After the Bell | August 23, 2023
Corn: December corn rallied 11 cents to $4.90 1/2 and closed above the 10-day moving average, nearer the session high. Corn futures rebounded today in tandem with SRW wheat in the wake of an overnight Russian drone attacks on Ukrainian grain facilities on the Danube River port of Izmail and in the Odesa region on the Black Sea. The strikes marked the eighth wave of attacks on Ukrainian port infrastructure since Russia quit the U.N. brokered Black Sea grain deal.
Scouts on Day 2 of the Pro Farmer Crop Tour found an average yield of 180.89 bu. per acre in Indiana, up from 177.85 bu. per acre last year, but down from the three-year average of 183.72 bu. In Nebraska, scouts found an average yield of 167.22 bu. per acre, up from 158.53 bu. per acre last year but down from the three-year average of 172.01. Day 3 of the Tour will find scouts on the eastern leg sampling fields in western Illinois and eastern Iowa, while scouts on the western leg will sample fields in western Iowa. Day 3 results will be posted for Illinois and Iowa districts 1, 4 and 7 tonight at 8 p.m. CT on our website.
Weekly ethanol production in the week ended August 18 totaled 1.048 million barrels per day (bpd), falling 21,000 bpd on the week. Meanwhile, ethanol stocks dropped approximately 600,000 barrels on the week to 22.8 million barrels.
USDA will release weekly export sales data early Thursday morning, with traders expecting sales to range from 0 to 250,000 MT for 2022-23 and 250,000 to 450,000 MT for 2023-24.
Soybeans: November soybean futures rose 14 1/2 cents to $13.60 1/2. September meal gained $6.70 to $413.00 and September bean oil was up 94 points at 66.15 cents. All three markets closed nearer their session highs. Scorching heat in the Corn Belt boosted the soybean complex futures today. Also, new Russian attacks on Ukrainian grain facilities that lifted wheat and corn futures also spilled over into buying interest in soybeans. Risk-on attitudes in the general marketplace also invited fresh speculator interest to the soy complex futures.
World Weather Inc. today said two more weeks of mostly restricted rain across the Midwest along with expanding heat into Thursday “will lead to significant drying across the region and some soybeans are likely to suffer from declines in yields in the drier areas while soil moisture is high enough in much of the region to support crop development.” Rain will be needed by the first days of September to prevent greater declines in soybean yields in a large part of the Midwest as time will be running out for significant improvements in yields before the crop matures, said the forecaster.
On day 2 of the Pro Farmer crop tour, scouts found an average pod count in a 3’x3’ square of 1,309.96 in Indiana, up from 1,165.97 last year and the three-year average of 1,228.94. Meanwhile, in Nebraska, scouts found an average pod count of 1,160.02, up from last year’s average of 1,063.72, but lower than the three-year average of 1,196.02.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybeans sales of zero to 200,000 MT in the 2022-23 marketing year, and sale of 550,00 to 1.25 million MT in the 2023-24 marketing year.
Wheat: December SRW futures rose 12 1/4 cents to $6.39 3/4. December HRW futures rallied 16 cents before settling at $7.63 3/4, nearer the session high. Spring wheat futures rallied 11 1/2 cents before settling at $8.03 1/4, also near session highs. Some uncertainty came into play in the market at midday as Yevgeny Prigozhin, the leader of the Wagner mercenary group that attempted a mutiny in Russia in June, was involved with a plane crash that killed ten in Russian airspace. The market did not react much today, but it is unsure what kind of political turmoil this may bring about in Russia as the conflict with Ukraine wages on. There is some rain expected over the next week in the northeastern areas of the northern Plains, which will benefit immature, late season crops, says World Weather Inc. Conditions remain favorable for rapid fieldwork advancement and the harvesting of the spring wheat crop.
The USDA releases export sales tomorrow morning for the week ending Aug 17, analysts expect sales between 250,000 and 450,000 MT compared to last week at 359,539 MT.
Cotton: December cotton futures rose 146 points to 85.82 cents, closing near the session high. Risk-on attitudes that rallied the U.S. stock indexes and pressured the U.S. dollar index supported buying interest in cotton futures today, as did rallies in the grain futures markets. U.S. weather continues to lean bullish for cotton prices. World Weather Inc. today reported cotton in west Texas is not likely to receive any serious relief from dryness anytime soon, although some showers may evolve briefly early next week. U.S. Delta cotton continues dry and warm and needs a little moisture to reduce crop stress. U.S. southeastern crops are still rated well with little change likely. Cotton in Arizona and California are drying back down again, but some boost in precipitation will be possible again briefly late next week and into the following weekend, said the forecaster. Cotton traders will closely examine Thursday morning’s weekly USDA export sales report. Cotton traders are also awaiting Friday’s speech by Federal Reserve Chair Powell at the annual Fed confab in Jackson Hole, Wyoming. Powell’s comments are likely to impact stock and financial markets, which in turn would impact the cotton futures market.
Cattle: Expiring August live cattle futures inched up 10 cents to $178.05 Wednesday, while most-active October futures gained 5 cents to $178.675. The nearby August feeder contract dipped 50 cents to $245.025, while October slid 35 cents to $$250.875. Cash trading was nonexistent in the five-market area Monday and Tuesday, robbing futures traders of cash market guidance. Meanwhile, the wholesale market continues strengthening; choice-grade cutout built on early-week gains, rising 43 cents to $317.48 at noon today, while select cutout surged $2.44 to $292.06, which reduced the choice-select spread to $25.42. This still implies considerable tightness of high-quality cattle and beef supplies, since the 10-year average for the spread in mid-to-late August is around $14.50. The midsession quote for choice beef is the highest since early July, although history suggests grocers will soon have gathered their needs for planned Labor Day features; that may presage a seasonal slide in wholesale prices, which in turn may encourage packers to continue trying to hold the line on cash cattle bids, but we would be in no hurry to count out the potential for fresh short-term cash gains. Bears seem to hold the short-term technical advantage in October futures at this point.
Although feeder futures declined modestly today, the moderate size of those losses was rather impressive given the strong advance posted by the grain and soy complexes today. It seems doubly impressive when one considers the heat wave currently dominating the Great Plains, since feedyard managers probably aren’t in a rush to place cattle in their lots in such conditions.
Hogs: October lean hog futures attempted to rally this morning but bearish seasonals and selling pressure ultimately led to the price falling $1.025 to $78.55. Cash prices continue to deteriorate with the CME lean hog index falling 77 cents to $98.04 as of Monday, with preliminary date pointing to an additional 67 cent drop to $97.37 as of Tuesday. The anticipation of increased hog and pork supplies as well as dwindling summer grilling demand has made it difficult for futures bulls to garner any meaningful momentum. Wholesale prices have seemingly turned a corner lower as well despite impressive movement the last few days, with carcass values falling $1.64 to $102.01 at midsession. Movement remained impressive at 169.78 loads. Bellies continue to lead the way over as BLT season is coming to an end. The steep discount that futures hold to cash prices should keep losses at bay for the most part, but thus far bears have been proven right in the seasonal downturn in cash prices. Bears seem to believe the steep drops in cash prices seen the last two years will happen once again this year, but high costs of beef should limit the destruction of pork demand, indicating some of the selling may be overdone.
