Ahead of the Open | August 3, 2022

GRAIN CALLS

Corn: 3 to 5 cents higher.

Soybeans: 10 to 12 cents higher.

Wheat: 13 to 20 cents higher.

GENERAL COMMENTS: Wheat futures rebounded overnight from a drop to the lowest levels in over a week behind a pickup in global demand. Corn and soybeans also turned higher after falling initially overnight. Malaysian palm oil futures rose slightly following two days of sharp losses, while front-month crude oil futures firmed more than $1. U.S. stock index futures signal a higher open, while the U.S. dollar index is near unchanged this morning.

Today's forecast model runs indicate rain in the dry areas of the northwestern Corn Belt this weekend, World Weather Inc. said. Based on the European model run, 0.75 to more than 2.50 inches is expected in part of the region, while the GFS suggests 0.25 to 0.75 inch. “The European model seems to be overdoing the rainfall, but the forecast is all about ridge positioning and the slightest change in the position and intensity of the high-pressure ridge will have much to say about crop production potentials,” the forecaster said.

Inspection of the first ship carrying grain to leave Ukrainian ports under the recent deal between Ukraine, Russia, Turkey and the United Nation was completed and it will pass through the Bosphorus “shortly,” the Turkish defense ministry said today. The ship carrying 26,527 MT of corn is headed for Lebanon. After the first successful departure, a senior Turkish official said three ships may leave the three approved Ukrainian ports in the Black Sea every day, instead of the previously planned one.

Exporters have shipped 1.46 MMT of Ukrainian grain through Romania’s port at Constanta during the war. Port authorities said 183,581 MT of grains were currently en route to the port. Comvex, which has handled roughly 70% of Ukrainian grains and other goods to come through Constanta, has invested 4 million euros ($4.09 million) in a second barge offloading platform that became operational at the end of July, and boosted its total processing capacity to 84,000 MT in and 70,000 MT out per day. How much Ukrainian grain continues to move through Constanta “all depends on how the Istanbul agreement works out and on the quantities that Ukrainian ports can ship out,” the head of Comvex told Reuters.

StoneX estimates U.S. corn and soybean crops at 14.417 billion bu. and 4.490 billion bu., respectively, based on partly on customer surveys. yields at 176.0 bu. per acre for corn and 51.3 bu. per acre for soybeans. The firm’s initial crop estimates are lower than USDA’s July projections of 14.505 billion bu. on a yield of 177 bu. per acre for corn and 4.505 billion bu. on a yield of 51.5 bu. per acre for soybeans.

House Speaker Nancy Pelosi (D-Calif.) left Taiwan today after pledging solidarity and hailing its democracy. The trip angered Chinese officials, who openly warned Pelosi and Washington over her visit. “The question is whether Beijing will try to use the trip as some kind of excuse to take steps that could be escalatory or that could somehow produce conflict,” a senior U.S. State Department official said. Pelosi said her visit was intended to make it “unequivocally clear” the U.S. would “not abandon” the democratically governed island.

Algeria purchased around 720,000 MT of optional origin milling wheat, much of which is expected to be sourced from France. South Korea purchased 50,000 MT of milling wheat from both the U.S. and Australia. Taiwan purchased 55,000 MT of corn expected to be sourced from South Africa. Jordan tendered to buy 120,000 MT of optional origin milling wheat. Iran tendered to buy 60,000 MT of milling wheat.

CORN: December corn futures firmed after an initial drop in overnight to $5.87 3/4, the contract’s lowest intraday price since July 25. The contract faces initial resistance at the 20-day moving average of $5.99 3/4, the overnight high.

SOYBEANS: November soybeans also firmed overnight after initially falling to $13.75, the lowest intraday price in a week. The contract dropped 82 cents the previous two sessions, erasing over half of last week’s rally. USDA reported a daily sale of 135,000 MT of soymeal for delivery to Poland during the 2022-23 marketing year.

WHEAT: September SRW wheat fell as low as $7.68, the lowest intraday price since $7.60 1/2 on July 25, before rebounding.

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-mixed

CATTLE: Live cattle futures may trade steady to weaker as the market waits for additional cash signals, while feeders may take pressure from strength in corn. Cash cattle traded in the $135 to $138 range in the Southern Plains and $143 to $147 in the northern market on Wednesday, sources reported, steady to as much as $3 higher compared to last week’s trade in both regions. Key to where this week’s average cash price lands will be the number of cattle moved in each region, though it appears the string of weekly declines will end. Choice beef cutout values fell $2.14 Tuesday to $268.46, though movement was strong at 157 loads. October live cattle fell 50 cents Tuesday to $142.125.

HOGS: Lean hogs may see a mixed open amid signs the cash market rally may be slowing. The CME lean hog index is down 30 cents to $121.57 (as of Aug. 1), ending a nearly month-long string of daily price gains. Still, futures’ discount to the index should limit price downside. August futures settled $1.72 below today’s index, while October futures are over $25 under the benchmark. Wholesale market strength may also support futures, as pork cutout values surged $3.32 Tuesday to $131.02, a 14-month high, as bellies jumped more than $26. Movement was slightly slower at 283 loads. October lean hogs fell 60 cents to $96.225 on Tuesday.