Ahead of the Open | July 29, 2022
GRAIN CALLS
Corn: 12 to 14 cents higher.
Soybeans: 20 to 25 cents higher.
Wheat: 15 to 22 cents higher.
GENERAL COMMENTS: Soybean futures extended a week-long rally overnight to the highest prices in four weeks amid concerns Midwest heat in early August could harm yield potential. Corn and wheat futures also strengthened. Malaysian palm oil futures surged 8.8% and posted a second consecutive weekly gain behind soyoil market strength, while front-month crude oil futures were up more than $2. U.S. stock index futures signal a stronger open, while the U.S. dollar index is near unchanged.
Midwest crops will come under stress next week as a heat wave descends over the western Corn Belt, World Weather Inc. said, though a high-pressure ridge may shift back toward the Rocky Mountains Aug. 8-12, allowing for potential for cooling and showers in the U.S. eastern and northern Midwest. “Dryness is quickly expanding across the northwestern Corn Belt and the northern U.S. Plains,” the forecaster said. “The region is already experiencing short to very short soil moisture and by the time next week’s heat wave arrives crops will be more vulnerable than ever to suffer some serious stress.”
Ukraine is ready to start shipping grain from two Black Sea ports but no date has been set for the first shipment, Ukrainian Infrastructure Minister Oleksandr Kubrakov said. Ukrainian President Volodymyr Zelenskyy said his country is awaiting a signal from the United Nations and Turkey to start exports. “We sent all the signals to our partners – the UN and Turkey, and our military guarantees the security situation,” Zelenskyy said. “The infrastructure minister is in direct contact with the Turkish side and the UN. We are waiting for a signal from them that we can start.”
The U.S. personal consumption expenditures (PCE) index rose 6.8% annually in June — the highest level since January 1982. Core PCE minus food and energy costs climbed 4.8%, though that was down from the February peak of 5.3%.
Euro zone inflation rose to another record high in July and its peak could still be months away. Consumer prices accelerated at an 8.9% annualized rate in July, up from an 8.6% jump in June. Fallout of Russia’s war in Ukraine has caused energy and food prices to surge.
Russia’s wheat export tax for Aug. 3-9 will be 4,626.8 rubles ($74.28) per metric ton based on an indicative price of $371.90, down from 4,951.7 rubles the previous week. The tax is well below levels when it was pegged to the U.S. dollar.
Rainfall in recent days helped ease drought conditions in some areas of Argentina, the Buenos Aires Grains Exchange said in its weekly report. The exchange reported wheat area classified as being in drought dropped nine percentage points to 35% following rains over central and southern areas of Buenos Aires and La Pampa provinces.
South Korea purchased 40,000 MT of Canadian milling wheat. The Philippines passed on tender to buy 100,000 MT each of feed wheat and feed barley.
SOYBEANS: November soybeans overnight surged to $14.68 1/2, the contract’s highest intraday price since $14.70 3/4 on July 1 and up from $13.15 3/4 at the end of last week. The new-crop contract, currently up nearly $1.53 this week, is poised for its biggest weekly advance since 2004.
USDA reported daily soybean sales of 132,000 MT to unknown destinations for 2022-23.
WHEAT: September SRW wheat overnight reached $8.63 3/4, the highest intraday price since $8.69 1/2 on July 12 and up from $7.59 at the end of last week. Wheat futures may continue to follow corn and soybeans higher as traders watch for developments in Ukraine.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-firmer
CATTLE:Live cattle futures are heading for the first weekly decline in the past three as cash prices continue to slip for the fourth week in a row. USDA-reported live steers averaged $138.61 through Thursday morning, down from last week's average of $141.12. After a strong performance on Wednesday, wholesale beef trade slumped Thursday, with Choice cutout values down 22 cents to $267.77, while movement slowed to 99 loads. Wholesale beef trade may be relatively slow for a week or two until retailers start ramping up purchases for Labor Day features. October live cattle fell 50 cents Thursday to $141.825, down from $143.00 at the end of last week.
HOGS: Lean hog futures may extend the sharp rally of the past two weeks on continued cash market strength. The CME lean hog index is up another 85 cents to $120.58 (as of July 27) and is now only $2.10 below last year’s peak, which came in mid-June. The cash hog market may top year-ago levels — something we originally expected but then questioned when the normal seasonal rally was delayed. While it took the cash hog market longer than normal to start its rally to a midyear high, the seasonal strength is lasting deeper into the year than normal. Packers are actively competing for hogs even as slaughter rates start to build, suggesting market-ready supplies are lighter than expected. Pork cutout values jumped $2 Thursday to $128.79, the highest since June 2021. Movement was light at 223 loads.
