First Thing Today | August 30, 2022

Good morning!

Price pressure overnight... Corn and wheat futures pulled back from Monday’s gains overnight, while the soybean market faced followthrough selling. As of 6:30 a.m. CT, corn futures are trading 9 to 11 cents lower, soybeans are mostly around 20 cents lower and wheat futures are mostly 7 to 15 cents lower. Front-month crude oil futures are $2.75 lower and he U.S. dollar index is down more than 300 points this morning.

Consultant cuts corn yield... Crop Consultant Dr. Michael Cordonnier cut his corn yield forecast by 3 bu. to 170 bu. per acre amid the continued decline in crop condition ratings, persistent dry conditions in areas of the western Corn Belt and confirmation of lower yields from recent crop tours, including ours. He says it’s unlikely any improvement in weather going forward is going to add any significant yield to corn, though it could keep the crop from deteriorating further. His corn production estimate is now 13.82 billion bushels. Cordonnier kept his soybean yield and production estimates at 50.5 bu. per acre and 4.40 billion bushels, respectively.

Corn CCI rating continues to fall... When USDA’s weekly 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 dropped another 2.6 points – the seventh straight weekly decline – to 342.11. That’s the lowest corn CCI rating for late August since 2013. The soybean crop inched 0.6 point lower to 345.84 – the fourth straight weekly decline. Click here for more details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Aug. 28.

• Corn: 86% dough (88% average), 46% dented (52% average), 8% mature (9% average), 54% good/average (55% last week).
• Soybeans: 91% setting pods (92% average), 4% dropping leaves (7% average), 57% good/excellent (57% last week).
• Spring wheat: 50% harvested (71% average), 68% good/excellent (64% last week).
• Cotton: 94% setting bolls (91% average), 28% bolls opening (24% average), 34% good/excellent (31% last week).

Ukrainian grain export update... Another six ships carrying a total of 183,000 MT of agricultural products left Ukraine’s Black Sea ports today, bringing the running totals to 61 vessels and around 1.5 MMT since grain shipments resumed Aug. 1. The Ukrainian grain traders union said corn accounted for 62% of the total volume shipped. Wheat accounted for 17% and barley for 6%. Ukraine has also exported rapeseed, sunseeds, soybeans and other commodities.

USDA: Weekly export sales data unavailable until further notice... USDA retracted weekly export data it had released last Thursday amid technical difficulties. It said Monday the weekly sales data would not be available until further notice, suggesting the technical issues haven’t been resolved.

Railroads, unions reach tentative agreements... A group of large U.S. freight railroads has reached tentative agreements with unions representing more than 15,000 workers, a step to avoid a widespread strike after years of failed labor talks. The deals with three of the 12 rail unions come several weeks after a mediation board appointed by the White House issued recommendations including wage increases and expanded health coverage. The nine remaining unions and major carriers have until mid-September to accept or reject the plan recommended by the mediation board.

Kashkari ‘happy’ to see market rout in wake of Jackson Hole... Sharp stock-market losses show investors received the message that Fed Chair Jerome Powell and his colleagues are serious about tackling inflation, said Minneapolis Fed President Neel Kashkari. “I was actually happy to see how Chair Powell’s Jackson Hole speech was received,” Kashkari said in an interview Monday. “People now understand the seriousness of our commitment to getting inflation back down to 2%.”

U.S. business confidence in China falls to record low... Sentiment about operating in China among U.S. businesses has plummeted to a new low, driven largely by Beijing’s continued use of sudden Covid-19 lockdowns, an annual survey by an American business group found. The poll of member companies by the U.S./China Business Council found American multinationals increasingly losing confidence in the near-term prospects for their China ventures, according to results published Monday. This year, 21% of respondents said they were pessimistic or somewhat pessimistic about their five-year business outlook in the world’s second-largest economy, compared with 9% last year. China is battling Covid-19 in every province despite the world’s strictest measures to keep the virus out. All 31 mainland provinces recorded at least one local Covid case over the past 10 days, reflecting the broadest exposure to the virus since at least February 2021.

ERP payments topped $6.5 billion as of Aug. 28... Payments under USDA’s Emergency Relief Program (ERP) increased to $6.53 billion as of Aug. 28, up from $6.47 billion the prior week. The total includes $5.64 billion to non-specialty crop producers ($5.61 billion prior) and $888.2 million to specialty crop producers ($862 million prior) for eligible 2020 and 2021 losses related to natural disasters. North Dakota still leads with $1.03 billion paid out for eligible losses in 2020 and 2021, followed by Texas at $799.6 million. By crop, there have been $1.95 billion in payments for corn, $1.10 billion for soybeans, $928.3 million for wheat and $639.3 million for cotton. USDA also recently mailed out additional applications under the initial phase of the effort which they said would be for over $750 million in payments before factors are applied.

China blocks pork shipments from Indiana plant... Tyson Foods’ pork processing plant in Logansport, Indiana, has been suspended from exporting products to China, USDA announced. No reason was given by USDA or Tyson for the suspension, which started Monday. The move follows Beijing’s halt on shipments of meat products from two other U.S. plants in the past month or so, citing the presence of ractopamine, a feed additive used in the U.S. but banned by China. The Tyson suspension shouldn’t have much impact on the meat trade between the two countries as there are still a lot of U.S. plants eligible to export to China.

Cash cattle expected to trade steady/weaker... Last week’s average cash cattle price fell $2.09 to $144.79, ending a three-week string of price gains. Packers will be buying cattle for a shortened slaughter schedule next week and also have new contract supplies for September available on Thursday. As a result, packer demand for negotiated cattle is likely to remain limited, despite signs consumer demand is chewing through heavy slaughter totals, which reached the highest of the year last week.

Cash hog index continues to slide... The CME lean hog index is down another $2.06 to $111.26 (as of Aug. 26). Even with the drop in the index and yesterday’s strong gains in October lean hog futures, the front-month contract still finished at a $19.01 discount. That should help limit near-term seller interest and may trigger followthrough corrective buying.

Overnight demand news... South Korea purchased 137,000 MT of corn that is expected to be sourced from South America and/or South Africa and 30,000 MT of optional origin non-GMO soybeans. Japan is seeking 95,497 MT of milling wheat in its weekly tender. The Philippines tendered to buy 100,000 MT of feed wheat from unspecified origins.

See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.

Today’s reports

• 2:00 p.m. Outlook for U.S. Agricultural Trade: August 2022 — ERS