Market Snapshot | August 23, 2022

Corn futures are 26 to 29 cents higher at midsession.

• Corn futures rallied near an eight-week high after USDA crop ratings unexpectedly worsened and the Pro Farmer Midwest Crop Tour confirmed likely severe yield loss from drought in the western Corn Belt.
• Late Monday, USDA reported the U.S. corn crop 55% in “good” or “excellent” condition as of Sunday, down from 57% a week earlier and below analysts' expectations for the figure to stay unchanged. Corn rated poor-to-very poor increased to 18% from 17%.
• When USDA’s latest condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop fell another 4.07 points to 344.75, the sixth straight weekly decline.
• Scouts on the first day of the Pro Farmer Midwest Crop Tour found an average corn yield of 118.45 bu. per acre in South Dakota, down sharply from last year’s 151.45 bu. per acre estimate and the lowest Tour estimate for the state the Tour in 12 years.
• In Ohio, samples yielded an average corn yield of 174.17 bu. per acre, down from 185.06 bu. per acre in 2021 but up from the three-year average of 169.03 bu. per acre.
• Crop consultant Dr. Michael Cordonnier kept his corn yield estimate unchanged this week at 173.0 bu. per acre but holds a neutral to slightly lower bias. “The weather during August is turning out to be quite benign for the corn in the eastern Corn Belt, but not as good for the corn in the western Corn Belt,” he said in a report.
• December corn broke above the trading range that held since July to reach $6.62, the contract’s highest intraday price since $6.62 1/2 on June 29.

Soybean futures are 29 to 33 cents higher, nearby soymeal is up over $9 and nearby soyoil is up over 100 points.

• Soybeans rose with corn after USDA’s weekly ratings deteriorated and the Pro Farmer Crop Tour reported drought-damaged crops in the western Corn Belt.
• USDA reported 57% of the U.S. soybean crop in good-to-excellent condition as of Sunday, down from 58% a week earlier and one percentage point under analysts' expectations. Soybeans rated poor-to-very poor increased to 13% from 12%. Based on the Pro Farmer CCI, the soybean crop declined by 2.64 points to 346.44, the third straight weekly decline.
• In South Dakota, Crop Tour scouts reported soybean pod counts in a 3’x3’ square came in averaging 871.40, down from both 996.86 in 2021 and 1,026.86 for the three-year average. In Ohio, soybean pod counts in a 3’x3’ square totaled 1,131.64, down from 1,195.37 in 2021 but above the three-year average of 1,038.35.
• Cordonnier kept his U.S. soybean yield estimate unchanged at 50.5 bu. per acre and has a neutral bias. “August is the make-or break month for soybeans and the soybeans in the eastern Corn Belt have benefited from recent rainfall,” he wrote. “The weather has not been as beneficial in the western Corn Belt, especially in Kansas, Nebraska, and South Dakota.”
• USDA reported a soybean sale of 110,000 MT for delivery to China during the 2022-23 marketing year.
• November soybeans pushed above the 100-day moving average around $14.58 to hit $14.67, the contract’s highest intraday price since $14.81 on Aug. 1. Bulls may be targeting the July high at $14.89.

Wheat futures are sharply higher, led by gains of 24 to 28 cents in HRW and SRW contracts.

• Wheat futures rose on spillover support from rallies in corn and soybeans, with sharply higher crude oil and weakness in the U.S. dollar adding support.
• USDA reported U.S. spring wheat crop conditions at 64% “good” to “excellent,” unchanged from the previous week and meeting expectations. Based on the Pro Farmer CCI, the spring wheat crop improved 1.33 point to 369.69, up sharply from a year-ago rating of 223.40.
• Spring wheat harvest was 33% complete, up from 16% but still behind the 54% five-year average.
• Europe is facing its worst drought in at least 500 years, with two-thirds of the continent in a state of alert or warning, reducing inland shipping, electricity production and the yields of certain crops, a European Union agency said today. The August report of the European Drought Observatory (EDO), overseen by the European Commission, said 47% of Europe is under warning conditions.
• December SRW wheat surpassed the 10- and 20-day moving averages to reach $8.19 3/4, the contract’s highest intraday price since Aug. 16.

Live cattle futures are narrowly mixed at midmorning while feeder cattle are lower.

• October live cattle fell for the third time in four sessions amid continued fallout from USDAs unexpectedly bearish Cattle on Feed Report Friday. Traders continued to wait for cash trade to develop.
• Feeder cattle are under pressure from strength in corn prices.
• USDA’s Cold Storage report Monday was deemed supportive for live cattle. The agency showed U.S. beef stocks fell 6.0 million pounds during July to 510.8 million lbs., contrasting with an average drop of 22.2 million lbs. the previous five years and a sign of firm demand.
• Futures’ soft tone so far this week suggests traders see cash prices easing. Live steers averaged $146.88 last week, up $2.49 from the previous week and the third straight weekly gain.
• Choice cutout values rose 24 cents Monday to $264.52 but movement was relatively light at 89 loads.
• October live cattle fell as low as $143.95, the contract’s lowest intraday price since Aug. 16 but held support at the 20-day moving average of $143.85.

Hog futures are firmly higher.

• Lean hog futures rose a second day in a corrective rebound following last week’s sharp declines.
• Despite continued erosion in chase gauges, futures are finding support from firm demand readings. USDA, in its Cold Storage report, reported a drop of 8.6 million lbs. in U.S. pork stockpiles during July, more than double the average decline the previous five years.
• The CME lean hog index is down 31 cents to $119.98, near a four-week low. October futures’ discount to the index remains unusually wide, suggesting traders see further cash weakness.
• Pork cutout values rose 46 cents Monday to $117.61 on strong movement of over 313 loads.
• October lean hogs rose as high as $96.975, just below resistance at the 10- and 20-day moving averages around $97.30.