Market Snapshot | July 26, 2022

Corn futures are 10 to 11 cents higher at midmorning.

• Corn futures gapped higher overnight and climbed to the highest levels in over a week as disappointing crop ratings fueled concerns of lower yield prospects.
• Late yesterday, USDA reported 61% of the U.S. corn crop in either “good” or “excellent” condition as of Sunday, down from 64% a week earlier and below analysts’ expectations for a combined rating of 63%. 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 fell 6.2 points to 357.1, which is now 11.6 points below the five-year average. Much of the weekly decline was in Minnesota, Nebraska and Kansas.
• Midwest temperatures will turn hot once again next week. A returning high-pressure ridge in the central U.S. will bring back drier and warmer weather for the Plains and Midwest, but no seriously harsh weather is expected through the first half of August, World Weather Inc. said.
• Extreme heat in some areas last week further stressed crops during corn pollination, prompting Crop Consultant Dr. Michael Cordonnier cut his corn yield estimate by 2 bu. to 175 bu. per acre. He has a neutral to lower bias toward corn yields.
• December corn reached $6.02 1/2, the contract’s highest intraday price since $6.09 on July 19. The market’s strong open left a gap between Monday’s high at $5.84 1/4 and today’s low at $5.91.

Soy complex futures are broadly higher, led by gains of about 28 cents in August soybeans and around $11 in nearby soymeal; nearby soyoil is up around 75 points.

• Soybean futures also gapped higher overnight following lower-than-expected crop ratings and concerns a return of Midwest heat could come at an inopportune time for the crop’s development.
• USDA reported 59% of the U.S. soybean crop in “good” to “excellent” condition as of Sunday, down from 61% the previous week and the sixth straight weekly decline. A number closer to 60% was expected. Based on the Pro Farmer CCI, the soybean crop dropped 2.7 points to 350.7, which is 5.5 points below average.
• Cordonnier also lowered his soybean yield projection, reducing his outlook by 0.5 bu. to 51 bu. per acre. He also has a neutral-to-lower bias toward soybean yields.
• “Soybeans are entering their reproductive stage, and after a brief period of improved weather, hotter and dryer weather is forecasted as we move into August,” Cordonnier said in a report. “Declining soil moisture could result in moisture stress just as the soybeans start to fill pods.”
• November soybeans extended overnight gains and reached $13.76 3/4, the highest intraday price since $13.83 1/2 on July 19, after early topping the 20-day moving average.

Wheat futures are sharply higher, led by gains of 30 to 32 cents in spring wheat.

• Spring wheat led the markets higher on and unexpected drop in USDA’s spring wheat crop ratings and concerns over Ukrainian supplies.
• Russian jets hit Ukraine’s key port city of Odesa with cruise missiles again on Tuesday. The strikes also included attacks on other coastal villages and even more port facilities, raising concerns about the resumption of Ukrainian grain shipments.
• USDA reported 68% of the spring wheat crop in “good” to “excellent” condition as of Sunday, down from 71% the previous week and below analysts’ expectations for an unchanged figure. Based on the Pro Farmer CCI, the spring wheat crop fell 4.6 points to 372.5, still 45.1 points above the five-year average for the date. September SRW overnight rose to $7.92 but held within Monday’s range.
• French consultancy Agritel pegged the soft wheat crop in France, the European Union’s largest wheat grower, to fall 5.6% this year to 33.44 MMT after adverse weather cut yields. Agritel’s estimate, based on a survey of industry players July 18-22, is slightly above its initial forecast of 33.25 MMT and well above the French ag ministry’s projection earlier this month of 32.90 MMT, down 7.2% from last year.
• Traders bought up to seven shipments of French wheat aimed for Pakistan as part of a 300,000-MT tender last week, European traders said on Tuesday, in a further sign that importing countries are turning to western Europe to fill a gap left by missing Black Sea grain.
• Kazakhstan will produce between 13 MMT and 13.5 MMT of wheat this year, up around 15% from last year’s crop, according to the country’s ag minister. He says the country will need 6 MMT for domestic consumption and the rest will be available for export.

Live cattle and feeder cattle are lower in narrow-range trade at midmorning.

• Live cattle failed to generate much followthrough buying interest following Monday’s climb to three-month highs and are under mild pressure amid expectations for weaker cash prices.
• Feeder cattle are under pressure from strength in corn.
• Steady to weaker cash trade is expected again this week, though there may be little activity till late in the week. Cash cattle averaged $141.12 last week, down $1.00 from the previous week and the third consecutive weekly decline.
• Choice beef cutout values rose 99 cents Monday to $268.11 on light movement of 90 loads. Beef demand may be limited until retailers ramp up purchases around the second week of August for Labor Day features.

Hog futures are lower and trading in narrow ranges.

• Hog futures are under a second day of corrective, profit-taking pressure following last week’s rally to three-month highs. But firm cash fundamentals continue to support prices.
• The CME lean hog index rose 91 cents to $119.13 (as of July 22), the highest level since June 2021. August futures currently are trading at a discount of about $2.50 to the index.
• Pork cutout values rose $1.85 Monday to $127.92, near a 12-month high. Movement totaled 289.5 loads.
• August lean hogs are trading within Monday’s range. Upside targets for bulls include a three-month high posted Friday at $118.90.