Ahead of the Open | July 21, 2022

GRAIN CALLS

Corn: 12 to 15 cents lower.

Soybeans: 15 to 25 cents lower.

Wheat: 2 to 8 cents lower.

GENERAL COMMENTS: Corn and soybean futures fell to two-week lows overnight on expectations rains forecast for the Midwest will bring relief from recent heat. Wheat futures also declined. Malaysian palm oil futures dropped 5.4%, pressured by a slump of more than $3 in crude oil. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down more than 600 points this morning.

Rains are expected to reach parts of the Midwest next week and temperatures are seen pulling back from readings this week. “U.S. Midwest crop areas will continue in mostly good shape, despite dry pockets,” World Weather Inc. said today. “Some relief to developing dryness from Nebraska to Minnesota is expected over the coming week.”

Talks between Turkey, Russia, Ukraine and the United Nations on resuming Ukrainian grain exports through the Black Sea are going well so far, Turkish Foreign Minister Mevlut Cavusoglu said today, adding he was hopeful about reaching a deal. Cavusoglu said he hoped to be able to announce “good news” on the talks in coming days, but added there were still minor issues being discussed between the parties.

Western officials believe Russia will likely begin another major offensive in Ukraine early next year, including a possible effort to advance on the blockaded strategic port city of Odesa, to seize the country’s southwestern coast and cut off Ukraine from the sea, Foreign Policy reported. If Russian forces were to take the port, current and former officials warn, it would represent a devastating blow to Ukraine’s war efforts and give Moscow a greater stranglehold over critical global food supplies that have dwindled since the war began.

France’s winter grain crops show excellent quality levels and yields within average, grain cooperative Axereal said today. Grain production in France, the European Union’s biggest grower, is expected to fall this year after harsh weather hurt crops in some areas. The harvest of winter grains, such as wheat, barley, rapeseed and durum, was about to end with nearly two weeks in advance, Axereal said.

South Korea purchased 204,000 MT of corn from two separate tenders, with all of it expected to be sourced from South America and/or South Africa.

CORN:USDA reported net U.S. corn sales during the week ended July 14 of 33,900 MT for the 2021-22 marketing year, down 43% from the previous week and down 82% from the average for the previous four weeks. For 2022-23, net sales totaled 570,200 MT, up from 348,200 MT the previous week and exceeding trade expectations for sales of 100,000 to 500,000 MT.

December corn overnight fell as low as $5.71 1/4, the contract’s lowest intraday price since a five-month low of $5.66 1/2 posted July 6.

SOYBEANS: Net weekly U.S. soybean sales totaled 203,500 MT for 2021-22, primarily for China (146,900 MT, including 125,000 MT switched from unknown destinations) and slightly above trade expectations. That snapped a three-week string of net old-crop sales reductions. For 2022-23, net sales totaled 254,700 MT, within trade expectations and also primarily for China (136,000 MT).

November soybeans overnight fell to $13.07 1/4, the contract’s lowest intraday price since $13.02 1/2 on July 6, before rebounding slightly.

WHEAT: USDA reported net U.S. wheat sales of 511,100 MT for 2022-23, down 50% from the previous week and down 10% from the prior four-week average. Sales fell within trade expectations ranging from 300,000 to 850,000 MT.

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-firm

CATTLE: Live cattle futures may face pressure from prospects for a third consecutive weekly decline in cash prices. Cash cattle trade has been light so far this week, with wide price variances ranging from $136 in the Southern Plains to $145 in the northern market. But the bulk of trade has been at steady to $1 lower prices. With August live cattle futures trading well below the cash market, however, seller interest should be limited. Choice beef cutout values fell $2.04 Wednesday to $270.53 but movement was again strong at 119 loads. August live cattle rose 2.5 cents Wednesday to $135.75.

USDA reported net weekly beef sales of 23,800 MT for 2022, up from 9,200 MT the previous week and up 97% from the prior four-week average. 

HOGS: Hog futures may continue to gain support from firm cash fundamentals but could also face corrective pressure following this week’s rally to three-month highs. The CME lean hog index is up another 46 cents to $116.37 (as of July 19), the highest level since June 2021. Traders have narrowed the discount August lean hog futures hold to the cash index to just under $1.50. While that’s less than the normal seasonal decline into mid-August, the lead contract should remain supported until the cash index shows signs of topping. Pork cutout values fell 75 cents Wednesday to $124.37 on lighter movement of 224 loads. August lean hogs surged $2.05 to $114.875, the highest closing price since April 22.

Net weekly pork sales of 20,600 MT for 2022 were up 13% from the previous week but down 23% from the prior four-week average.