Evening Report | August 10, 2022
Check our advice monitor on ProFarmer.com for updates to our marketing plan.
Corn producers: Finish 2021-crop sales… Corn basis has weakened and there’s risk of that continuing into harvest. With futures moving into the upper half of the two-month trading range, it’s time to move remaining old-crop gambling stocks. We advise hedgers and cash-only marketers to sell the final 10% of 2021-crop to get to 100% sold. We’ll wait on additional new-crop corn sales.
Cotton producers: Increase 2022-crop sales… December cotton futures pushed above our target for making additional sales. While declining crop prospects are bullish, demand and recession concerns will likely cap the upside. We advise hedgers and cash-only marketers to sell another 10% of expected 2022-crop cotton to get to 70% forward-priced. Our next upside sales target is the 105.00-cent to 110.00-cent range in December cotton futures.
UN expects ‘big uptick’ in ships wanting to export Ukrainian grain... “We’re expecting to see a big uptick in applications for transit,” said Frederick Kenney, interim United Nations Coordinator at the Joint Coordination Center in Istanbul, which oversees the Ukraine grain export deal. “The goal of getting between two and five (million) metric tons is achievable,” he told reporters, referring to the monthly volume of exports.
So far, 12 ships have been authorized to leave Ukrainian ports and four other vessels were approved for travel to Ukraine. The second commercial ship to arrive in Ukraine has docked in the port of Chornomorsk and is ready to load grain, Ukraine’s infrastructure minister said on Wednesday. The number of inbound ships was expected to grow as grain sales are arranged, Kenney told reporters. The UN has stressed the export deal is a commercial operation that will be driven by the market. All ships are required to be inspected to allay Russian concerns they could be smuggling weapons into Ukraine.
“We’re going to be doing a comprehensive review of procedures early next week to see what needs to be tweaked and improved,” Kenney said.
Trade readies for first corn, soybean and cotton crop estimates... USDA’s initial survey-based corn and soybean crop estimates will be released on Friday. Those estimates are based mostly on farmer surveys and satellite imagery. The first cotton crop estimate will include objective yield data from Texas. Traders expect declines in production compared with USDA’s projections last month. The following estimates are from a Reuters survey (Bloomberg for cotton):
Expectations for 2022 |
|||
Corn |
|||
Production |
Yield |
Harvested acres (mil.) |
|
Average est. |
14.392 |
175.9 |
81.837 |
Range |
14.192 - 14.553 |
173.2 - 177.6 |
81.500 - 82.300 |
USDA July proj. |
14.505 |
177.0 |
81.940 |
Soybeans |
|||
|
Production |
Yield |
Harvested acres (mil.) |
Average est. |
4.481 |
51.1 |
87.724 |
Range |
4.367 - 4.590 |
49.9 - 52.5 |
87.300 - 88.910 |
USDA July proj. |
4.505 |
51.5 |
87.511 |
Cotton |
|||
Production |
Yield |
Harvested acres (mil.) |
|
Average est. |
14.75 |
NA |
NA |
Range |
14.00 - 15.75 |
NA |
NA |
USDA July proj. |
15.50 |
870 |
8.55 |
Spring wheat will be the focus in USDA’s wheat crop estimates... Any changes to the U.S. wheat crop estimates this month are typically minor. Much of the focus will be on the spring wheat crop estimate, though traders expect only a modest increase in that figure versus last month. The following estimates are from a Reuters survey.
Expectations for |
|
All wheat – billion bu. |
|
Average est. |
1.791 |
Range |
1.774 – 1.804 |
USDA July |
1.781 |
USDA 2021 |
1.646 |
|
|
Winter wheat – billion bu. |
|
Average est. |
1.203 |
Range |
1.197 – 1.210 |
USDA July |
1.201 |
USDA 2021 |
1.277 |
|
|
HRW wheat – million bu. |
|
Average est. |
585 |
Range |
580 - 590 |
USDA July |
585 |
USDA 2021 |
749 |
|
|
SRW wheat – million bu. |
|
Average est. |
376 |
Range |
372 - 380 |
USDA July |
376 |
USDA 2021 |
358 |
|
|
White winter wheat – million bu. |
|
Average est. |
242 |
Range |
239 - 250 |
USDA July |
240 |
USDA 2021 |
167 |
|
|
Other spring wheat – million bu. |
|
Average est. |
510 |
Range |
496 - 523 |
USDA July |
503 |
USDA 2021 |
331 |
|
|
Durum wheat – million bu. |
|
Average est. |
77 |
Range |
74 - 80 |
USDA July |
NA |
USDA 2021 |
77 |
|
Don’t forget about ending stocks... The focal point of Friday’s report data will be the U.S. crop estimates, but adjustments to USDA’s balance sheets could influence prices. Traders anticipate smaller U.S. new-crop ending stocks for corn and cotton, while soybean carryover is expected to be unchanged and wheat ending stocks are likely to increase. The following estimates are from a Reuters survey (Bloomberg for cotton):
Expectations for U.S. Carryover |
||
Corn – billion bushels |
||
2021-22 |
2022-23 |
|
Average est. |
1.512 |
1.402 |
Range |
1.363 – 1.560 |
1.285 – 1.485 |
USDA July |
1.510 |
1.470 |
|
||
Soybeans – million bushels |
||
2021-22 |
2022-23 |
|
Average est. |
226 |
230 |
Range |
210 - 255 |
175 - 320 |
USDA July |
215 |
230 |
|
|
|
Wheat – million bushels |
||
2021-22 |
2022-23 |
|
Average est. |
NA |
650 |
Range |
NA |
607 - 676 |
USDA July |
660 |
639 |
|
|
|
Cotton – million bales |
||
2021-22 |
2022-23 |
|
Average est. |
NA |
2.17 |
Range |
NA |
1.90 – 2.50 |
USDA July |
3.40 |
2.40 |
Expectations for Global Carryover |
||
Corn – MMT |
||
|
2021-22 |
2022-23 |
Average est. |
312.40 |
309.82 |
Range |
310.80 – 314.20 |
302.00 – 314.00 |
USDA July |
312.28 |
312.94 |
|
||
Soybeans – MMT |
||
|
2021-22 |
2022-23 |
Average est. |
88.95 |
99.47 |
Range |
87.71 – 90.00 |
97.50 – 103.10 |
USDA July |
88.73 |
99.61 |
|
||
Wheat – MMT |
||
|
2021-22 |
2022-23 |
Average est. |
279.98 |
268.00 |
Range |
278.00 – 281.10 |
265.00 – 273.00 |
USDA July |
280.10 |
267.52 |
|
||
Cotton – million bales |
||
|
2021-22 |
2022-23 |
Average est. |
NA |
83.68 |
Range |
NA |
83.00 – 84.30 |
USDA July |
84.04 |
84.26 |
U.S. consumer inflation eases, but core prices unchanged... The U.S. consumer price index (CPI) eased to 8.5% above year-ago in July, down from a 9.1% increase in June, as a decline in gasoline prices more than offset rises in food and other components. Despite the drop in gasoline prices during July, they were still 44.0% above year-ago, while the energy index was up 32.9%. The food index increased 1.1% in July – the seventh consecutive monthly increase of 0.9% or more – and jumped 10.9% over the past year, the largest 12-month increase since the period ending May 1979.
Core CPI, which excludes volatile food and energy prices, increased 5.9% versus last year, unchanged from June.
Traders slashed bets the Federal Reserve will deliver a third straight 75-basis-point interest rate increase in September following the bigger-than-expected slowdown in consumer inflation. Fed funds futures traders are now pricing in only a 38% chance the U.S. central bank will hike rates by 75 basis points when it meets in September, compared to 68% earlier. A 50-basis-point increase is now seen as a 62% probability.
PERC recommends getting propane early... Delayed planting in many states may cause high moisture corn to be a common challenge this harvest, requiring longer periods of grain drying than average. Due to increased uncertainty, the Propane Education & Research Council (PERC) recommends participating in early tank fill programs before peak harvest demand.
PERC’s Grain Drying Calculator tool helps plan ahead for propane supply needs. Available for free online, farmers can simply enter the number of acres, estimated bushels per acre, and optimal moisture percentages to determine gallons needed.
“Farmers will need ample supplies of propane to dry corn if they are faced with a short harvest season before winter,” said Mike Newland, director of agriculture business development for PERC. “While much of the nation is experiencing drying conditions, it will be important for producers to monitor weekly crop moisture levels and plan their grain drying fuel supplies accordingly.”
By filling tanks early, producers can beat the rush of higher propane demand at harvest time. Newland recommends looking into additional on-site fuel storage for immediate access to propane throughout the entire harvest season.