Market Snapshot | August 2, 2022

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Corn futures are down around 15 cents at midmorning.

  • Corn futures fell a second day in a row on stronger-than-expected USDA crop ratings and signs of less threatening Midwest weather.
  • USDA late Monday reported 61% of the U.S. corn crop in “good” or “excellent” condition as of Sunday, unchanged from the previous week and one percentage point above trade expectations. 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 1.3 points to 355.8, as both Iowa and Nebraska declined slightly more than one point each. The corn CCI rating is now 11.2 points below the five-year average.
  • Much of the Midwest will receive multiple rounds of timely rain through next Monday that should prevent excessive dryness and significant crop stress, World Weather Inc. said today. Exceptions to favorable crop conditions are still expected from southeastern South Dakota and southwestern Minnesota to eastern Nebraska and much of western into central Iowa.
  • Crop Consultant Dr. Michael Cordonnier cut his corn yield estimate, citing forecasts for heat and dryness across the central U.S. that will reduce soil moisture. He now estimates the average U.S. yield at 174 bu. per acre, down 1 bu. from his previous forecast.
  • Turkey expects roughly one grain ship to leave Ukrainian ports each day as long as an agreement that ensures safe passage holds, a senior Turkish official said today.
  • USDA reported corn processed for ethanol during June at 442.0 million bu., down 4.6 million bu. from May but up 2.5 million bu., or 0.6%, from June 2021. The June figure was nearly 8 million bu. under expectations.
  • December corn futures dropped under the 10-day moving average for the first time in a week and fell as low as $5.93, the lowest intraday price since July 26.

Soy complex futures are mixed, with soybeans down around 22 cents and soyoil down more than 200 points; soymeal is up $3 to $6.

  • Soybean futures extended Monday’s sharp losses after USDA’s weekly condition ratings came out better than expected.
  • USDA reported 60% of the soybean crop in “good” to “excellent” condition as of Sunday, an unexpected improvement from 59% a week earlier. Analysts expected a drop to 58%. When USDA’s weekly ratings are plugged into the weighted Pro Farmer CCI, the soybean crop improved 3.1 points to 353.9, still 2.7 points below average.
  • Cordonnier also lowered his soybean yield estimate, dropping his outlook 0.5 bu. to 50.5 bu. per acre. He has a neutral to lower bias toward yields.
  • Malaysian palm oil futures sank over 5% more for a second consecutive session as the market remained under pressure after Indonesia raised its overseas volumes quota.
  • USDA on Monday reported June soybean crush totaling 174.08 million bu., down 6.825 million bu. from May 2022 but up 12.336 million bu. from June 2021. USDA’s number was slightly below expectations.
  • November soybeans overnight fell as low as $13.77 1/4, the lowest intraday price since July 27, after tumbling 62 1/2 cents Monday.

Wheat futures are down sharply, led by declines of 25 to 27 cents in HRW and SRW contracts.

  • Wheat futures fell to one-week lows as USDA’s crop ratings exceeded expectations and the resumption of grain shipments from Ukraine eased supply concerns.
  • USDA reported 70% of the spring wheat crop in “good” to “excellent” condition as of Sunday, up from 68% a week earlier and above analyst expectations for 67%. Based on the Pro Farmer CCI, the spring wheat crop improved 2.9 points to 375.4, though that was slightly below ratings for this point in the growing season for 2018, 2019 and 2020.
  • The winter wheat crop was 82% harvested as of Sunday, up from 77% a week earlier and slightly behind the five-year average of 85% for that date.
  • Japan is seeking 122,103 MT of wheat in its weekly tender. South Korea tendered to buy 50,000 MT each of milling wheat from the U.S. and Australia. The Philippines tendered to buy 150,000 MT each of wheat and feed barley – both optional origin.
  • September SRW wheat fell as low as $7.72 3/4, the lowest intraday price since July 26.

Live cattle are mixed at midmorning while feeder cattle are mildly firmer.

  • Nearby live cattle futures are under mild pressure from expectations the cash market will extend recent weakness. Deferred contracts are up slightly.
  • Feeder cattle are stronger behind continued weakness in corn, though buyer interest is subdued.
  • Cash cattle likely will erode for a fifth consecutive week, sources report. USDA-reported live steers averaged $139.83 last week, down from $141.12 the previous week and the fourth straight weekly decline.
  • Retail beef demand appears to be holding up relatively well, based on recent wholesale trends. Choice beef cutout values rose $1.36 Monday to $270.60, near a two-week high. Movement was decent at 99 loads, up 10% from volume the previous Monday.
  • October live cattle are extending the sideways trade of the past two weeks and continue to hold a premium to cash prices. Initial support is seen at Monday’s low of $141.90.

Hog futures are lower, led by the October contract.

  • Lean hog futures are under facing corrective selling pressure after last week’s rally but remain underpinned by firm cash fundamentals.
  • The CME lean hog index is up 45 cents to $121.87 (as of July 29), near a 14-month high. Futures downside likely will be limited as long as cash fundamentals remain supportive.
  • Wholesale prices remain near 12-month highs and retailers likely will step up buying soon for Labor Day weekend features. Pork cutout values rose 36 cents Monday to $127.70 on strong movement of nearly 307 loads.
  • October lean hogs briefly pushed above Monday’s high to reach $97.075 before fading to losses just under the 10-day moving average at $95.85.
 

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