Market Snapshot | July 22, 2022

Corn futures are near unchanged at midmorning after rebounding from overnight weakness.

• December corn bounced back from an overnight drop to a six-month low with support from a rally in soybeans and concerns over a possible return to hot, dry conditions in the Midwest in early August.
• U.S. weather is still expected to be favorable in the coming 10 days with rain for most areas, including some of the drier areas of the Plains and southwestern Corn Belt, World Weather Inc. said today. Beyond that period, weather is expected to trend drier and hotter, “with the heat first bubbling up in the central and southern Plains and southwestern Corn Belt.”
• South Korea purchased 128,000 MT of corn expected to be sourced from South America or South Africa and 65,000 MT of optional origin corn.
• December corn overnight fell as low as $5.63 1/2, the contract’s lowest intraday price since $5.57 1/4 on Jan. 24, before climbing to gains. The new-crop contract is still down from $6.03 3/4 at the end of last week.

Soy complex futures are higher after erasing overnight weakness, with soybeans up 21 to 26 cents and nearby soyoil up around 190 points.

• November soybeans came roaring back from an overnight slide to a six-month low behind strength in crude oil and soyoil and a continued pullback in the U.S. dollar from 20-year highs. Concerns over a return of hot Midwest weather in August contributed to buying interest.
• Temperatures across most of the Midwest will likely be above normal during August, with below-normal precipitation expected for most of Iowa, Illinois and Indiana, according to NOAA’s recent one-month outlook.
• Indonesia is considering removing a domestic sales requirement for firms to obtain palm oil export permits because high inventories have been holding back a recovery of palm oil fruit prices, the country’s trade minister said. Policies to address the glut of palm oil inventories including a temporary removal of an export levy and a larger export quota, had failed to slash stocks quickly.
• China will auction another 500,000 MT of imported soybeans from its state reserves on July 29. Beijing continues to sell state-owned soybeans into the domestic market via weekly auctions to ensure plentiful supplies.
• November soybeans also fell to a six-month low overnight, dropping to $12.88 1/2. The new-crop contract is still down from $13.42 1/4 at the end of last week. Further gains today and a close above Thursday’s high of $13.41 3/4 could form a bullish key reversal higher.

Wheat futures are down sharply, with HRW, SRW and spring wheat off more than 30 cents.

• Wheat futures tumbled near five-months lows following reports of an agreement to resume grain shipments from Ukraine.
• Russia and Ukraine signed a landmark deal to reopen Ukrainian Black Sea ports for grain exports, raising hopes that an international food crisis aggravated by the Russian invasion can be eased. UN Secretary General Antonio Guterres said the accord opens the way to significant volumes of commercial food exports from three key Ukrainian ports – Odesa, Chernomorsk and Yuzhny, and the U.N. would set up a coordination center to monitor implementation of the deal.
• France’s grain harvest kept up at a fast pace in the week to July 18, with soft wheat running two weeks ahead of last year, while maize crop conditions deteriorated as the country experienced a hot spell, FranceAgriMer data showed today. The farm office said in French farmers had harvested 84% of the soft wheat crop by July 18, up from 50% last week.
• Buyers from China purchased large volumes of Australian and French wheat this week in a sign that the Asian country is taking advantage of a recent dip in prices to fill its large needs, European traders said. Traders reported purchases of around 1 MMT of Australian wheat and China bought at least two cargoes, possibly up to seven, of French wheat this week.
• September SRW wheat fell as low as $7.67 3/4, near last week’s low of $7.65 3/4, and is down from the end of last week, when the contract closed at $7.76 3/4.

Live cattle and feeder cattle are sharply higher at midmorning.

• Live cattle opened mixed but sparked technically-driven buying after pushing above Monday’s high and reaching the highest price in over a week.
• USDA’s Cattle on Feed Report this afternoon is expected to show the July 1 feedlot inventory up 0.1% from year-ago levels, with June placements expected to have declined 5% and marketings to have risen 1.9%.
• USDA’s Cattle Inventory Report is expected to show U.S. cattle herd as of July 1 down 2.1% from year-ago. The projected 2022 calf crop is expected to have shrunk another 2%. Beef heifers held back for breeding are expected to be down 3.2% from last year.
• Choice beef cutout values fell $2.77 Thursday to $267.76 but movement was again relatively strong at 105 loads.
• USDA-reported live steers averaged $140.40 through Thursday morning, down from last week’s average of $142.12.

Hog futures are higher, led by another strong advance in the nearby August contract.

• August lean hog futures extended this week’s rally to three-month highs behind strong technicals and continued strength in cash fundamentals.
• The CME lean hog index is up another 67 cents to a 13-month high at $117.04 (as of July 20). August futures have surged to a premium of about 78 cents to the index after trading at a discount previously.
• Pork cutout values fell 47 cents Thursday to $123.90 on relatively light movement of 276 loads.
• USDA’s Cold Storage Report this afternoon will detail frozen meat stocks at the end of June. The five-year average is a 25.8-million-lb. drop in pork stocks during the month.
• August lean hogs reached $117.925, the contract’s highest intraday price since $119.225 on April 25. Further strength may have market bulls targeting the April high at $121.50.