After the Bell | August 22, 2023

Corn: December corn futures fell 3 cents t0 $4.79 1/2, finishing near mid-range. The corn bears are out in force early this week. Early results from the Pro Farmer Midwest crop tour lean bearish for corn prices. On Monday crop scouts found an average corn yield of 157.42 bu. per acre in South Dakota, up from 118.45 bu. last year and the three-year average of 149.71 bu. In Ohio, samples yielded an average corn yield of 183.94 bu. per acre, up from 174.17 bu. per acre in 2022 and up from the three-year average of 175.64 bu. per acre. Later this evening, scouting results will start to come in from Indiana, Illinois and Nebraska. Tour results will be posted on our website at 8 p.m. CT. An up-trending U.S. dollar index, which hit a 2.5-month high today, was also a negative element for the corn futures market. Corn bulls got no traction today from USDA reporting a daily sale of 224,000 MT of corn for delivery to Mexico. World Weather Inc. today said the heat wave presently gripping the Corn Belt will see cooling begin Friday and by Sunday highs in the middle 70s to the middle 80s will be most common before warming occurs during the early to middle part of next week with temperatures not nearly as warm as what occurs this week. On Monday afternoon USDA rated 58% of the corn crop as “good” to “excellent,” down one percentage point from last week, while the portion rated “poor” to “very poor” rose two points to 15%. When USDA’s ratings are plugged into the Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect) the corn crop fell 2.4 points to 350.2, but is still 5.4 points (1.6%) above last year at this time.

Soybeans: November soybeans fell 15 3/4 cents to $13.46, ending the session below the 40-day moving average, while September meal futures fell $3.50 to $406.30. September soybean oil fell 278 points to 65.21 cents. Gap-filling was the theme of the day across soybean futures, with notable selling in meal and soyoil pressuring the complex, though technical support at the 200-day moving average remained intact. Scorching temps through much of the week, along with dry conditions forecast through the next ten days, are seemingly old news as World Weather Inc. expects a break in the current heatwave late this week into the weekend. The forecaster notes cooler air is likely in the northern Plains and Great Lakes region, with most of the heat becoming confined to the southern states. Meanwhile, USDA updated its weekly condition ratings on Monday, leaving the “good” to “excellent” rating unchanged from the previous week at 59% “good” to “excellent,” while the portion of the crop rated “poor” to “very poor” rose one point to 13%. On our weighted CCI, the soybean crop fell 0.3 points to 348.9 and is now 2.4 points (0.7%) above last year at this time.

Day 1 of the Pro Farmer Crop Tour revealed average soybean pod counts in a 3’x3’ square for South Dakota at 1,013, up from 871.4 (16.2%) in 2022 but down from the three-year average of 1,039.71 (2.6%). Pod counts in Ohio averaged 1,252.93, up from 1,131.64 (10.7%) in 2022 and the three-year average of 1,160.90 (7.9%).

Wheat: December SRW wheat futures rose 2 cents at $6.27 1/2. December HRW wheat fell 1/2 cents to $7.47 3/4. Both markets closed near mid-range. December spring wheat futures fell 7 1/4 cents to $7.91 3/4. Buying interest in the wheat futures markets was limited today by weaker corn and soybean futures markets, and a rally in the U.S. dollar index to a 2.5-month high. Agriculture consultancy, Sovecon, cast a further shadow by increasing its Russia wheat harvest forecast for 2023 to 92.1 MMT from 87.1 million. Notions Ukrainian grain will continue to flow out of the country and reach its intended destinations—despite the Russia-Ukraine war—remain a bearish underlying factor for the wheat futures markets. Monday afternoon’s USDA crop progress reports showed the agency rate 38% of the U.S. spring wheat crop as “good” to “excellent,” down four points from last week. The portion of the crop rated “poor” to “very poor” increased three percentage points to 23%. World Weather Inc. today said that in the northern Plains, rainfall in the next seven days will be mainly in northeastern production areas, such as northern Minnesota and northeastern North Dakota. Much of this will occur Wednesday and Thursday. Recent rain in the west has been helpful. However, more will be needed for any late season crops, said the forecaster. Look for the wheat futures markets to continue to follow the lead of the soybean and corn markets in the near term.

Cotton: December cotton rose 65 points to 84.36 cents, notching a mid-range close. December cotton futures were able to extend Monday’s gains but were limited by resistance at the near convergence of the 10- and 20-day moving averages. A lingering heatwave in the Southern Plains is keeping supply concerns elevated, while global demand reservations continue to hold gains to a minimum. USDA updated weekly condition ratings, reducing the “good” to “excellent” rating by three percentage points to 33%, while the portion of the crop rated “poor” to “very poor” increased three points to 46%. The Texas crop was rated 10% “good” to “excellent,” down four points from last week, and 71% “poor” to “very poor,” up five points on the week.  

World Weather Inc. reports cotton in West Texas is not likely to receive any serious relief from dryness anytime soon, although some showers may evolve next week briefly. South Texas cotton will get rain today and Wednesday, stalling harvest progress and raising a little concern over fiber quality, but the rain is unlikely to last long enough or be heavy enough to induce any long-term damage. Meanwhile, much of the South Texas crop has already been harvested. Cotton in the Delta continues dry and warm and needs a little moisture to reduce crop stress.

Cattle: October live cattle futures gave up yesterday’s gains and are seemingly set to test last week’s low of $177.625 as prices closed $1.25 lower today at $178.625. No cash trade has taken place yet this week as packers are content waiting and producers are holding out for higher prices. Wholesale trade thus far today is fruitful for bulls, with Choice cutout rising $1.64 to $317.20, negating yesterday’s losses. Select cutout rose $2.35 to $289.68, narrowing the Choice/Select spread to $27.52, though still historically wide. Movement was not particularly strong at 54 loads, indicating grocers could be finished purchasing inventory for Labor Day. Feeder cattle did not perform particularly well today either despite falling corn and soybean meal prices, with October futures settling $1.425 lower on the day at $251.225. Feeder futures have been trading sideways since early July and have remained within spitting distance of their highs. Corn prices have been volatile over the same period, but rising prices in corn in mid-July had little negative effect on feeder futures, which shows how impressive the strength has been. It will take a significant catalyst to break out of the current range, one that may not happen all that soon.

Hogs: Hog futures continued suffering from seasonal weakness Tuesday, with the nearby October contract falling $1.05 to $79.575. Traders continue anticipating a seasonal breakdown in cash hog and wholesale pork values during the coming weeks and months. Although active grocer buying may tend to support pork prices in the short run as they accumulate inventories for planned Labor Day sales, the industry expects a sustained drop from that point. This is based upon the strong seasonal tendency for hog and pork supplies to surge during fall. Moreover, with the grilling and BLT seasons coming to an end in the days ahead, consumer demand is also seen dwindling through late summer. The cash market has continued its recent slide, as exemplified by last Friday’s official quote for the CME hog index at $98.81, down 80 cents, as well as Monday’s preliminary index figure at $98.04, down another 77 cents. Pork cutout has kept falling as well; today’s midsession quote dropped $1.07 to $104.14 after having topped $117.00 in early August. We harbor suspicions the current bearishness is overdone, but bulls have little reason to fight the downtrend at this time.