), frozen meals (23%) and frozen pizza (18%).

Ukrainian exports of grains, oilseeds and vegoils reached 2.66 MMT in July, up 22.7% from June. The total included 412,000 MT of wheat, 183,000 MT of barley, 1.1 MMT of corn, 362,100 MT of sunflower seeds and other commodities. But Ukrainian grain and oilseed exports still declined nearly 52% from year-ago during the first month of the 2022-23 marketing year.

Malaysia’s palm oil stocks at the end of July rose to an eight-month peak on the back of improving production and soaring imports, according to data from industry regulator the Malaysian Palm Oil Board (MPOB). Crude palm oil production climbed 1.84% to 1.57 MMT from June levels, while palm oil exports grew 10.72% to 1.32 MMT, MPOB said.

Japan purchased 82,955 MT of wheat from its weekly tender, including 25,070 MT U.S. and 57,885 Canadian, and tendered to buy 70,000 MT of feed wheat and 40,000 MT of feed barley. Jordan tendered to buy 120,000 MT of optional origin milling wheat.

 

CORN: December corn futures overnight dropped as low as $6.11, filling a gap in the daily chart created with Tuesday’s strong open, before rebounding. Initial resistance is seen at Tuesday’s high of $6.24 1/2, just under the 40- and 200-day moving averages.

SOYBEANS: November soybeans overnight rose to $14.41, the contract’s highest intraday price since $14.81 on Aug. 1. The new-crop contract surged 28 3/4 cents Tuesday.

WHEAT: September SRW wheat overnight reached $7.99, just under Tuesday’s high of $8.01 1/4.

 

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-firmer

 

CATTLE: Live cattle futures may face followthrough pressure from Tuesday’s soft close and weakness in wholesale beef prices as traders wait for the cash market to develop. Choice beef cutout values fell $1.51 to $264.73 but movement was strong at 154 loads, signaling firm retailer demand. Choice beef continues to trade around the mid-$260s, with retailers stepping up purchases when prices weaken and pulling back when prices climb. Despite sideways beef trade, the cash market is well supported as packer margins remain in the black. October live cattle fell $1.05 Tuesday to $143.175.

HOGS: Lean hog futures are supported by ongoing cash market strength. The national direct cash hog price jumped $8.29 Tuesday, while the CME lean hog index is 33 cents firmer to $122.25 (as of Aug. 6), a 14-month high. Cash sources signal packers are pulling hogs forward to fill near-term slaughter runs. Any pulling forward of animals is not only price-supportive near-term but would somewhat reduce the seasonal buildup in hog numbers relative to expectations through the end of the year. Pork cutouts fell 21 cents Tuesday to a three-week low at $123.85, but movement was strong at 321 loads.

China’s pork prices in July surged 25.6% from the previous month, with the strong gains attributed to production capacity cuts, farmers holding back pigs from market and a recovery in consumer demand. On an annual basis, Chinese pork prices jumped 20.2% in July, stirring speculation China may step up purchases of U.S. pork.

 

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