Ahead of the Open | September 20, 2022
Corn: 3 to 5 cents higher.
Soybeans: 4 to 6 cents lower.
Wheat: Winter wheat 10 to 12 cents higher; spring wheat 3 to 6 cents higher.
GENERAL COMMENTS: Corn futures climbed modestly overnight after USDA reported slower-than- expected U.S. harvest progress and continued declines in crop condition ratings. Wheat futures rose in a corrective bounce from Monday’s sharp losses, while soybeans fell. Malaysian palm oil futures rose 1.1%, the market’s first gain in four sessions, while front-month crude oil futures are down slightly. U.S. stock index futures signal a weaker open and the U.S. dollar index is around 400 points higher.
Crop consultant Dr. Michael Cordonnier lowered his U.S. corn and soybean yield estimates given highly variable early corn yields and the hot, dry end to the growing season across areas of the Corn Belt. Cordonnier cut his corn yield by 1 bu. to 169 bu. per acre, which lowered his production estimate to 13.60 billion bu. He cut his soybean yield by 0.5 bu. to 50.0 bu. per acre, which dropped his production estimate to 4.33 billion bu.
China's soybean imports from Brazil plunged in August from a year ago, customs data showed, as high prices capped purchases. Imports from the U.S. increased. China, the world's biggest soybean buyer, imported 6.25 MMT of soybeans from Brazil in August, down from 9.04 MMT a year earlier. Total imports last month plunged 25% from a year before to 7.17 MMT, the lowest for August since 2014.
Ukrainian farms in all government-controlled regions have started sowing winter wheat for the 2023 harvest, seeding 364,000 hectares, or 9% of the expected area, the agriculture ministry said today. The ministry did not provide a forecast, although Agriculture Minister Mykola Solsky told Reuters last month the area could fall to 3.8 million hectares from 4.6 million a year earlier due to the Russian invasion. The Ukrainian army’s successes in recapturing a significant swathe of land in the northeast and the south could lead to improved forecasts for the winter sowing area for the 2023 grain crop.
Last month brought severe drought, wildfires and sweltering-hot temperatures to many parts of the world, including North America and Europe — two areas that saw their hottest-ever Augusts on record, according to a new National Oceanic and Atmospheric Administration (NOAA) report. Overall, NOAA said, record-warm temperatures encompassed 8.2% of the world’s surface last month. Both Europe and China saw their warmest-ever summers, while North America had its second-warmest summer.
China kept its benchmark lending rates unchanged, as expected, as authorities held off additional monetary easing following rapid declines in the yuan and as other global central banks continued to tighten monetary policy. The one-year loan prime rate (LPR) was kept at 3.65%, while the five-year LPR was unchanged at 4.30%. Widening divergence in the monetary policies between China and the U.S. could stoke fears of capital flight out of China, just as Beijing seeks to marshal resources to revive sluggish growth.
CORN: USDA late Monday reported 7% of the U.S. crop was harvested as of Sunday, up from 5% a week earlier but slightly behind the 8% average for the previous five years. Harvest progress also fell short of expectations for about 10%. USDA rated 52% of the crop “good” or “excellent,” down from 53% last week. 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 3.3 points to 336.9, the 10th straight weekly decline.
SOYBEANS: USDA reported 3% of the U.S. crop was harvested as of Sunday, short of both the 5% five-year average and analyst expectations, also 5%. The crop was rated 55% “good” or “excellent,” down from 56% last week. Based on the Pro Farmer CCI, the soybean crop fell 3.3 points to 338.9, the seventh consecutive weekly decline.
WHEAT: USDA said 21% of the winter wheat crop was planted as of Sunday, up from 10% a week earlier and ahead of the five-year average of 17%. Analysts expected a planting to be about 20% complete. The spring wheat crop was 94% harvested, up from 91% the previous week.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weaker
CATTLE: Live cattle futures may gain followthrough support from Monday’s firm close and expectations for continued strength in cash prices. Live steers last week averaged $143.19, up 71 cents from the previous week. A recent slump in wholesale beef shouldn’t be overly concerning considering high slaughter rates and carcass weights, and cash sources suggest the price pressure under these conditions actually signals retailer demand is stronger than expected. Boxed beef movement last week totaled 3,791 loads, the highest weekly total since mid-July. Choice beef cutout values rose 5 cents Monday to $252.45, near a 17-month low posted last week. Movement was strong at 137 loads.
October live cattle rose 22.5 cents Monday to $145.725 after earlier rising to $146.275, a seven-year intraday high for a nearby contract.
HOGS: Lean hog futures may face followthrough pressure from Monday’s soft close, but firming cash fundamentals should limit weakness. The national direct cash hog price firmed $1.30 on Monday, while the CME lean hog index is up 45 cents to $98.42 (as of Sept. 16). Despite the firming cash fundamentals, October lean hog futures slipped 42.5 cents Monday and finished $1.945 below today’s cash index quote. Traders are likely to maintain a slight discount in the lead contract as any upturn in the cash index is likely to be temporary before seasonal pressure resumes. Pork cutout values fell 51 cents to $105.88, down from a four-week high. Movement was strong at 347 loads.
