Ahead of the Open | August 11, 2022

GRAIN CALLS

Corn: 5 to 7 cents higher.

Soybeans: 13 to 15 cents higher.

Wheat: 6 to 10 cents higher.

GENERAL COMMENTS: Grain and soybean futures climbed overnight amid weakness in the U.S. dollar and ongoing concerns over dry Midwest weather. Malaysian palm oil futures rose 3.8% on stronger export data and gains in soyoil. Front-month crude oil futures are up around $1.50, reaching the highest prices in over a week. U.S. stock index futures signal a stronger open, while the U.S. dollar index is down more than 400 points.

USDA reported a daily sale of 103,400 MT of soybean meal for delivery to Mexico during the 2022-23 marketing year.

Rain is expected in parts of the Midwest next week as colder air moves into the region, but the absence of moisture from the Gulf of Mexico may result in relatively light amounts, World Weather Inc. said. The region may see the “familiar weather pattern of limited rainfall in the west and central parts of the Midwest while the east becomes quite cool and showery,” the forecaster said.

Wholesale prices fell in July for the first time in two years as cheaper oil slowed inflation. The U.S. producer price index for July fell 0.5% from June, the first month-over-month decrease since April 2020, according to the Labor Department. Economists expected an increase of 0.2%. The PPI for July rose 9.8% compared to the same month a year earlier, down from an 11.2% increase in June.

The first shipments of wheat should start flowing from Ukrainian ports next week under the new export deal, a top UN official said Wednesday. The first 12 shipments that have left three Black Sea ports designated by the deal were carrying corn or oilseed products. “The silos were full of corn and the ships that were there have been loaded with corn. We’re actually transitioning to wheat,” said Frederick Kenney, interim UN Coordinator at the Joint Coordination Center (JCC) in Istanbul.

Conab lowered its projection for Brazil’s corn crop to 114.7 MMT, down 972,000 MT from last month, and kept its 2021-22 export estimate unchanged at 37.5 MMT. Conab kept its soybean production and export forecasts unchanged at 124.0 MMT and 75.2 MMT, respectively. For wheat, Conab projects a record crop of 9.2 MMT for 2022-23, up 160,000 MT from last month.

Consultancy Strategie Grains slashed its European Union corn production forecast by 10 MMT to a 15-year low of 55.4 MMT due to severe drought across Europe. “The outlook for the 2022 crop grain maize [corn] harvests across Europe has deteriorated drastically,” Strategie Grains said in its monthly report. “This would be the smallest harvest since 2007.”

The Rosario Grain Exchange expects Argentina’s corn planting area to fall by 4.7% to 8 million hectares for 2022-23, while soybean acres are anticipated to rise by 4.3% to 16.8 million acres. The exchange cited producers’ preference for soybean production given the “not very encouraging weather forecasts and high possibilities” of La Niña in a year of “high uncertainty.” The exchange projects 2022-23 production at 55 MMT for corn, 47 MMT for soybeans and 17.7 MMT for wheat.

The national average price for regular unleaded gasoline fell to $3.99 a gallon on Thursday, according to AAA. Gas prices hit a record high of $5.02 in June. Despite the 21% drop, they remain 25% higher than this time last year.

CORN: USDA reported net weekly U.S. corn sales at 191,800 MT for 2021-22, up “noticeably” from the previous week and from the average for the previous four weeks. For 2022-23, net sales totaled 191,300 MT. Both figures were at the low end of trade expectations. Traders await USDA’s Crop Production Report Friday. USDA’s first survey-based estimates are expected to come in lower than its July projections.

SOYBEANS: USDA reported net weekly soybean sales reductions of 66,700 MT for 2021-22. For 2022-23, net sales totaled 477,200 MT, primarily for China (195,000 MT) and “unknown destinations” (184,200 MT). Both figures were within trade expectations. USDA has reported net old-crop sales reductions in six of the past seven weeks.

WHEAT: USDA reported net weekly wheat sales of 359,200 MT for 2022-23, up 44% from the previous week but down 34% from the prior four-week average. 

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-firmer

CATTLE: Live cattle may gain support from expectations for stronger cash prices, thought higher corn prices may weigh on feeders. Cash cattle sales were light through Wednesday, though the limited trade that did occur was around $1 higher in the northern live market and $2 to $3 higher for the dressed market. Cash sources didn’t indicate any activity in the Southern Plains, though the initial sales up north suggested prices will rise. Choice beef cutout values fell $1.50 Wednesday to $263.23 but movement was again solid at 123 loads. USDA reported net U.S. beef sales of 14,600 MT for 2022, up 22% from the previous week but down 17% from the prior four-week average. 

October live cattle gained $1.30 Wednesday to $144.475, the contract’s highest closing price since May 4.

HOGS: Lean hog futures may gain support from bullish charts and strong cash fundamentals. The CME lean hog index has turned choppy recently but the long-term trend remains higher. The index is down 16 cents today (as of Aug. 9) to $122.09. October hogs, which assume lead-month status after the August contract’s expiration on Friday, finished Wednesday more than $21 below that level. Pork cutout values fell 18 cents Wednesday to $123.67, but movement was strong at 302 loads. USDA reported net U.S. pork sales of 21,500 MT for 2022, down 31% from the previous week and down 6% from the prior four-week average. 

October lean hogs surged $1.25 Wednesday to $100.85, a lifetime-high close for the contract.