After the Bell | August 23, 2022
Corn: December futures surged 26 1/4 cents to $6.55 1/4, the contract’s highest closing price since June 28. Corn futures rallied to 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 Monday 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 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. On day two, scouts touring eastern Nebraska sampled more corn and soybean acreage with low yield prospects due to drought. Scouts in Indiana reported stronger crop prospects. Day 2 results for Nebraska and Indiana will be released at 8 pm CT.
Soybeans: November soybeans rose 25 3/4 cents to $14.61, the contract’s highest close since June 29. September soymeal rose $8.00 to $468.50. September soyoil rose 82 points to 69.59 cents. Soybeans rallied to an eight-week high on increasing concerns over dryness-impaired crops in parts of the Midwest. Day 1 of the Pro Farmer Crop Tour revealed average soybean pod counts in a 3’x3’ square for South Dakota at 871.40, down 13% from last year and down 15% from the 3-year average. Ohio pod counts were pegged at 1131.64, down 5.3% from last year but up 9% compared to the 3-year average.
A rally in crude oil and an unexpected erosion in government crop condition ratings also encouraged buyers in the soy complex. USDA reported 57% of the nation’s soybean in good-to-excellent condition, a point lower than the average analyst estimate. Also, USDA reported a daily sale of 110,000 MT (4 million bu.) soybeans for delivery to China for the 2022-23 marketing year.
Wheat: December SRW wheat rose 12 1/4 cents to $8.00 1/2, the contract’s highest closing price since Aug 16. December HRW wheat rose 13 cents to $8.79. December spring wheat climbed 13 cents to $8.79. Winter wheat rose a third straight day as rallies in corn and soybeans fueled more corrective buying and short covering following last week’s steep losses. Gains of over $3 in crude oil futures also encouraged buyers in grains. Late Monday, USDA reported the U.S. spring wheat crop at 64% good-to-excellent, unchanged from the previous week. Spring wheat harvest was 33% complete, up from 16% complete last week but still behind the 54% five-year average for this time of year.
Cotton: December cotton futures fell 191 points to 112.23 cents per pound, the lowest closing price since Aug. 12. The cotton market received a bearish surprise when USDA late Monday reported total U.S. planted and failed cotton Farm Service Agency (FSA) August acres at 13.517 million. Last year, final cotton planted acres were 242,000 acres over the August FSA number. Based on that figure, total 2022 cotton planted acres would come in around 13.76 million. Even assuming some additional yield losses in August, U.S. cotton production is likely at least 1 million bales higher than USDA’s August forecast.
Cattle: October live cattle gained 10 cents to $144.60 following two-sided trading. Feeder futures sank as corn and soybean futures rallied, with the September contract down $1.90 to $182.45. Fed cattle opened strongly in response to the bullish demand implications of Monday’s USDA Cold Storage report but soon faded, possibly reflecting expectations for seasonal weakness in beef demand. Choice beef cutout values fell 44 cents early today to $264.08, though movement by midday was strong at 94 loads. Cash cattle have strengthened the past three weeks but traders are still waiting for the market to develop this week. A few head changed hands at $149.00 in northern areas Monday, futures’ downturn since the middle of last week may be giving buyers pause.
Hogs: October lean hogs fell $1.075 to $92.90, the contract’s lowest closing price since July 15. Futures failed to sustain an early rally in response to bullish USDA Cold Storage numbers as growing expectations for seasonal cash downturn continued to embolden sellers. Traders are clearly pessimistic about the late summer-early fall outlook, as indicated by futures’ wide discount to the CME Lean Hog Index and October futures. The index fell 31 cents today to $119.98, near a four-week low, and is expected to drop another 80 cents tomorrow. Weakness in wholesale pork also weighed on futures, as pork cutout values plunged $11.14 early today to $106.47, led by a drop of over $47 in bellies. Wholesale weakness is to be expected with the summer grilling season winding down and hog supplies poised to rise seasonally, but the bearishness built into fourth-quarter futures still appears excessive.
