GRAIN CALLS
Corn: slightly lower.
Soybeans: 4 to 6 cents higher.
Wheat: 9 to 15 cents lower.
GENERAL COMMENTS: Grains choppy to lower, soybeans slightly higher… Corn futures are narrowly mixed to lower. Soybean futures are up 3 to 4 cents. Winter wheat futures have tumbled 10 to 12 cents; spring wheat futures are 5 to 8 cents higher. The U.S. dollar index is slightly higher. Crude oil futures are under pressure. Risk-off attitudes are on the rise early this week after the Taliban’s rapid takeover of Afghanistan and as the ongoing surge of the Delta variant of Covid-19 impacts major economies.
Scouts on the first day of the Pro Farmer Crop Tour found an average corn yield of 151.5 bu. per acre in South Dakota, which was down sharply from last year’s 179.2 bu. per acre yield and well under the three-year average of 170.4 bu. per acre. Soybean pod counts in a 3’x3’ square came in at 996.9 for South Dakota, which compares with 1,250.9 pods last year and 1,036.1 pods for the three-year average. In Ohio, samples yielded an average corn yield of 185.1 bu. per acre, up sharply from 167.7 bu. per acre last year on Tour and 167.2 bu. per acre for the three-year average. Soybean pod counts in a 3’x3’ square came in at 1,195.4 for Ohio, which compared to 1,155.7 pods last year for the state and 1,056.0 pods for the three-year average. Today, scouts on the eastern leg of the Tour travel from Noblesville, Indiana, to Bloomington, Illinois. Scouts on the western leg will travel from Grand Island to Nebraska City, Nebraska. Tonight, we will release official Tour results from Nebraska and Indiana.
Following are highlights from USDA’s crop progress and condition update for the week ended Aug. 15.
- Corn: 73% in dough, 22% dented, 62% “good” to “excellent” (G/E)
- Soybeans: 94% blooming, 81% setting pods, 57% G/E
- Spring wheat: 11% G/E, 58% harvested
- Cotton: 93% squaring, 75% setting bolls, 10% bolls open, 67% G/E
Germany’s association of farm cooperatives today lowered its estimate of the country’s wheat crop by 400,000 MT to 22.39 MMT, which would be a 1.3% decline from the 2020 season. The country dealt with repeated rain in August, though Germany was able to skirt the crop damage late-season moisture caused in France. And this came after a cold spring and a hot, dry summer. The association says crop quality is reasonable to good. The group also lowered its 2021 winter rapeseed production forecast from 3.68 MMT to 3.51 MMT, which would be near steady with last year’s crop. Harvest of both crops is winding down. Germany is the EU’s second largest producer of wheat and often its largest rapeseed producer.
Brazilian farmers in the country’s center-south have harvested 70% of their safrinha corn crop, which lags last year’s pace by seven percentage points, reports the agribusiness consultancy AgRural. Progress picked up over the past week, though quality issues continue. AgRural reports, “In the west and southwest of Paraná ... quality problems caused by frosts abounded, with reports of loads leaving the fields with up to 40% of damage,” adding that there are also quality issued in Mato Grosso do Sul, but they are not as severe.
CORN: Corn futures stalled Monday after surging rather impressively in the wake of last week’s big USDA reports. The fact that December futures proved unable to close above the downtrend line drawn across its June and July highs suggested underlying weakness, which came to the fore again in overnight trading. The market is apparently garnering little support from the weekly Crop Progress report, even though it indicated a 2% drop in “good” to “excellent” readings to 62% from 64% last week. The weakness may reflect the strong Ohio yield reading from the Pro Farmer Crop Tour published yesterday evening.
SOYBEANS: Soybean futures were apparently boosted Monday by a daily announcement of a sizeable sale to ‘unknown destination’ for the eighth straight workday. Similar news was belatedly forthcoming again this morning, with private exporters having sold 198,000 metric tons of beans to China and 132,000 MT to ‘unknown destinations’ yesterday. This could add up to a quick bullish followthrough after the opening. One has to suspect the strength has a technical component to it, since the nearby contracts have closed above their short-term downtrends. Equally impressive was the manner in which the market largely shrugged off the diminished results of the monthly NOPA Crush report released yesterday.
WHEAT: Wheat futures are giving back a portion of the truly impressive gains posted late last week after the USDA chopped its Russian wheat harvest forecast and the global carry-out projection for 2021-22. The likely question for many is whether the various contracts can hold at support represented by short-term moving average and previous contract highs. Having Germany trim its wheat harvest forecast may provide underlying fundamental support. One has to wonder if the spring wheat harvest reading at 58% complete is influencing the market, although it wasn’t that far removed from expectations averaging 56% complete.
CATTLE: Steady-higher.
HOGS: Mixed-higher.
China’s sow herd contracts for first time in nearly two years… China’s sow herd declined 0.5% from June to July, the first decline in nearly two years, reports state media. But the herd was still up 25% from year-ago, according to China’s National Development and Reform Commission (CNDRC) spokesman Meng Wei. The country had 45.6 million sows at the end of June, which was still up 2% from late 2017, before African swine fever hit. A dive in prices in recent months led to panic selling and producers have been working to get rid of unproductive sows. An executive at China’s largest pork processor, WH Group, last week warned that the June liquidation of sows had been significant and could push live hog prices higher the second half of 2022. China’s total pig herd climbed 0.8% in July, with the herd now up 31% from year-ago, CNDRC reports.
USDA’s Food Safety and Inspection Service announced that as of Aug. 12, Mafrig Global SA (establishment (3250) has been added to the list of eligible plants that have been certified to export meat to the U.S.
Live cattle futures settled split, with nearbys higher on the ongoing beef rally. Choice climbed $4.97 and Select surged $5.53 on Monday, but movement slowed to 78 loads. That could hint a top is near. Load counts have been shy of 100 for three consecutive days. Cash cattle traded at an average price of $123.28 last week, down 55 cents from the week prior and a disappointment given soaring boxed beef values and packer profit margins. Packer profit margins top $901 a head, according to HedgersEdge.com.
Lean hog futures posted moderate to sharp gains to start the week, with the October contract gapping higher and leading gains. The pork cutout value tumbled $6.33, continuing the recent trend of market volatility. Hams once again were the major price driver, with prices dropping nearly $26. Meanwhile, national average cash hog bids dropped $2.29 on Monday.
CATTLE: Beef values continued their impressive surge Monday, as indicated by Choice cutout at the end of the day topping both last Friday’s and midsession levels; it rose $4.97 to $329.80. It’s now within striking distance of its early-June high at $340.55. Packers were apparently able to persuade a few producers to sell for less than they had last Monday, although the 5-area average at $123.28 did top last week’s mean by about 50 cents. The strong futures close once again left most-active October (at $129.125) within striking distance of what has been a barrier at $130.00. A breakout above that level could trigger a strong followthrough.
HOGS: After having soared almost $25 last Friday, ham primal values gave back that gain and a bit more yesterday, which translated into a sizeable drop (down $6.94 to $117.01) in pork cutout. That may bode rather ill for today’s futures opening. Still, futures posted across-the-board gains Monday in apparent response to the large cash discounts built into the nearby October and December contracts. That strength was quite impressive when viewed in light of last week’s 94,000-head surge in the hog slaughter total over the early-August total. Ideas that the ongoing climb in wholesale beef prices will continue to cause elevated substitution demand for cheaper pork cuts is likely supporting the hog/pork complex as well.