Ahead of the Open | August 17, 2022

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GRAIN CALLS

Corn: 4 to 6 cents higher.

Soybeans: 13 to 15 cents higher.

Wheat: 4 to 8 cents higher.

 

GENERAL COMMENTS: Corn, soybean and wheat futures rose overnight on corrective buying following two days of sharp declines. Malaysian palm oil futures firmed 0.4%, while front-month crude oil futures are near unchanged after falling to 6 1/2-month lows Tuesday. U.S. stock index futures signal a weaker open, while the U.S. dollar index is up around 300 points.

The Midwest weather outlook remains mostly price-negative for corn and soybean futures. Timely rain is expected across much of the region the rest of this week while temperatures will remain mild, World Weather Inc. said. Significant rain is expected in Texas and parts of Oklahoma early next week following light showers tonight into Friday morning. The rain may provide some relief to northern and western Texas following months of dryness, but the moisture will arrive too late for most crops, the forecaster said.

Grain shipments out of Ukraine continue. Four more ships left the Ukrainian ports at Chornomorsk and Odesa carrying sunflower meal, sunflower oil and corn, according to Turkey’s defense ministry. Five more vessels are expected to arrive at Ukrainian ports today to be loaded with ag products. Two dozen ships carrying grain trapped at Ukrainian ports since Russia’s invasion have departed since Aug. 1.

The U.S. Agency for International Development is providing over $68 million in additional funding to the UN World Food Program (WFP) to purchase, move and store up to 150,000 MT of Ukrainian wheat to help with the world hunger. USAID Administrator Samantha Power said the wheat will be purchased and sent to countries suffering from “severe hunger and malnutrition” in the Horn of Africa. The U.S. has provided $4.8 billion to WFP this year.

India raised its wheat production estimate on Wednesday even as other forecasters and traders were scaling down output numbers because of a heatwave. India estimates its wheat crop at 106.84 MMT, up 430,000 MT from its prior forecast. USDA on Friday cut its wheat production forecast for India by 3 MMT to 103 MMT. USDA’s Foreign Agricultural Service has pegged India’s production at 99 MMT, while some traders estimated output fell to as low as 95 MMT because of the heatwave.

The first batch of FSA certified acreage originally scheduled to be released Aug. 12 will be posted on Aug. 22 at 2 p.m. CT, according to USDA. FSA issues the initial certified acreage data in August and then updates the figures each month until January.  

Malaysia will maintain its export tax for crude palm oil at 8% for September but it lowered the reference price to 3,907.51 ringgit ($875.34) per MT, down from 5,257.91 ringgit per MT this month. The export tax structure starts at 3% for crude palm oil in a 2,250 to 2,400 ringgit-per-MT range. The maximum tax rate is set at 8% when prices exceed 3,450 ringgit per MT.

Bangladesh tendered for 50,000 MT of optional origin milling wheat.

 

CORN: December corn overnight fell as low as $6.06 3/4, the lowest intraday price since $6.01 on Aug. 8, before rebounding to modest gains. The contract held support at the 20-day moving average around $6.07 but remains down more than 27 cents for the week.

SOYBEANS: November soybeans traded within Tuesday’s range overnight after dropping 31 cents Tuesday to $13.88, the contract’s lowest closing price since Aug. 3. Tuesday’s low at $13.76 marks initial support.

WHEAT: September SRW wheat extended the past week’s sideways trade overnight, with initial support coming in at this week’s low of $7.78.

 

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-weaker

 

CATTLE: Live cattle may extend Tuesday’s rally to 3 1/2-month highs behind expectations for firmer cash prices, though the market may also be vulnerable to corrective selling. Stronger corn futures may pressure feeders. This week’s cash cattle negotiations have been slow to develop, though one source signaled bids of $151 were passed in Nebraska, suggesting feedlots may be digging in their heels. Unless packers grow more aggressive with cash bids, active trade may not be seen until late in the week for a change. Wholesale beef market strength may also support futures. Choice beef cutout values rose 98 cents to $265.44 on strong movement of 161 loads.

October live cattle rose $1.875 Tuesday to $145.675, the contract’s highest closing price since April 22. September feeder cattle rose $2.475 to $185.475.

HOGS: Lean hog futures may see followthrough pressure from Tuesday’s selloff, but corrective buying and the October contract’s unusually wide discount to the cash index may limit price downside. The sharp futures drop was driven in part by ideas the cash market is topping out and heading into a seasonally weak period. The CME lean hog index is down 65 cents today to $121.06 (as of Aug. 15), the fourth decline in the past five days. October hogs finished Tuesday at nearly a $24.50 discount. Traders clearly fear the cash market is going to face heavy pressure over the next two months.

Pork cutout values fell $3.76 Tuesday to $121.15, near a five-week low, but movement was strong at 337 loads. October lean hogs sank the $4.00 daily limit to $96.575, the lowest close since Aug. 3.

 

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