GRAIN CALLS
Corn: 2 to 5 cents lower.
Soybeans: mixed to higher.
Wheat: mixed to higher.
GENERAL COMMENTS: Corn futures are a penny or five lower to start the day. Soybean futures are mixed to up 5 cents, taking back a portion of yesterday’s losses. Winter wheat futures were weak in early trading, while spring wheat futures are up 1 to 4 cents. The U.S. dollar index has extended its rally to the highest level since early November. Crude oil futures are under pressure, but within yesterday’s trading range.
Pro Farmer Crop Tour results for Iowa and Minnesota… On Day 4 of the Pro Farmer Crop Tour, scouts measured an average corn yield potential of 190.8 bu. per acre for Iowa, which compares to 177.8 bu. per acre last year for the state and 183.0 bu. per acre for the three-year average. Pod counts in a 3’x3’ square came in at 1,218 for Iowa, which compares to 1,146 pods in 2020 and 1,154 pods for the three-year average.
In Minnesota, scouts measured average corn yield potential of 177.4 bu. per acre, which compares to 195.1 bu. per acre last year and 181.4 bu. per acre for the three-year average. Pod counts in a 3’x3’ square came in at 1,027 for Minnesota, which compares to 1,086 pods last year and 1,047 pods for the three-year average.
Our Pro Farmer production and yield estimates (informed by Tour data, but separate) will be released at 1:30 p.m. CT today on our website, in our newsletter and via email.
Rains fell overnight across the western half to two-thirds of Nebraska and South Dakota, with some very light accumulation making its way into southwest North Dakota. More rain is expected for these states and into Minnesota today and later this weekend.
China imported 7.88 MMT of beans from Brazil in July, which was a 3.7% dip from year-ago, according to data from China’s General Administration of Customs. China’s soybean imports from all origins total 8.67 MMT during July, a 14.1% drop from last year at this time. China’s imports from the U.S. totaled just shy of 42,300 MT from the U.S., a marginal improvement from year-ago. China typically focuses its purchases on Brazil over the northern hemisphere summer with focus shifting to the U.S. in the fall.
Russia has set its wheat export taxes at $31.70 per metric ton for Aug. 25-31. That’s up $1.30 from where the duty stands this week. Given its status, along with other nations in the Black Sea region, as dominant wheat exporters, this looks supportive of the wheat markets.
Corn accounted for 47.5% of Japan’s corn use in animal feed during June, a 1.8-point decline from the year prior and a 0.3-point dip from May, preliminary data from the country’s ag ministry showed. Sorghum use dropped 0.4 points from year-ago to 1.1%. Barley and wheat use were each up 0.2 points from June 20202 to 3.7% and 1.7%, respectively.
France’s farm office now estimates 91% of this year’s soft wheat crop had been collected as of Aug. 16, a solid 19-point advance from the week prior thanks to a stretch of drier weather. Last year at this time, harvest was complete. Durum wheat harvest is now complete and spring barley harvest is close behind.
CORN: The Iowa and Minnesota results of the Pro Farmer Crop Tour seemed to hold conflicting implications for the corn harvest, with increased Iowa yield prospects likely more than offsetting those from modest Minnesota reductions. Otherwise, there was little news pertinent to the corn market released overnight. Given that this week’s rains will likely enable corn plants in many areas to finish the growing season well, along with the market’s tendency for seasonal weakness as the harvest looms, traders are likely concerned about its ability to sustain gains.
SOYBEANS: As with corn, the implied increase in Iowa soybean pod counts will prove larger than the reductions seen in Minnesota likely exerted downward pressure upon Soybean futures in early morning trading. Prices had risen rather significantly overnight, but suffered a sizeable setback as the sun rose. Traders may also be thinking the long string of daily announcements of U.S. soybean sales has ended. Given the help this week’s rains are giving soybeans in many areas, the market’s tendency for late summer-fall losses, as well as the technical damage done by yesterday’s breakdown, futures apparently face sustained downward pressure.
WHEAT: This week’s rains have come too late to help the U.S. spring wheat crop. Indeed, heavy rains at this point may hamper the harvest, which may partially explain moderate overnight gains posted by spring wheat futures. Conversely, these rains will almost surely improve planting prospects for the winter wheat crop in the Northern Plains. Traders may also see the rains as marking the beginning of the end of the drought in that region. News that Russia is upping its taxes on wheat exports looks supportive, given that country’s status as a dominant exporter.
LIVESTOCK CALLS
CATTLE: Steady-higher.
HOGS: Steady-lower.
USDA will release its monthly Cattle on Feed Report today. Analysts polled by Reuters expect the report to show all major categories down from year-ago, with the number of cattle on feed at 98.2% of year-ago levels and placements at 93.1% of year-ago. Boxed beef values have yet to reverse their multiweek rally and Choice values climbed $1.55 yesterday to $341.63, taking out the mid-June high. Select shot $6.61 higher. But movement did slow to 75 loads. But the wholesale market’s impressive rally has yet to translate to any major cash market gains, and the market is now skeptical of the cash market’s ability to rally. Packer profit margins climbed to $999.25 a head yesterday, reports HedgersEdge.com.
The pork cutout value rose just 79 cents on Thursday and movement slowed to 283.19 loads. Hams dropped $10.37, but loins climbed $11.79. Meanwhile, weekly pork export sales of 20,000 MT for 2021 failed to impress, dropping 31% from the prior four-week average. The weak price gains by both beef and pork, as well as limited movement, raised concern the pork market could also turn down. Still, cash hog bids climbed $1.29 on Thursday.
CATTLE: The wholesale beef market has seemingly lost much of its upward momentum, but yesterday’s modest advance of $1.55 still pushed Thursday’s ending quote above the June peak to $341.63. Historical buying patterns followed by grocers suggests they’ll remain active until noon next Wednesday, but given the sheer size of the recent surge, one has to wonder how aggressive they’ll be from this point. On the other hand, there is no shortage of cattle or beef at this juncture, which implies torrid demand from consumers and export customers. Also, while cash cattle prices have strengthened this week, they are drastically below their peak levels from 2014-15, which implies great upside potential if/when feedlot supplies tighten.
HOGS: The national direct market average for hogs sold yesterday rebounded from recent losses, rising $1.29 to $98.80 and the Iowa-Southern Minnesota average bounced to $105.12. This may signal a firming of the CME lean hog index, since it’s expected to drop 99 cents to $108.18 per hundredweight today. As expected, the afternoon quote for pork cutout gave back a major portion of the big gain posted at midsession Thursday, but it did end the day 79 cents higher at $121.40. Nevertheless, with recent beef gains slowing significantly and hog slaughter surging on a seasonal basis, traders clearly worry that prospective losses will prove even larger than implied by the big discounts built into nearby futures.