Good morning!
Weaker tone ahead of USDA’s August crop reports... After two-sided trade earlier overnight, a weaker tone has developed in the grain and soy markets this morning, led lower by wheat. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 7 to 11 cents lower and wheat futures are 10 to 13 cents lower. Front-month crude oil futures are around $1.40 lower and the U.S. dollar index is up more than 450 points.
First corn, soybean crop estimates highlight August crop reports... USDA’s Crop Production and Supply & Demand Reports will be released at 11 a.m. CT. The first survey-based corn and soybean estimates will be the highlight, with traders expecting declines from levels projected in July. Based on the average pre-report estimate from a Reuters survey, corn production is expected to come in at 14.392 billion bu. on a yield of 175.9 bu. per acre, while the soybean crop is expected at 4.481 billion bu. on a yield of 51.1 bu. per acre. USDA resurveyed planted acreage in the Dakotas and Minnesota, and the corn harvested acreage percentage could be lowered to reflect more acres chopped for silage. Any changes to wheat production this month are likely to be relatively minor, with the average estimate for all wheat at 1.791 billion bushels. Slightly higher old-crop ending stocks are expected for corn and soybeans. For 2022-23, traders anticipate smaller ending stocks for corn, while soybean carryover is expected to be unchanged and wheat ending stocks are likely to increase. Click here to view the full pre-report expectations.
First wheat shipment leaves Ukrainian ports... Two more ships left Ukraine’s Black Sea ports on Friday, including the first wheat shipment under the new export deal, according to Turkey’s defense ministry. A total 14 ships have now departed from Ukraine over the past two weeks, following the deal with Russia to allow the resumption of grain exports from Ukraine’s Black Sea ports. Turkey’s defense ministry said on Thursday four ships that were inspected by the Joint Coordination Center team in Istanbul arrived in Ukraine and were being loaded, though no departure date was given.
Vital European waterways drying up... Waterways vital to European commerce are drying up under scorching temperatures, as we previously noted. Water levels at one key chokepoint of the Rhine in Germany were roughly half their normal level this week, and they’re forecast to drop even more, while the Danube is receding in Eastern Europe, impeding a key Ukrainian grain route.
‘Alarming’ situation unfolding at a Russian-occupied nuclear power plant in southeastern Ukraine... Parts of the Zaporizhzhia nuclear plant — the largest nuclear plant in Europe — have been knocked out due to recent attacks, risking an “unacceptable” potential radiation leak, according to Mariano Grossi, the Director General of the International Atomic Energy Agency (IAEA). “IAEA experts believe that there is no immediate threat to nuclear safety,” but “that could change at any moment,” Grossi said. Russia and Ukraine have so far been unwilling to agree to an IAEA inspection of the plant and have accused each other of shelling the facility.
Russia lowers its wheat export tax... Russia’s wheat export tax for Aug. 17-23 will be 5,018.1 rubles ($82.30) per metric ton based on an indicative price of $367.30, down from 5,219.6 rubles the previous week. The tax is well below levels when it was pegged to the U.S. dollar.
China lowers 2021-22 soy import estimate... China’s ag ministry cut its estimate for 2021-22 (Oct.-Sept.) soybean imports to 91.0 MMT, down 2 MMT from the previous month’s forecast, as heavy hog industry losses reduced demand for soymeal. Soybean imports are now forecast to fall 8.8% from 2020-21. The ag ministry kept its 2022-23 soybean import forecast at 95.2 MMT, which would be a 4.6% rise from this year. Estimates to corn output, imports and consumption were also unchanged, however, recent low temperatures and excessive rainfall in the northeast, might impact corn production in some areas, the ministry said.
China continues to auction soybean reserves... China will sell auction another 500,000 MT of imported soybeans from state-owned reserves on Aug. 19. Beijing continues to sell soybeans from state reserves to boost supplies in the domestic market.
U.K. economy contracted in the second quarter... Britain’s gross domestic product fell 0.1% compared with the preceding quarter, the Office for National Statistics said Friday. The nation is projected to enter recession from the fourth quarter of this year, according to the Bank of England.
House to vote on IRA/reconciliation measure... The House prepares to take up the Inflation Reduction Act or a final vote later this afternoon. House Majority Whip Jim Clyburn (D-S.C.), acknowledging that the bill isn’t everything Dems wanted: “I’ve always said a half loaf is better than no loaf. You come back and get the other half if we can have a successful election in November and get the numbers we need.” Expected passage in the House will send the bill to President Joe Biden for his signature.
Court delays enforcement of Massachusetts pork law... A U.S. federal court judge for the District of Massachusetts on Thursday signed a court order approving an agreement to delay enforcement of a state law that would have banned the sale of pork that comes from animals not housed according to the state’s prescriptive housing standards. A coalition led by the National Pork Producers Council (NPPC), with the National Restaurant Association and several New England restaurant and hospitality associations filed suit seeking to stop the law’s impeding implementation. The suit also asks the court to find the law unconstitutional.
Big weekly cattle sales again... After a slow start, cash cattle trade actively picked up with 93,000 head trading so far after 103,000 head of negotiated trade last week. Prices continue to be highly varied, with a range of $138 to $152.50, though it appears the average price will firm again this week. Higher prices amid active trade signals a market that should continue to strengthen as slaughter supplies tighten.
October hogs hold huge discounts... August lean hog futures expire today, meaning the October contract will take over lead-month status at a major discount. October hogs finished Thursday $21.325 below the August contract and $20.785 under today’s cash index quote. That’s too wide. While market-ready numbers will build seasonally, packers are pulling hogs forward, which will smooth out the supply increase into year-end.
Overnight demand news... South Korea purchased 60,000 MT of optional origin corn.
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
- 11:00 a.m. WASDE — ERS
- 11:00 a.m. Cotton Ginnings — NASS
- 11:00 a.m. Crop Production — NASS
- 11:15 a.m. Cotton: World Markets and Trade — FAS
- 11:15 a.m. Grain: World Markets and Trade — FAS
- 11:15 a.m. Oilseeds: World Markets and Trade — FAS
- 11:15 a.m. World Agricultural Production — FAS
- 2:00 p.m. Vegetable and Pulses Yearbook — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Turkey Hatchery — NASS
- 2:30 p.m. Commitments of Traders — CFTC