Ahead of the Open | August 4, 2022

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GRAIN CALLS

Corn: 1 to 3 cents higher.

Soybeans: 13 to 15 cents higher.

Wheat: HRW and SRW 4 to 5 cents higher, spring wheat 9 to 12 cents higher.

 

GENERAL COMMENTS: Soybean futures firmed late in the overnight session amid corrective buying following three days of sharp declines. Corn and wheat also rose. Malaysian palm oil futures fell 1.2% on projections for higher inventories. Front-month crude oil futures edged slightly higher after earlier falling to a six-month low. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down around 250 points this morning.

Crop moisture stress remains a “big concern” in the northwestern U.S. Corn Belt, but rain is expected to impact much of the region over the late weekend and early part of next week, World Weather Inc. said today. “Only partial relief is expected, but sufficient rain should occur to take the edge off of stress for a little while,” the forecaster said.

A Turkish bulk carrier is expected to arrive in the Ukrainian Black Sea port of Chornomorsk on Friday and will be the first vessel to come into a Ukrainian port since the war began, a spokesperson for the regional administration of Odesa said. The Turkish bulk carrier OSPREYS “is heading from the Dardanelles Strait to the port of Chornomorsk,” the spokesperson wrote late Wednesday.

The Kremlin said on Thursday the deal to unblock Ukraine’s grain exports from the Black Sea was not a “one-time mechanism,” and that it hoped it would continue to work effectively. “This is not a one-time mechanism, but a mechanism that is designed to ensure the export of the grain that has accumulated in these ports,” Kremlin spokesman Dmitry Peskov told reporters.

China fired multiple missiles around Taiwan on Thursday as it launched its largest ever military drills a day after a visit by U.S. House Speaker Nancy Pelosi (D-Calif.) to the self-ruled island that Beijing regards as its sovereign territory. China’s Eastern Theatre Command said it had completed multiple firings of conventional missiles on waters off the eastern coast of Taiwan as part of the planned exercises. The last time China fired missiles into waters around Taiwan was in 1996.

Malaysia's palm oil inventories at the end of July may have risen to the highest in eight months due to improving production and soaring imports, based on a Reuters survey. Stockpiles in the world’s second-largest producer expanded 8.3% from June to 1.79 MMT, according to the median estimate of 11 traders and analysts. Production is expected to have climbed 2% to its highest since November.

Taiwan purchased 50,910 MT of U.S. milling wheat. Japan purchased 122,103 MT of wheat from its weekly tender, including 54,680 MT of U.S., 32,410 MT of Canadian and 35,013 MT of Australian. Iran purchased between 180,000 and 240,000 MT of milling wheat likely to be sourced from Russia.

 

CORN: Net U.S. corn sales for 2021-22 totaled 57,900 MT during the week ended Aug. 4, down 62% from the previous week but up 31% from the average for the previous four weeks. For 2022-23, net weekly sales totaled 256,700 MT, up from 193,700 MT the previous week and within trade expectations ranging from 100,000 to 400,000 MT.

SOYBEANS: USDA reported net weekly soybean sales reductions of 11,000 MT for 2021-22, down 81% from the previous week and down 90% from the prior four-week average. A sales increase of 124,800 MT for China was more than offset by reductions of 229,500 MT for “unknown destinations.” That marked five of the past six weeks in which there were net old-crop sales reductions. For 2022-23, net sales totaled 410,600 MT, primarily for unknown destinations (154,000 MT) and China (144,000 MT). New-crop sales were within trade expectations ranging from 200,000 to 700,000 MT.

WHEAT: Net weekly wheat sales totaled 249,900 MT for 2022-23, down 39% from the previous week and down 55% from the prior four-week average. Sales were at the low end of expectations ranging from 200,000 to 550,000 MT. September SRW wheat firmed overnight after dropping 11 cents Wednesday to $7.63 3/4, a six-month closing low.

 

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-weaker

 

CATTLE: Live cattle futures may extend Wednesday’s surge to three-month highs on followthrough technical strength and a firmer-than-expected cash market. Wednesday’s rally was led by October and December contracts, signaling traders could be looking ahead to a tightening supply of market-ready cattle in the fourth quarter and beyond. Deferred live cattle futures hold a premium to nearby prices, but the tighter supply outlook should continue to provide solid underlying support. Choice beef cutout values fell 52 cents Wednesday to $267.94 on movement of 106 loads.

USDA reported net weekly U.S. beef sales of 12,000 MT for 2022, down 52% from the previous week and down 30% from the average for the previous four weeks. October live cattle rose $1.825 Wednesday to $143.95, a three-month closing high.

HOGS: Lean hog futures may face pressure from weakening cash fundamentals. The CME lean hog index is down 63 cents today to $120.94 (as of Aug. 2), its second straight daily decline after a nearly month-long rally. The pork cutout value fell $5.53 Wednesday to $125.49, led by a drop of more than $26 in bellies. While cash fundamentals are likely to trend lower seasonally into year-end, traders appear overly pessimistic with the big discounts built into fall- and winter-month futures. Net weekly pork sales totaled 31,000 MT, up 43% from the previous week and up 35% from the prior four-week average. Increases were primarily for China (16,800 MT, including decreases of 300 MT).

August lean hogs rose $1.15 Wednesday to $121.00, the highest close for a nearby contract since June 2021, while October futures fell 37.5 cents to $95.85.

 

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