Ahead of the Open | July 22, 2021
GRAIN CALLS
Corn: 13 to 15 cents lower.
Soybeans: 27 to 30 cents lower.
Wheat: 15 to 25 cents lower.
GENERAL COMMENTS:
Corn, wheat and soybean futures fell sharply overnight, with new-crop soybeans dropping to the lowest level in over a week. There are few significant changes to the near-term weather outlook for key U.S. crop areas, as dry conditions persist in the northwest Corn Belt with hotter temperatures expected through at least month-end. Nymex crude oil futures were up about 0.6%, while the U.S. dollar index is slightly weaker.
Canada’s recent wheat crop estimate continues to stir debate. Analysts were stunned when Canada’s WASDE equivalent report earlier this week pegged the country’s crop at 31.4 MMT, similar to USDA, with yields pegged 1% above the three-year average.
Senators Deb Fischer (R-Neb.) and Amy Klobuchar (D-Minn.) reintroduced the Consumer and Fuel Retailer Choice Act, a bill that would extend the Reid vapor pressure (RVP) volatility waiver to ethanol blends above 10%. It would allow retailers across the country to sell E15 and other higher ethanol blends year-round. This comes after a D.C. Circuit court struck down the Trump administration’s waiver permitting year-round sales of such fuels. The measure will likely be rolled into an infrastructure measure; it’s unlikely to clear on its own.
CORN: USDA’s weekly export sales report today showed net sales reductions of 88,500 metric tons (MT) for corn for the 2020-21 marketing year. For 2021-22, net sales totaled 47,700 MT. Expectations for 2020-21 ranged from a reduction of 100,000 MT to an increase of 300,000 MT; for 2021-22, expectations ranged from 100,000 MT to 400,000 MT.
WHEAT: HRW and SRW futures tumbled overnight after six consecutive daily gains pushed prices to two-month highs. Spring wheat futures extended a pullback from September’s $9.44 1/2 contract high hit Monday, stirred questions on whether a top is forming, though severe dryness in the Northern Plains and Canadian Prairies may limit the downside. USDA reported net weekly wheat sales of 473,200 MT for 2021-22, which were up 11% from the previous week and 44% from the prior four-week average. Trade expectations ranged from 350,000 MT to 600,000 MT.
CATTLE: Steady-weaker
HOGS: Steady-firmer
CATTLE: USDA reported net beef export sales of 25,100 MT for 2021, up 63% from the prior four-week average. Live steers in top U.S. feedlot regions yesterday averaged $121.17, down from last week’s average of $122.82, according to USDA. Choice cutout values rose 36 cents to $265.24, still down from last week’s average of $272.77 and near 3 1/2-month lows. Tomorrow’s monthly Cattle on Feed and biannual Cattle Inventory Reports are expected to show contraction in the U.S. herd. The July 1 feedlot inventory is expected to be down about 1% from year-earlier levels, based on the average of analyst estimates, and the total U.S. cattle inventory is expected to be down around 0.5%. Feedlot placements in June are expected to have declined about 4.1%.
HOGS: USDA reported pork export sales of 24,500 MT for 2021, down 12% from the prior four-week average. August lean hog futures remain at a discount to the CME lean hog index. The national direct average carcass price fell $3.06 yesterday to $106.78, down from $107.32 at the end of last week, USDA reported. Average cutout values rose $1.75 to $122.09, as sharp jumps in belly and ham prices pushed the benchmark to its highest point since June 17. USDA’s monthly Cold Storage Report later today, if it keeps with historical trends, will show tighter pork supplies. On average over the past five years, frozen pork stocks have fallen 27.6 million lbs. from the end of May to the end of June.