Ahead of the Open | August 19, 2022

GRAIN CALLS

Corn: Steady to 1 cent higher.

Soybeans: 6 to 8 cents lower.

Wheat: 4 to 8 cents higher.

GENERAL COMMENTS: Soybean futures fell overnight amid expectations Midwest rain will boost crop prospects, while corn was little changed. Wheat futures rose on corrective buying following Thursday’s sharp declines. Malaysian palm oil futures rose 1% on support from a weaker ringgit but posted a 7.1% weekly loss due as crude oil fell. Front-month crude oil fell around $1.00. U.S. stock index futures signal a weaker open, while the U.S. dollar index is nearly 400 points higher.

Rain is expected in the Southern Plains this weekend through the first part of next week, resulting in a notable boost in topsoil moisture for better grazing conditions and for a better environment for early wheat planting in September, World Weather said. “The moisture will come too late for a serious change in summer crop production, although a few cotton fields may experience an increase in bolls.” In the Midwest, the forecast reduced rain chances during the second week of the outlook, “but with soil conditions mostly favorable and temperatures mild the impact is unlikely to be very great.”

Ukraine has exported 2.99 MMT of grains since July 1, according to the country’s ag ministry, down 51.6% from the same period last year. The ministry data showed exports so far in 2022-23 included 1.94 million MMT of corn, 783,000 MT of wheat and 257,000 MT of barley. Export volumes have picked up this month after three Black Sea ports were reopened on Aug. 1. Since then, Ukraine has exported 1.29 MMT of grain, though that’s still down sharply from 3.14 MMT during the same period last year.

Ukraine’s wheat harvest is 91% complete at 17.4 MMT, according to grain traders union UGA. It said total harvest of grains and oilseeds stood at 25.7 MMT, 2.3 MMT higher than the country’s ag ministry indicated. Ukraine’s government expects total production to be 65 MMT to 67 MMT, down from last year’s record of 86 MMT.

Russia’s wheat export tax for Aug. 24-30 will be 4,794.7 rubles ($80.92) per metric ton based on an indicative price of $358.10. That’s down from a rate of 5,018.1 rubles per metric ton the previous week.

European producers are again curbing fertilizer operations because of rising prices of natural gas, a key feedstock, with at least a quarter of the region’s nitrogen fertilizer capacity thought to be lost already, according to Bloomberg. In China, a power crunch in the Sichuan province is stopping fertilizer output there. Most nitrogen prices are up after aggressive summer fill, yet they’re down sharply from spring highs, portending relief ahead of the U.S. fall season, Bloomberg Intelligence says.

China will auction another 500,000 MT of imported soybeans from state-owned reserves on Aug. 26.

CORN: December corn traded within Thursday’s range overnight and is poised for a weekly loss after ending last week at $6.42 1/4.

 SOYBEANS: November soybeans overnight fell as low as $13.89 after firming 15 1/2 cents Thursday to $14.05 1/4. The contract ended last week at $14.54 1/4.

WHEAT: September SRW wheat reached $7.42 1/4 overnight but is still poised for a sharp decline this week after ending last week at $8.06.

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-weaker

CATTLE: Live cattle may face mixed, two-sided trade as the market waits for further cash signals and USDA’s Cattle on Feed Report after today’s close. Cash trade has been light so far this week, with most feedlots passing on mildly firmer bids and packers showing no urgency after two weeks of aggressive purchases. With feedlots current on marketings, they could choose to carry some animals into next week if packers don’t increase bids from current levels.

USDA’s Cattle on Feed Report is expected to show the Aug. 1 feedlot inventory up 0.7% from year-ago at nearly 11.2 million head. While placements on average are expected to be down 1.5% from last year, though estimates ranged from a 5% drop to 1.3% increase. July marketings are expected to be down 2.9%.

HOGS: Lean hog futures may face followthrough pressure from Thursday’s steep declines and beliefs the cash market has peaked. October hogs fell the $4.75 daily trading limit to $93.30, $27.30 below today’s CME lean hog index quote (as of Aug. 17). The daily limit for hog futures expands to $7.00 for today’s session. While yesterday’s technical breakdown could lead to active followthrough selling, the huge discount the front-month contract holds to the cash index appears far too wide. Pork cutout values rose $1.44 Thursday to $119.91, up from a five-week low. Movement improved slightly to 286 loads.

October lean hogs fell Thursday to $93.30, the lowest closing price in nearly five weeks, and is down from $100.025 at the end of last week.