Ahead of the Open | July 27, 2022
GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 13 to 16 cents higher.
Wheat: HRW and SRW 2 to 5 cents higher, spring wheat 1 to 3 cents lower.
GENERAL COMMENTS: Soybean futures rose to the highest prices in over two weeks overnight and corn also firmed amid concerns hot temperatures next week could harm yield prospects. Winter wheat futures rose amid ongoing concerns over the resumption of Ukrainian grain shipments. Malaysian palm oil futures rose 1%, while front-month crude oil is mildly firmer this morning. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down more than 100 points.
The Federal Reserve is expected to announce another hike to its benchmark funds rate at the conclusion of its two-day Federal Open Market Committee (FOMC) meeting at 1 p.m. CT, though there’s a question of whether it will be a 75-basis-point hike or 100 points. Fed Chair Jerome Powell’s post-FOMC press conference will be monitored closely for indications of how much further the U.S. central bank expects to raise interest rates in its battle against inflation.
A Turkish official said all the details had been worked out for resuming Ukrainian grain exports via Black Sea ports, including a safe route for ships that will not require the clearing of sea mines. He said, “It will not take more than a few days. It looks like the first grains will be loaded this week and its export from Ukraine will take place.” But Russian attacks on the port of Odesa Saturday and again Tuesday, along with a round of air strikes at the port of Mykolaiv yesterday have raised questions about whether Russia will allow active Ukrainian grain exports.
Scouts on Day 1 of the Wheat Quality Council’s annual spring wheat tour found an average HRS yield of 48.9 bu. per acre on routes through southern and eastern areas of North Dakota, up sharply from the five-year average of 39.0 bu. per acre on similar routes. The crop has benefited from favorable weather, the North Dakota Wheat Commission said, although high humidity has raised risk of crop diseases and grasshoppers threaten yields in spots. Scouts will sample fields in northern North Dakota today.
Bunge Ltd raised its full-year profit forecast today and posted a 15% jump in second-quarter 2022 adjusted profit as the global farm commodities merchant benefited from higher demand and tighter supplies of commodity grain crops. But transportation and ongoing pandemic-related issues continue to be a drag on the grain sector overall. Bunge's agribusiness unit saw a boost from U.S. and Brazilian soy crush due to strong demand for meal and oil, it said, but its merchandising group was impacted by ocean freight issues, where rates have soared and ports have been jammed.
Indonesia launched road tests for two types of biodiesel containing 40% palm oil, hoping to conclude by the end of the year whether they are viable for public use.
Taiwan tendered to buy 50,910 MT of U.S. milling wheat. Jordan tendered to buy 120,000 MT of optional origin milling wheat.
SOYBEANS: November soybeans overnight extended Tuesday’s rally and climbed to $14.02 3/4, the contract’s highest intraday price since $14.18 on July 12. The contract still has an unfilled 9-cent gap created with Tuesday’s strong open.
WHEAT: September SRW wheat overnight reached $8.18 3/4, the contract’s highest intraday price since July 21 and close to the 20-day moving average at $8.22 1/4.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-mixed
CATTLE: Live cattle may face pressure from expectations a three-week slide in cash prices will continue. Cash prices are expected to trade steady to weaker compared with last week’s $141.12 average, though meaningful transactions may not happen until late in the week. Packers have been slow to establish bids as they appear content to pull from committed supplies and feedlots will be in no hurry to move more cattle at lower prices since marketings are current. Choice beef cutout values rose $1 Tuesday to $269.11 on solid movement of 115 loads. August live cattle fell 87.5 cents Tuesday to $136.875.
HOGS: Lean hog futures should gain support from strength in cash fundamentals but any gains may be limited by skepticism the cash market has much additional upside. The CME lean hog index is higher again today and at its highest level since June 2021. August futures are about $2.50 below the index, signaling traders sense the index will peak soon. The widening discount should limit seller interest in lead-month futures. Traders also have more than a normal seasonal cash decline built into fall- and winter-month futures. Pork cutout values fell $1.05 Tuesday to $126.77, down from a 12-month high a day earlier. Movement totaled about 299 loads, slightly above the recent average. August lean hogs fell 25 cents to $116.975.
