Ahead of the Open | July 19, 2022
GRAIN CALLS
Corn: 20-plus cents lower.
Soybeans: 20-plus cents lower.
Wheat: 10 to 15 cents lower.
GENERAL COMMENTS: Grain futures fell sharply overnight amid prospects a deal may be reached to allow more grain to be shipped out of Ukraine. Malaysian palm oil futures fell 2.8% in the wake of Indonesia removing its export levy. Front-month U.S. crude oil futures are down over $2. U.S. stock index futures signal at firmer open, while the U.S. dollar index extended a recent decline from 20-year highs, down more than 800 points.
Extreme heat is expected to continue in much of the Midwest over the next week but some relief may be ahead in late July, World Weather Inc. said. Temperatures in the central U.S. could reach 115 degrees Fahrenheit over the next few days, with 100-degree readings reaching as far north as South Dakota and far western Iowa. “The heat will reach into Missouri and the northern Delta while it will be most punishing in areas from Kansas to Texas,” World Weather said.
Russian President Vladimir Putin will visit Tehran today for talks with Iranian Supreme Leader Ayatollah Ali Khamenei, the Kremlin leader's first trip outside the former Soviet Union since Moscow's Feb. 24 invasion of Ukraine. Putin is also expected to meet Turkey's Tayyip Erdogan to discuss a deal aimed at allowing the resumption of Ukraine’s Black Sea grain exports.
Crop Consultant Dr. Michael Cordonnier kept his U.S. corn and soybean yield projections unchanged but switched back to a neutral/lower bias. He estimates average corn and soybean yields at 177 bu. and 51.5 bu. per acre, respectively. But after one week with a neutral bias, he switched back to a neutral-to-lower bias, calling forecasts for the remainder of July and August “problematic.”
Cordonnier also noted corn yields have been increasing as harvest progressed in Argentina and later-planted corn wasn’t as impacted as much by dry weather earlier in the season. As a result, Cordonnier raised his Argentine corn crop estimate by 1 MMT to 50 MMT
The Russian government plans to buy around 1 MMT of grain from Russian producers for state grain reserves, starting in August. Russia’s grain intervention fund will be increased to 3 MMT in coming years, the ag ministry said.
The European Union will amend its sanctions on Moscow on Wednesday by allowing the unfreezing of some funds of top Russian banks that may be required to ease bottlenecks in the global trade of food and fertilizers, a draft document showed.
Egypt’s state buyer cut the acceptable protein level for U.S. SRW and soft white wheat in its tender that closes today to 10.5% as a way of generating more offers for U.S. supplies.
CORN: USDA late Monday reported 64% of the U.S. corn crop in “good” or “excellent” condition as of Sunday, unchanged from a week earlier and above the average analyst estimate of 63%. About 37% of the crop was silking, up from 15% the previous week but behind the five-year average of 48%. 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 1.8 points to its lowest level of the year at 363.4 and 5.1 points below the five-year average for mid-July.
December corn futures overnight fell as low as $5.88, the lowest in nearly a week.
Overnight, November soybeans fell as low as $13.55 3/4, after gaining 38 cents Monday to $13.80 1/4, the highest close in a week.
WHEAT: USDA reported the winter wheat harvest at 70% complete as of Sunday, up from 63% a week earlier and below trade expectations for 75%. The spring wheat crop continued to improve, with USDA rating the crop 71% “good” to “excellent,” up from 70% a week earlier, and the Pro Farmer CCI up 1.5 points for the week and 46.1 points above the five-year average.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-firmer
CATTLE: Live cattle futures may face pressure from slipping cash prices and signs of weakening beef demand. Choice beef cutout values rose $1.64 Monday to a five-week high of $270.55, but movement was slow at 67 loads. Slower movement at higher prices indicates retailers have upcoming beef needs mostly covered and are likely to be more selective over the near-term. August live cattle rose 70 cents Monday to $135.625.
HOGS: Lean hog futures may extend Monday’s rally to three-month highs behind continued strength in cash fundamentals. The CME lean hog index is expected to climb another 74 cents to $114.89 (as of July 15), near a 13-month high. Pork cutout values fell 22 cents to $121.96 but movement was strong at 309 loads, signaling solid retailer demand on any price dips. August lean hogs rose $2.30 Monday to $112.125, the contract’s highest closing price since April 28.
