Ahead of the Open | July 20, 2021
GRAIN CALLS
Corn: 12 to 14 cents higher
Soybeans: 17 to 21 cents higher
Wheat: 10 to 16 cents higher
GENERAL COMMENTS:
Corn and soybean futures rose overnight after USDA’s latest weekly crop condition ratings showed little substantial improvement. Dryness in the north and northwest Corn Belt remains a concern. Wheat futures reached two-month highs in the wake of another drop in spring wheat conditions. Crude oil futures were down slightly after yesterday’s plunge to five-week lows. The U.S. dollar index reached its highest level since early April.
Consultant Michael Cordonnier kept his U.S. corn crop yield estimate unchanged at an average of 175.5 bu. per acre, noting generally favorable July weather. The crop “has made a slow improvement in recent weeks,” Cordonnier said in a report. “The weather during the second half of July will probably not be as good as during the first half of the month and the critical area to watch remains the northwestern Corn Belt.”
Cordonnier maintained his Brazilian corn crop estimate of 88 MMT, but his bias is neutral to lower and he said he suspects the final estimate “will be lower than the current estimate.” He noted more frosts/freezing temperatures are likely in Brazil Monday through Wednesday for the same areas that saw three consecutive nights of frosts three weeks ago. This could cause additional losses.
Through July 15, farmers in Brazil had harvested 30% of their safrinha corn crop, the agribusiness consultancy AgRural reported. That’s a 10-point gain for the week but still lags last year’s pace by 13 percentage points. AgRural reports excessive moisture has slowed harvest for major producing areas like Parana and Mato Grosso do Sul, and the forecast for a cold front this week could bring additional losses.
Controlling and preventing African swine fever (ASF) in China remains a “complicated” and “severe” task, according to Xin Guochang, an official at the husbandry bureau of the country’s ag ministry. But Xin says Chian’s overall disease situation is stable. Industry sources reported new outbreaks in northern and northeastern China earlier this year, along with outbreaks in China’s southwest Sichuan province.
CORN:
USDA yesterday said 65% of the U.S. corn crop was rated “good” or “excellent” as of Sunday, unchanged from the previous week. Analysts expected a good-to-excellent reading of 66%. 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 improved 1.7 points to 368.5 points. December corn futures overnight reached $5.67 1/2, matching yesterday’s high.
USDA rated 60% of the U.S. soybean crop good-to-excellent as of Sunday, up from 59% the previous week and consistent with analysts’ expectations. Based on the weighted Pro Farmer CCI, the soybean crop improved 0.4 point to 352.3 points, but still 7.3 points below for soybeans for the third week in July. Cordonnier, the consultant, kept his U.S. soybean yield projection unchanged at 50 bu. per acre, with a neutral bias. November soybeans overnight rose as high as $13.97 1/2, after yesterday reaching $14.18, the highest intraday price since $14.23 on July 1.
WHEAT:
The spring wheat crop continues to deteriorate, as USDA reported 11% of the U.S. crop in good-to-excellent condition as of Sunday, down from 16% the previous week. USDA rated 63% of the crop “poor” or “very poor,” up from 55% a week earlier. The spring wheat CCI plunged another 20.9 points over the past week, paced by a 11.5-point dive in North Dakota. The spring wheat CCI rating is now 38.1% below the five-year average for this date. Overnight, September SRW wheat reached $7.18, the highest intraday price since $7.32 1/4 on May 13.
CATTLE: Steady-mixed
HOGS: Steady-firmer
CATTLE:
Boxed beef values continue to slip. Choice cutout values yesterday averaged $266.49, down $1.45 from Friday and the lowest price since April 7. Live steers in top U.S. feedlot regions yesterday averaged $122.82, equal to last week’s average, which was up from $96.36 during the same week in 2020. Chart levels to watch include August live cattle’s low yesterday at $119.20, the 100-day moving average around $119.90 and the intraday low so far this month at $118.90. Upside levels to watch include $122.60, last week’s high.
Futures may gain support from continue strength in wholesale pork and August futures’ discount to the CME cash index. Carcasses on national direct markets yesterday averaged $106.24, down $1.08 from Friday. Cutout values averaged $121.85, up $1.91 from Friday and the highest since June 17. Chart levels to watch include $106.80, last week’s high in August hogs, and the 100-day moving average around $104.20, as well as last week’s low, $102.10. Despite recent ASF outbreaks, Zeng Yande, head of development and planning under the ministry, said China’s hog herd totaled 439 million pigs at the end of June, representing 99.4% of late 2017, pre-ASF levels. Zeng detailed that China’s sow herd stood at 45.64 million head, up 2% from late 2017 levels.
