Ahead of the Open | August 15, 2022

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GRAIN CALLS

Corn: 16 to 20 cents lower.

Soybeans: 40 to 50 cents lower.

Wheat: 17 to 22 cents lower.

 

GENERAL COMMENTS: Corn, soybean and wheat futures fell sharply overnight on a combination of a crop-friendly Midwest weather outlook, stepped-up China concerns and pressure from outside markets. Malaysian palm oil futures fell 6.7% following conflicting export data. Front-month crude oil futures are down nearly $5 after touching the lowest level since early February. U.S. stock index futures signal a lower open, while the U.S. dollar index is up around 500 points.

Both European and GFS weather models and their ensembles are signaling rains and cooler temps for most areas of the Corn Belt during the next two weeks. The Delta and Southeast will experience a mix of sunshine and rains, along with seasonal temps the next two weeks. “At least some rain will fall in these drier areas while temperatures are cooler biased in the next two weeks resulting in at least partial relief to crop stress, but more rain will still be needed,” World Weather Inc. said.

U.S./China tensions flared again as more lawmakers visited Taiwan. Five U.S. lawmakers arrived in Taipei on an unannounced visit late Sunday, following a visit by House Speaker Nancy Pelosi earlier this month. In response, the People’s Liberation Army Eastern Theatre Command organized multi-service joint combat readiness patrols and combat drills in the sea and airspace around Taiwan on Monday.

Two more ships carrying grain left from Ukraine's Black Sea ports on Saturday, Turkey’s defense ministry said, bringing the total number of vessels to depart the country since the grain export deal was signed to 16. The first ship carrying Ukrainian wheat to be exported under the deal arrived in Istanbul for inspection Sunday. The priority is “to free up space in the Ukrainian ports and get all those vessels frozen there the last few months to leave Ukraine with cargo, so [they] can get new ships in,” said a United Nations official.

Members of the National Oilseed Processors Association (NOPA) are expected to report July soybean crush totaled 171.5 million bu., according to a Reuters survey. If realized, that would be up 4.2% from June and 10.6% above last year. It would also be the largest crush since March and the second biggest tally for July, behind only 2020. Soyoil stocks are expected to decline for a fifth straight month to a 10-month low of 1.713 billion pounds.

Exports of Malaysian palm oil products Aug. 1-15 rose 2.8% from the same week last month, cargo surveyor Intertek Testing Services said. Cargo surveyor Amspec Agri Malaysia, however, said exports during the same period fell 1.9%. Indonesia will set crude palm oil reference price at $900.52 per MT for Aug. 16-31, up from $872.27 per MT in the first half of the month. The reference price would place the export tax of crude palm oil at $74 per MT in that period. Indonesia has waived palm oil export levies until the end of August.

Large speculators increased their bullish bets in the corn and soybean markets for the second consecutive week, data from the Commodity Futures Trading Commission showed. The managed money net long in corn rose 12,141 futures and options contracts during the week ended Aug. 9 to 142,062 contracts. In SRW wheat, large speculators expanded a net short for the sixth consecutive week, to 20,348 futures and options contracts.

Saudi Arabia purchased 180,000 MT of wheat.

 

CORN: December corn overnight fell as low as $6.21 3/4 after gaining 32 1/4 cents last week to $6.42 1/4, the contract’s highest closing price since June 20. Trade focus has shifted from Friday’s USDA Crop Production Report, which featured a lower-than-expected estimate for the U.S. crop, to Midwest weather. USDA will update its weekly crop condition ratings after today’s close. A week ago, USDA reported 58% of the U.S. corn crop in “good” or “excellent” condition as of Aug. 7, down from 61% the previous week.

SOYBEANS: November soybeans overnight fell as low as $14.04 after closing Friday at $14.54 1/4, up 45 1/2 cents for the week and the highest close since July 29. Weather will be the key price driver for the soybean market, which ended higher Friday despite USDA’s higher-than-expected U.S. crop estimate at a record 4.531 billion bushels. USDA a week ago reported 59% of the U.S. soybean crop in “good” to “excellent” condition as of Aug. 7, down from 60% a week earlier.

WHEAT: September SRW wheat overnight fell as low as $7.83 1/2 after dropping 4 3/4 cents Friday to $8.06, up 30 1/4 cents for the week. Strength in the U.S. dollar and weakness in corn and soybeans will weigh on the wheat market early this week. A week ago, USDA rated 64% of the spring wheat crop in “good” to “excellent” condition, down sharply from 70% a week earlier.

 

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

 

CATTLE: Live cattle may extend last week’s gains on expectations a recent cash resurgence will continue, while weakness in corn prices may support feeder cattle. Live steers averaged $144.34 last week through Friday morning, up $3.50 from last week’s average, and traders appear optimistic cash prices will firm again. Wholesale beef extended a sideways-to-lower pattern, as Choice beef cutout values ended last week at $263.37, down $1.25 from a week earlier. Movement was lighter at 89 loads. October live cattle fell 60 cents Friday to $144.50, up 62.5 cents for the week.

HOGS: Lean hog futures may continue last week’s rally behind support from cash fundamentals. The CME lean hog index is up 7 cents to $121.93 (as of Aug. 11), near a 14-month high posted last week and just 75 cents below last year’s peak. Even if the cash index doesn’t surpass year-ago levels, it’s unlikely to post a sharp decline due to signs the cash market will remain well supported. While slaughter supplies are starting to build seasonally, cash sources continue to signal packers are pulling hogs forward, which is supported by declining weights. A recent slump in wholesale pork may mute buying interest. Pork cutout values fell $1.48 Friday to a four-week low at $121.83, but movement was strong at nearly 316 loads. October lean hogs fell $1.05 Friday to $100.025, still up $1.625 for the week.

 

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