First Thing Today | August 1, 2023

Good morning!

Quiet, two-sided trade overnight... Corn, soybeans and wheat traded on both sides of unchanged while holding in relatively tight ranges during the overnight session. As of 6:30 a.m. CT, corn futures are trading mostly a penny lower, soybeans are steady to 4 cents higher, the winter wheat markets are 5 to 8 cents lower and spring wheat is steady to a penny lower. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is more than 300 points higher.

Consultant leaves corn, soybean yields unchanged... Weekend rainfall along with moderating temps impacted enough areas for crop consultant Dr. Michael Cordonnier to keep his yield estimates at 174 bu. per acre for corn and 50.5 bu. per acre for soybeans. But he has a neutral to lower bias toward both crops. Cordonnier estimates production at 15.01 billion bu. for corn and 4.17 billion bu. for soybeans.

Corn, soybean and spring wheat CCI ratings deteriorate amid heat... 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 4.7 points to 344.3, which was 11.5 points (3.2%) below last year at this time. The soybean crop fell 2.5 points to 335.8, which was 18.1 points (5.1%) below year-ago. The spring wheat CCI rating plunged 9.6 points to 326.8, which was 48.7 points (13.0%) below last year and the lowest rating of the growing season. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of July 30.

• Corn: 84% silking (82% average); 29% dough (29% average); 55% good/excellent (57% last week).
• Soybeans: 83% blooming (78% average); 50% setting pods (47% average); 52% good/excellent (54% last week).
• Cotton: 86% squaring (87% average); 47% setting bolls (50% average); 41% good/excellent (46% last week).
• Spring wheat: 97% headed (98% average); 2% harvested (5% average); 42% good/excellent (49% last week).
• Winter wheat: 80% harvested (83% average).

Sharp monthly drop in soybean crush expected... Analysts expect USDA to report processors crushed 175.7 million bu. of soybeans in June, based on a Bloomberg survey. That would be down 13.6 million bu. (7.2%) from May but up 1.6 million bu. (0.9%) from last year. Corn-for-ethanol use is expected to total 444.2 million bu., which would be up 6.7 million bu. (1.5%) from May and equal to year-ago.

China to sell state-owned soybean reserves... China will auction 461,400 MT of imported soybeans from state reserves on Friday.

Another indicator of Chinese economic concern... China’s Caixin/S&P Global manufacturing purchasing managers index (PMI) fell to 49.2 in July from 50.5 the previous month, marking the first decline in activity since April and the lowest reading in six months. New orders dropped after growing the prior two months, foreign sales contracted the most since September 2022 and buying levels were down for the first time since January.

China tries to ease pressure on yuan... China’s currency regulators have in recent weeks asked some commercial banks to reduce or delay their dollar purchases, two people with direct knowledge of the matter told Reuters. The so-called window guidance was meant to slow the pace of yuan depreciation, the sources said. One source said regulators were emphatic banks should hold off dollar purchases under their proprietary trading accounts.

Global gold demand slips in Q2 but central bank demand record-strong in H1... The World Gold Council (WGC) said global demand for gold fell 2% in the second quarter to 921 MT, due to higher interest rates and a stronger U.S. economy, though total demand was up 7% annually. Central bank demand for gold reached a record 387 MT in the first half of 2023, WGC said, and is expected to remain strong throughout this year.

Another slow week of cash cattle trade is possible... The average cash cattle price dropped $1.38 last week to $184.81. Trading volume was extremely light as most feedlots refused to move cattle at lower prices. With fresh contract supplies available starting today, packers will likely remain reluctant to bid up for supplies. Another week of reduced slaughter runs and limited cattle purchases could help the wholesale beef market forge a seasonal low.  

Seasonal top not yet in place for cash hogs... The CME lean hog index is up 19 cents to $106.00 (as of July 28), rebounding from a 3-cent loss on Monday. August lean hog futures narrowed their discount to the cash index to $1.875 with Monday’s gains. With 10 market days until the August contract expires and 12 days until it is cash-settled, traders may narrow the discount a little more.

Overnight demand news... Algeria purchased between 720,000 and 810,000 MT of milling wheat that’s expected to be sourced mostly from the Black Sea region, especially from Russia, Romania and Bulgaria. Taiwan tendered to buy up to 65,000 MT of corn, which can be sourced from the United States, Brazil, Argentina or South Africa. Japan is seeking 86,290 MT of milling wheat in its weekly tender.

See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.

Today’s reports

• 2:00 p.m. Cotton System Consumption and Stocks — NASS
• 2:00 p.m. Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks — NASS
• 2:00 p.m. Flour Milling — NASS
• 2:00 p.m. Grain Crushings and Co-Products Production — NASS
• 2:00 p.m. Honey Bee Colonies — NASS