Ahead of the Open | August 9, 2022

GRAIN CALLS

Corn: 14 to 16 cents higher.

Soybeans: 27 to 30 cents higher.

Wheat: 13 to 17 cents higher.

GENERAL COMMENTS: Corn futures gapped higher at the start of overnight trade and reached the highest levels in over a week after USDA’s crop condition ratings slipped more than expected. Soybeans and wheat also surged. Malaysian palm oil futures rose 1.3% after Indonesia lowered its export tax threshold on crude palm oil. Front-month crude oil futures were up more than $1. U.S. stock index futures signal a weaker open, while the U.S. dollar index is down nearly 400 points.

USDA reported a sale of 133,000 MT of corn for delivery to China during the 2022-23 marketing year. Today’s sale follows Monday’s announcement of a combined 225,000 MT in corn sales to Italy and “unknown destinations” for 2022-23.

A high-pressure ridge will shift to the far western U.S. next week, reducing heat for the Plains and allowing showers to return to many areas in the Midwest, including the western Corn Belt, World Weather Inc. said today. Limited rainfall is expected for the southwestern U.S. Corn Belt during the coming 10 days, but temperatures will not be nearly as hot. “If the high-pressure ridge moves as far to the west as the models are suggesting today, rain may eventually reach into some of the western Corn Belt crop areas, but some caution is advised because the ridge may be moving too far to the west.”

Crop Consultant Dr. Michael Cordonnier held his corn and soybean yield estimates unchanged at 174 bu. and 50.5 bu. per acre, respectively, though he has a neutral to lower bias toward both. Rains during the weekend were beneficial and there are more rainfall chances the first half of this week, he noted in a report.

Two more ships left the Ukrainian port of Chornomorsk today, Turkey’s defense ministry said, one carrying 64,720 MT of corn destined for South Korea and the other containing 5,300 MT of sunflower meal for Turkey. That brings the total number of ships to leave Ukrainian ports to 12 since Aug. 1. Four ships that left Ukraine on Sunday are anchored near Istanbul and will be inspected today, the defense ministry said.

Indonesia on Tuesday lowered its threshold for applying export tax on crude palm oil to a reference price of $680 per MT, down from $750 per MT previously. The export tax goes up for every $50 price increase in the reference price, which is set periodically by the trade ministry. Indonesia’s customs office said the changes raised the current export tax for crude palm oil to $52 per MT from the previous $33 per MT, with the reference price currently set at $872.27.

Jordan made no purchases in its tender to buy 120,000 MT of milling wheat. Japan is seeking 82,955 MT of milling wheat in its weekly tender. The Philippines tendered to buy 120,000 MT each of wheat and feed barley.

CORN: USDA late Monday reported 58% of the U.S. corn crop in “good” or “excellent” condition as of Sunday, down from 61% the previous week and worse than analyst expectations for a drop to 60%. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 3.9 points to 352.0, the fourth straight weekly decline. The rating is 14.7 points (4.0%) below the five-year average for the date.

December futures’ strong overnight open left a gap between Monday’s high of $6.11 and today’s low of $6.12 1/4. The contract rose as high as $6.24 1/2, the highest intraday price since $6.25 on Aug. 1.

SOYBEANS: USDA reported 59% of the U.S. soybean crop in “good” to “excellent” condition as of Sunday, down from 60% a week earlier and meeting trade expectations. Based on our CCI, the soybean crop dropped 2.7 points to 351.2, which was 5.0 points (1.4%) below average.

November soybeans overnight reached $14.35, the contract’s highest intraday price since Aug. 1

WHEAT: USDA rated 64% of the spring wheat crop in “good” to “excellent” condition as of Sunday, down sharply from 70% a week earlier. The figure was expected to stay unchanged. The winter wheat harvest was 86% complete, up from 82% the previous week but behind the five-year average of 91%. Based on our CCI, the spring wheat crop fell 7.6 points to 367.8, though that was still 39.2 points above the five-year average, which included last year’s drought-ravaged crop and the lowly rated 2017 crop.

September SRW wheat overnight reached $8.01 1/4, the highest intraday price since Aug. 1.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

CATTLE: Live cattle futures may extend Monday’s rally to three-month highs behind expectations for further cash strength. Last week’s negotiated cash cattle trade totaled 103,000 head, the fourth highest of the year, while the average price firmed $1.01 to $140.84, up from last week’s average of $139.83. Last week’s cash trade may have started what should be a general seasonal strengthening as fed cattle supplies tighten. Choice beef cutout values rose $1.62 Monday to $266.24 on solid movement of 105 loads. October live cattle rose 35 cents to $144.225, the contract’s highest closing price since May 4.

HOGS: Lean hog futures may extend Monday’s gains behind strong technicals. The CME lean hog index is down 17 cents to $121.92 (as of Aug. 5). Pork cutout values fell 97 cents Monday to $124.06, the lowest in over two weeks. Movement was relatively light at 263 loads. October lean hogs rose $1.90 to $100.30, a lifetime-high close for the contract, after rising within 7.5 cents of the contract high. Nearby August hogs rose 97.5 cents to $121.80, the highest close for a nearby contract since June 2021.