Ahead of the Open | August 16, 2022

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GRAIN CALLS

Corn: 5 to 7 cents lower.

Soybeans: 12 to 15 cents lower.

Wheat: 8 to 12 cents lower.

 

GENERAL COMMENTS: Corn and soybean futures fell overnight on expectations Midwest rains and cooler temps this week will boost yield prospects. Wheat futures also fell amid increasing grain shipments out of Ukraine, concerns over China’s economy and strength in the U.S. dollar. Malaysian palm oil futures rose 1.1% as the ringgit hit a 5 1/2-year low. Front-month crude oil futures briefly rebounded above unchanged but are now modestly weaker. U.S. stock index futures signal a weaker open, while the U.S. dollar index is up nearly 200 points though off its earlier highs.

USDA reported a sale of 228,606 MT of soybeans for delivery to Mexico during the 2022-23 marketing year.

Rain fell in western and south-central Iowa, Nebraska and northern Missouri overnight and more is expected the next 10 days across the region, World Weather Inc. said. “The moisture will help to improve crop and field conditions especially with cooler temperatures expected for a while,” the forecaster said. “There will be pockets that need for more rain, while other areas will experience some short-term moisture improvements and parts of the region may dry down a little, but crop conditions should not change much.”

Crop consultant Dr. Michael Cordonnier cut his U.S. corn yield forecast by 1 bu. to 173 bu. per acre amid continued deterioration of crop condition ratings. He also reduced his harvested acreage forecast by 500,000 acres, to 81.35 million acres, on expectations a larger percentage will be cut for silage or abandoned and lowered his production estimate to 14.07 billion bu. Cordonnier kept his soybean yield at 50.5 bu. per acre and adopted USDA’s harvested acreage figure of 87.2 million, which puts his production estimate at 4.40 billion bushels.

Five more ships left Ukrainian ports carrying corn and wheat, three from Chornomorsk and two from Pivdennyi, Turkey’s defense ministry said today. Four more ships bound for Ukraine were to be inspected in Istanbul today. Ukraine could export 3 MMT of grain from its ports in September and may eventually export 4 MMT, an official said, noting the country had received applications for 30 ships to come to Ukraine in the next two weeks to export grain.

SovEcon raised its Russian wheat crop estimate by 3.8 MMT to 94.9 MMT due to record winter wheat yields in many regions and improved spring wheat conditions. But the Russia-based consultancy is concerned with exports. It raised total grain production by 5.1 MMT to 142.6 MMT, saying “Russia’s big crop is getting bigger thanks to great weather in 2022,” though this likely will have a limited impact on the global market as 2022-23 Russian exports remain “painfully slow.”

China will boost economic demand in a strong, reasonable and moderate manner and accelerate infrastructure construction in the third quarter, officials from the state planner said, in an attempt to boost its weakening economy.

U.S. freight demand is slipping heading into the critical fourth quarter. Recent industry measures and comments from trucking executives suggest shipping volumes are softening from last year’s urgent demand. The Wall Street Journal reported freight rates are also pulling back from historic highs as domestic operations grow less strained and the capacity constraints of the past two years recede. The broad Cass Freight Index last month reached its lowest point since April.

Midwest large eggs closed at $2.16 a dozen on Friday, down about 37% from late July’s record high, according to commodity researcher Urner Barry. That will provide relief for consumers, who saw egg prices jump 47% at U.S. grocery stores last month during the worst period of food inflation since 1979.

 

CORN: USDA late Monday reported the U.S. corn crop conditions at 57% “good” or “excellent” as of Sunday, down from 58% a week earlier and one percentage point higher than expected. 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 another 3.1 points to 348.8, the fifth straight weekly decline and now 17.7 points (4.9%) below the five-year average.

December corn traded within Monday’s range overnight after falling 14 cents to $6.28 1/4 to start the week.

SOYBEANS: USDA reported 58% of the soybean crop in “good” to “excellent” condition, down from 59% a week ago and in-line with trade expectations. Based on the Pro Farmer CCI, the soybean crop declined by 2.1 points to 349.1, the second straight weekly decline and now 5.1 points (1.4%) below the five-year average.

November soybeans traded within Monday’s range overnight. The contract dropped 42 cents Monday $14.12 1/4, the lowest closing price since Aug. 8 but more than 26 cents off the session low.

WHEAT: USDA reported 64% of the spring wheat crop in “good” to “excellent” condition as of Sunday, unchanged from a week earlier and one percentage point above expectations. The crop was 16% harvested as of Sunday, down from the five-year average of 35% and below trade expectations for 22%. Based on the Pro Farmer CCI, the spring wheat crop rose 0.5 point to 368.4, well above last year’s drought ravaged crop but 8.9 points (2.4%) below the 2018-2020 average.

 

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-firmer

 

CATTLE: Cattle futures may trade mixed, with concerns over beef demand weighing on live cattle but weaker corn prices boosting feeders. Choice cutout values rose $1.09 Monday to $264.46 but movement was slower at 95 loads. Last week’s total beef movement, at 3,201 loads, was the slowest since the week ended April 22. Beef movement will be closely watched for signs whether retail buying for upcoming Labor Day features is wrapping up early. October live cattle fell 70 cents Monday to $143.80, the lowest closing price since Aug. 9.

HOGS: Lean hog futures may extend recent gains behind strong cash fundamentals. Pork cutout values gained $3.08 Monday to $124.91, led by a gain of over $13 in bellies. Retail demand for pork remains solid as packers moved 295 loads at the higher prices, and that likely will keep packers pulling some animals ahead and maintain support for the cash market. The CME lean hog index is down 22 cents to $121.71 (as of Aug. 12), though still near the 14-month high posted last week. October lean hogs rose 55 cents Monday to $100.575, near the session high.

 

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