First Thing Today | August 16, 2022

Good morning!

Followthrough selling overnight... Corn, soybean and wheat futures extended yesterday’s losses overnight but all three markets held above Monday’s lows. As of 6:30 a.m. CT, corn futures are trading 4 to 6 cents lower, soybeans are 10 to 20 cents lower and wheat futures are 9 to 12 cents lower. Front-month crude oil futures are around 75 cents higher and the U.S. dollar index is nearly 400 points higher.

Consultant cuts corn yield, harvested acres... Crop consultant Dr. Michael Cordonnier cut his corn yield forecast by 1 bu. to 173 bu. per acre amid continued deterioration of crop condition ratings. He also lopped 500,000 acres off his harvested acreage forecast as he expects a greater percentage to be cut for silage or abandoned, reducing it to 81.35 million acres. That lowered his production estimate to 14.07 billion bushels. Cordonnier kept his soybean yield at 50.5 bu. per acre for now and adopted USDA’s harvested acreage figure of 87.2 million, which puts his production estimate at 4.40 billion bushels.

Corn and bean CCI ratings decline, spring wheat crop inches higher... 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. 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. The spring wheat crop inched 0.5 point higher to 368.4, which was well above last year’s drought ravaged crop but 8.9 points (2.4%) below the 2018-2020 average. Click here for more details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Aug. 14.

• Corn: 94% silking (97% average), 62% dough (65% average), 16% dented (20% average), 57% rated good/excellent (58% last week)
• Soybeans: 93% blooming (93% average), 74% setting pods (77% average), 58% rated good/excellent (59% last week)
• Spring wheat: 16% harvested (35% average) 64% rated good/excellent (64% last week)
• Winter wheat: 90% harvested (94% average)
• Cotton: 80% setting bolls (78% average), 15% bolls opening (14% average), 34% rated good/excellent (31% last week)

More grain shipments leave Ukrainian ports... Five more ships have left Ukrainian ports carrying corn and wheat, three from Chornomorsk and two from Pivdennyi, Turkey’s defense ministry said on Tuesday. Four more ships bound for Ukraine were to be inspected in Istanbul on Tuesday. Ukraine could export 3 MMT of grain from its ports in September and may in the future be able to export 4 MMT from them monthly, Deputy Infrastructure Minister Yuriy Vaskov said. He said the country had received applications for 30 ships to come to Ukraine in the next two weeks to export grain.

SovEcon sharply raises Russian wheat crop estimate... 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. It said, “Russia’s big crop is getting bigger thanks to great weather in 2022. This is likely to have a limited impact on the global market as 2022-23 Russian exports remain painfully slow. We estimate July-August exports at only 5.8 MMT, down 22% from average and 28% below last year. Such a slow start of the new export campaign amid record-high crop doesn’t bode well for the domestic market and Russian farmers.”

China to boost economic support for flagging economy... 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. “China will optimize policies for sustained economic recovery, macro policies should expand demand actively in a strong, reasonable and moderate manner,” a spokesperson at the National Development and Reform Commission (NDRC) said. As part of the added support, Beijing will step up the use of special local government bonds and new credit granted by policy banks and increase infrastructure projects.

U.S. recession watch: ports... West Coast ports are dropping signals about a slowdown in U.S. demand, with the number of inbound containers falling in July. Loaded inbound containers arriving at the Port of Oakland plunged to 69,463 20-foot equivalent units (TEUs). That is 27% less than both the prior month and same month a year earlier, and the least busy July for imports since 2009. At Long Beach, the country’s busiest location after Los Angeles, laden inbound shipments fell to 376,175 TEUs — the smallest amount this year and the quietest July since 2019. U.S. ports will see less retail cargo entering the country in the second half of the year as economic growth slows amid aggressive interest-rate increases and persistent inflation, the National Retail Federation said last week.

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 reports 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 and freight rail shipments appear to be sputtering. The pullback comes as a pivot in consumer spending toward services looks to be in full swing, leaving retailers weighed down by excess inventory. Trucking executives note shipment volumes remain strong by historical standards and say business is moderating after a period of rapid growth. They just need shipping demand to build back up to its usual fall peak. “We’re not sure if it’s recessionary or if it’s just, we’re getting back to a place of more normal distribution,” said C.H. Robinson CEO Bob Biesterfeld, on moderating freight demand.

Egg prices are coming down... 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. Retail rates generally follow commodity prices, so consumers should see a “significant” drop by more than a dollar per dozen in the next 30 days, said John Brunnquell, chief executive officer of Egg Innovations, one of the biggest U.S. producers of free-range eggs.

ERP payouts reach $6.37 billion... As of Aug. 14, payments under the Emergency Relief Program (ERP) totaled $6.37 billion with 261,017 applications approved. The total includes $5.55 billion for non-specialty crops and $824.1 million for specialty crops. North Dakota still leads with $1.01 billion paid out for eligible losses in 2020 and 2021, followed by Texas at $786.3 million. By crop, there have been $1.94 billion in payments for corn, $1.09 billion for soybeans, $920.6 million for wheat and $636.9 million for cotton.

Limited retailer demand for beef... Boxed beef prices firmed on Monday, with Choice up $1.09, though packers moved only 95 loads on the day. That movement was down 10 loads from last Monday. Traders will watch beef movement closely to see if it was just a slow start to the week or if retailer buying for upcoming Labor Day features is wrapping up early.

Strong day for wholesale pork trade... The pork cutout value firmed $3.08 on Monday as all cuts except loins firmed. While that was down from gains earlier in the day, retailer demand for pork remains solid as packers moved 295 loads at the higher prices. Solid retailer demand is likely to keep packers pulling some marketings ahead and maintain support for the cash market.

Overnight demand news... Exporters reported no tenders or sales.

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

• 11:00 a.m. Cotton and Wool Outlook: August 2022 — ERS
• 11:00 a.m. Oil Crops Outlook: August 2022 — ERS
• 2:00 p.m. Feed Outlook: August 2022 — ERS
• 2:00 p.m. Rice Outlook: August 2022 — ERS
• 2:00 p.m. Wheat Outlook: August 2022 — ERS