Ahead of the Open | August 8, 2022

GRAIN CALLS

Corn: 7 to 8 cents lower.

Soybeans: 9 to 12 cents lower.

Wheat: 8 to 12 cents lower.

GENERAL COMMENTS:

Grain and soybean futures fell overnight as reports of additional ships leaving Ukraine eased concerns over global supplies. Malaysian palm oil futures rose to the highest level in over a week behind strength in rival vegoils, while front-month crude oil was down about $1.50 and near six-month lows. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down nearly 300 points.

USDA reported daily sales of 132,000 MT of soybeans for delivery to China during the 2022-23 marketing year, along with 105,000 MT of corn for delivery to Italy and 120,000 MT of corn for delivery to “unknown destinations,” both for 2022-23.

Weekend rainfall in the Midwest occurred mostly as expected with a few minor exceptions, World Weather Inc. said. Western and southern Iowa, northern Missouri, Nebraska and Kansas missed much of the rain along with some areas in west-central Illinois. More rains are pushing across areas of the Corn Belt this morning and rainfall will continue into Tuesday. The outlook turns hot and dry across the Plains and western Corn Belt from the middle of the week into early next week before the next chance for rains is expected.

Two more ships, carrying corn and soybeans, departed Ukrainian Black Sea ports on Monday, Turkey and Ukraine said, taking the total to 10 that have sailed under the new grain export deal. Ukraine’s infrastructure minister said Pivdennyi, the third Ukrainian port included in the deal, was finally up and running. So far, around 243,000 MT of corn has been exported from Ukraine on seven ships since the first departure on Aug. 1, according to a Reuters tally of data from Turkey’s defense ministry.

China’s military announced fresh military drills on Monday in the seas and airspace around Taiwan – a day after the scheduled end of its largest ever exercises to protest against last week’s visit to Taipei by House Speaker Nancy Pelosi. Taiwan’s foreign ministry condemned the move, saying China was deliberately creating crises.

Russia is now expected to produce 95 MMT of wheat this year, according to ag consulting firm IKAR, up from its prior forecast of 90.5 MMT. The firm attributed the increase mostly to higher yields in the Central and Volga regions. Last week, consulting firm SovEcon raised its Russian wheat crop forecast to 90.9 MMT.

Tyson Foods Inc.’s quarterly revenue exceeded analysts’ estimates as chicken prices climbed, but earnings missed expectations. Tyson said it raised meat prices to offset surging inflation, including $145 million of higher costs for feed ingredients in the April to June quarter. Average sales prices for Tyson’s beef decreased 1.2% in the quarter as demand eased for premium cuts, the company said. Sales volumes in beef still increased 1.3%. In Tyson's pork business, sales volumes and prices decreased amid reduced export and retail demand.

Large speculators increased their bullish bets in the corn market for the first week in the past seven while increasing bullish bets in soybeans, based on Commitments of Traders data from the Commodity futures Trading Commission (CFTC). The managed money net low rose 9,133 futures and options contracts during the week ended Aug. 1 to 129,921 contracts, up from a 22-month low the previous week.

CORN: December corn futures traded within Friday’s range during overnight trade after ending last week at $6.10, down 10 cents for the week. Traders await USDA’s weekly crop updates after today’s close. A week ago, USDA reported 61% of the U.S. corn crop in “good” or “excellent” condition as of July 31, unchanged from the previous week.

SOYBEANS: November soybeans traded within Friday’s range during overnight action after ending last week at $14.08 3/4, down 59 3/4 cents from a week ago. USDA a week ago reported 60% of the soybean crop in good-to-excellent condition, an unexpected improvement from 59% a week earlier.

China imported 7.9 MMT of soybeans in July, down 4.5% from June and 9.1% less than last year, as weak crush margins reduced demand from importers. Through the first seven months of this year, China imports 54.2 MMT of soybeans, down 5.9% from the same period last year.

WHEAT: September SRW futures fell below last Friday’s low overnight but held above recent support at  $7.52.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

CATTLE: Live cattle may gain support from last week’s cash upturn. Traders appear cautiously optimistic cash cattle prices will work higher stronger than expected prices last week. USDA-reported live steers average $140.52 last week through Friday morning, up from the previous week’s average of $139.83. But packers continue to rely on previously purchased cattle, contracted and formula-based animals to fill out their slaughter schedules, which could again limit demand for negotiated animals. Given the discount nearby live cattle futures hold to the cash market, their march higher should continue, even if cash trade is sluggish.

HOGS: Lean hog futures may gain support from strong cash fundamentals and followthrough technical strength from last week’s rally to 3 1/2-month highs. Today’s CME lean hog index quote is up 48 cents to $122.09 (as of Aug. 4), just 59 cents shy of last year’s high, which was posted in mid-June. Given tighter slaughter supplies than last year, we anticipate the cash index will continue to climb. But slaughter numbers are starting to build seasonally, so there’s no guarantee prices will continue to rise. October lean hogs ended last week at $98.40, up $1.175 for the week.

China imported 643,000 MT of meat during July, up 40,000 MT (6.7%) from June but 207,000 MT (24.7%) below year-ago. China doesn’t break down the categories of meat imports in its preliminary data, but the sharp year-over-year reduction was due to slower pork demand. Through the first seven months of this year, China imported 4.1 MMT of meat, down 30.9% from the same period last year.