Ahead of the Open | August 12, 2022

GRAIN CALLS

Corn: Steady to 2 cents lower.

Soybeans: 5 to 7 cents lower.

Wheat: 6 to 10 cents lower.

GENERAL COMMENTS: Wheat futures led grain markets lower overnight as traders awaited USDA’s Crop Production and Supply & Demand Reports later this morning. Malaysian palm oil futures rose 3.7% and posted a weekly gain of 14% on signs of stronger demand. Front-month crude oil futures are down around $1.50 but still up nearly $4 for the week. U.S. stock index futures signal a stronger open, while the U.S. dollar index is up more than 550 points.

USDA’s Crop Production and Supply & Demand Reports will be released at 11 a.m. CT. The first survey-based corn and soybean estimates will be closely watched, with traders expecting declines from levels projected in July. Based on the average pre-report estimate from a Reuters survey, corn production is expected to come in at 14.392 billion bu. on a yield of 175.9 bu. per acre, while the soybean crop is expected at 4.481 billion bu. on a yield of 51.1 bu. per acre. USDA resurveyed planted acreage in the Dakotas and Minnesota, and the corn harvested acreage percentage could be lowered to reflect more acres chopped for silage. Any changes to wheat production in USDA’s reports today will likely to be relatively minor, with the average estimate for all wheat at 1.791 billion bushels and other spring wheat production expected to increase about 7 million bu. to 510 million bu. Wheat ending stocks for 2022-23 may increase about 11 million bu. Click here to view the full pre-report expectations.

The near-term Midwest weather outlook hasn’t changed substantially, with showers and thunderstorms accompanied by a couple of shots of cooler air during the coming week to 10 days, World Weather Inc. said. “No serious decline in crop or field conditions will occur, but there will definitely be pockets of dryness that will need to be closely monitored,” the forecaster said. Temperatures will be milder than usual, especially from the middle of next week through August 25 in most of the Midwest.

Two more ships left Ukraine’s Black Sea ports Friday, including the first wheat shipment under the new export deal, according to Turkey’s defense ministry. A total 14 ships have now departed from Ukraine over the past two weeks, following the deal with Russia to allow the resumption of grain exports from Ukraine’s Black Sea ports.

French corn crop conditions declined steeply last week to the lowest level in at least a decade, Reuters reported, citing data from farm office FranceAgriMer, amid a worsening drought in the European Union’s top grain producer. An estimated 53% of French corn was in good or excellent condition as of Aug. 8, down from a revised 62% for the previous week, FranceAgriMer said. That was the lowest corn rating for this time of year in data going back to 2011.

Russia’s wheat export tax for Aug. 17-23 will be 5,018.1 rubles ($82.30) per MT based on an indicative price of $367.30, down from 5,219.6 rubles the previous week. The tax is well below levels when it was pegged to the U.S. dollar.

China’s ag ministry cut its estimate for 2021-22 (Oct.-Sept.) soybean imports to 91.0 MMT, down 2 MMT from the previous month’s forecast, as heavy hog industry losses reduced demand for soymeal. Soybean imports are now forecast to fall 8.8% from 2020-21. The ag ministry kept its 2022-23 soybean import forecast at 95.2 MMT, which would be a 4.6% rise from this year. Estimates to corn output, imports and consumption were also unchanged, however, recent low temperatures and excessive rainfall in the northeast, might impact corn production in some areas, the ministry said.

China will sell auction another 500,000 MT of imported soybeans from state-owned reserves on Aug. 19. Beijing continues to sell soybeans from state reserves to boost supplies in the domestic market.

South Korea purchased 60,000 MT of optional origin corn.

CORN: December corn overnight rose as high as $6.31 3/4, the contract’s highest intraday price since $6.36 1/2 on July 29, before fading to slight losses. The new-crop contract is still up from $6.10 at the end of last week.

SOYBEANS: November soybeans overnight rose as high as $14.57, the contract’s highest intraday price since $14.81 on Aug. 1, before dropping to losses. The new-crop contract is still up from $14.08 3/4 at the end of last week.

WHEAT: September SRW wheat fell as low as $7.96 3/4 overnight but is still up from $7.75 3/4 at the end of last week.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

CATTLE: Live cattle futures may extend this week’s gains behind cash market strength and bullish technicals. Cash cattle trade picked up in recent days, with 93,000 head trading so far after 103,000 head of negotiated trade last week. Prices have ranged widely from $138 to $152.50, though it appears the average will climb for the second consecutive week after averaging $140.84 last week. Active trade amid higher prices portends further market strength as slaughter supplies tighten. Wholesale beef prices slipped this week but movement has been strong. Choice beef cutout values fell 13 cents Thursday to $263.10, the lowest since late May, on movement of 103 loads.

October live cattle rose 62.5 cents Thursday to $145.10, the contract’s highest close since April 22 and up from $143.875 at the end of last week.

HOGS: Lean hog futures may extend this week’s run to contract highs on bullish charts and cash strength. August lean hog futures expire today and the October contract will take over lead-month status at an unusually wide discount of nearly $21 to the cash index that’s poised to narrow. Market-ready hog numbers will build seasonally, packers are pulling hogs forward, which will smooth out the supply increase into year-end. The CME lean hog index is down 23 cents to $121.86 but remains in an uptrend and close to a 14-month high. Signs of weakness in wholesale pork could limit futures upside. Pork cutout values fell 36 cents Thursday to $123.31, the lowest in over three weeks, while movement was light at 233 loads.

October lean hogs rose 22.5 cents Thursday to $101.075, a lifetime-high close for the contract and up from $98.40 at the end of last week.