Good morning!
Grains rebound overnight... Grains faced followthrough selling early in the overnight session, but markets are higher this morning amid corrective buying, led by wheat. As of 6:30 a.m. CT, spring wheat futures are trading 17 to 18 cents higher, winter wheat is 11 to 15 cents higher, corn is around 2 cents higher and soybeans are 1 to 3 cents higher. Front-month crude oil futures are modestly lower, while the U.S. dollar index is down around 250 points this morning.
First Ukrainian grain shipment clears inspection... Inspection of the first ship carrying grain to leave Ukrainian ports under the recent deal between Ukraine, Russia, Turkey and the United Nation is completed and it will pass through the Bosphorus “shortly,” the Turkish defense ministry said on Wednesday. The ship carrying 26,527 MT of corn is headed for its final destination of Lebanon. After the first successful departure, a senior Turkish official said three ships may leave the three approved Ukrainian ports in the Black Sea every day, instead of the previously planned one. UN spokesperson Stephane Dujarric said more outbound movement was being planned from Ukraine on Wednesday, adding that about 27 ships were covered by the export deal.
Romanian Black Sea port hopes to keep shipping Ukrainian grain... Exporters have shipped 1.46 MMT of Ukrainian grain through Romania’s port at Constanta during the war. Port authorities said 183,581 MT of grains were currently en route to the port. Comvex, which has handled roughly 70% of Ukrainian grains and other goods to come through Constanta, has invested 4 million euros ($4.09 million) in a second barge offloading platform that became operational at the end of July, and boosted its total processing capacity to 84,000 MT in and 70,000 MT out per day. How much Ukrainian grain continues to move through Constanta “all depends on how the Istanbul agreement works out and on the quantities that Ukrainian ports can ship out,” the ahead of Comvex told Reuters. “With all our hearts we wish they can restore their chain flows. But we are here, ready to help.”
StoneX expects slightly smaller corn, bean crops than USDA’s July projections... Based on customer surveys and other factors, StoneX estimates the U.S. corn and soybean crops at 14.417 billion bu. and 4.490 billion bu., respectively. It estimates yields at 176.0 bu. per acre for corn and 51.3 bu. per acre for soybeans. The firm’s initial crop estimates are lower than USDA’s July projections of 14.505 billion bu. on a yield of 177 bu. per acre for corn and 4.505 billion bu. on a yield of 51.5 bu. per acre for soybeans.
Pelosi departs Taiwan, China angered... House Speaker Nancy Pelosi (D-Calif.) left Taiwan on Wednesday after pledging solidarity and hailing its democracy. Pelosi was scheduled to continue her Asian tour with stops in South Korea and Japan. The trip angered Chinese officials, who openly warned Pelosi and Washington over her visit. A senior U.S. State Department official said, “The question is whether Beijing will try to use the trip as some kind of excuse to take steps that could be escalatory or that could somehow produce conflict. China should not use this as a pretext to continue what it’s been doing, which is seeking to change the status quo with regard to Taiwan. And if any escalation or crisis were to somehow follow her visit, it would be on Beijing.”
Pelosi says U.S. will ‘not abandon’ Taiwan as China plans military drills... Pelosi said her now completed visit to Taiwan was intended to make it “unequivocally clear” the U.S. would “not abandon” the democratically governed island. China’s ruling Chinese Communist Party views Taiwan as part of its territory and has long vowed to “reunify” the island with the Chinese mainland, by force if necessary. China threatened to retaliate to her presence with a series of military exercises the Taiwanese Defense Ministry likened to a “maritime and aerial blockade.” On Tuesday, 21 Chinese warplanes made incursions into Taiwan’s air defense identification zone, according to Taiwan’s Defense Ministry. China also slapped import bans on more than 100 Taiwanese products in retaliation for hosting Pelosi.
Market fear index remains subdued... The CBOE Volatility Index, or VIX, Wall Street’s fear gauge, has been relatively subdued for much of the year. The index, based on options prices tied to the S&P 500, is hovering at slightly elevated levels. It hasn’t closed above 30, a key level that signifies increased fear, since June and settled Tuesday just below 24. The VVIX, an index measuring the volatility of the VIX itself, has fallen relatively steadily since January and recently hit a three-year low of 80. The last time the VVIX was this low, the VIX was at 12, a level of extreme market calm.
Gas prices continue to retreat... Gas prices have fallen for 49 straight days and are approaching $4 a gallon. The average price of gas sank to $4.16, according to AAA, a 17% decline from the peak of $5.02 set back on June 14.
Coming soon: update on ERP payouts... USDA this week is expected to update payments for the Emergency Relief Program (ERP) via a dashboard that will be interactive and allow payments to be searched by state and commodity. ERP provides payments for eligible 2020 and 2021 disasters. A congressional effort is likely for the program to cover 2022 disasters.
Wide range on early cash cattle trade... Sources reported cash cattle trade in the $135 to $138 range in the Southern Plains and $143 to $147 in the northern market on Wednesday. Prices were steady to as much as $3 higher compared to last week’s trade in both regions. Key to where this week’s average cash price lands will be the number of cattle moved in each region, though it appears the string of weekly declines will end.
Cash hog index weakens... The CME lean hog index is down 30 cents to $121.57 (as of Aug. 1), ending a nearly month-long string of daily price gains. Still, the cash index is $1.72 above where August lean hog futures finished on Tuesday. October hogs are more than $25 below the cash index, while December hogs closed yesterday at nearly a $34 discount.
Overnight demand news... Algeria purchased around 720,000 MT of optional origin milling wheat, much of which is expected to be sourced from France. Taiwan purchased 55,000 MMT of corn expected to be sourced from South Africa. Jordan tendered to buy 120,000 MT of optional origin milling wheat. Iran tendered to buy 60,000 MT of milling wheat.
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
- 9:30 a.m. Weekly Ethanol Production — EIA