GRAIN CALLS
Corn: 4 to 6 cents higher.
Soybeans: 4 to 6 cents higher.
Wheat: 21 to 30 cents higher.
GENERAL COMMENTS: Wheat futures surged to the highest prices in over five weeks overnight on reports Russia is reconsidering the Ukraine grain export deal, stoking renewed concerns over supply disruptions. Corn also rose, while soybeans bounced back from an earlier drop to near three-week lows. Malaysian palm oil futures fell 2.5% to hit a six-week closing low amid concerns over Covid lockdowns in China. Front-month crude oil futures are more than $1 lower, U.S. stock index futures indicate a weaker open and the U.S. dollar index is up more than 500 points after hitting a 20-year high for the third day in a row.
USDA reported a sale of 257,400 MT of corn for delivery to Mexico, including 226,920 MT for the 2022-23 marketing year and 30,480 MT for delivery during the 2023-24 marketing year.
Russian President Vladimir Putin said Russia and the developing world had been “cheated” by a UN-brokered Ukrainian grain export deal and vowed to look to revise its terms to limit the countries that can receive shipments. Putin said Ukrainian grain exports were not going to the world’s poorest countries as originally intended. Putin wants to amend the deal to restrict which countries can receive grain shipments from Ukraine.
U.S. farmers confronting supply-chain bottlenecks and a surging dollar are losing competitive edge in the global market for soybeans to their biggest rival: Brazil. In most of the years through 2020, it was about twice as expensive for China, the top importer, to ship Brazilian rather than American soybeans. But logistics issues in the U.S., upgrades to Brazil’s ports and supply infrastructure, and a strong dollar have almost eliminated that gap, USDA data show. It now costs roughly the same for a Chinese buyer to transport a ton of soybeans from Brazil’s biggest-growing state of Mato Grosso as it does from Iowa, the No. 2 U.S. producer, Bloomberg reported. Brazil is reaping the benefits of more than 290 billion reais ($56.1 billion) the federal government has invested in roads and maritime gateways since 2008.
Argentine soybean farmers registered 268,000 MT of sales during the last week of August, based on agriculture ministry data, as the country expects the pace of sales to increase as new foreign exchange incentives kick in. The Aug. 25-31 soy sales boosted the proportion of the 2021-22 harvest that has been sold to 52.2% of the 44-MMT crop. Soy sales during the current harvesting season still lag the percentage of the crop sold at this point during 2020-21, when nearly 63% had been purchased.
China imported 7.17 MMT of soybeans in August, down 9.0% from July and 24.5% less than year-ago and the smallest August import tally since 2014. Soymeal demand has been weak and Chinese crush margins have been negative since mid-April, with crushers in the key processing hub of Rizhao losing 519 yuan ($74.80) for each MT of soybeans processed as of Sept. 5. Through the first eight months of this year, China imported 67.08 MMT of soybeans, down 8.6% from the same period last year.
South Korea purchased 55,000 MT of feed wheat expected to be sourced from Australia. Japan tendered to buy 70,000 MT of feed wheat and 40,000 MT of feed barley.
CORN: USDA late Tuesday reported the U.S. corn crop condition at 54% “good” or “excellent” as of Sunday, unchanged from a week earlier and above analysts’ expectations for a drop to 53%. The crop was rated 15% mature, slightly behind the five-year average of 18% for that date. 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 1.6 points to 340.5, the eighth straight weekly decline and 5.1% below the five-year average.
December corn overnight reached $6.84. A push above last week’s high may have bulls targeting $7.00.
SOYBEANS: USDA said 57% of the U.S. soybean crop was in “good” or “excellent” condition as of Sunday, unchanged from a week earlier and above expectations for a drop to 56%. Based on the Pro Farmer CCI, the soybean crop declined 2.2 points to 343.6, the fifth consecutive weekly drop and 2.4% under the five-year average.
November soybeans overnight fell as low as $13.84, the contract’s lowest intraday price since $13.76 1/2 on Aug. 18, before rebounding to gains. Near-term resistance comes in at the 50-day moving average at $14.10 3/4.
WHEAT: SRW futures led overnight gains in wheat, with the December contract rising as high as $8.53 3/4, the highest intraday price since $8.63 3/4 on July 29. Late Tuesday, USDA reported 71% of the spring wheat crop had been harvested as of Sunday, up from 50% a week earlier and four percentage points above expectations.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weaker
CATTLE: Live cattle futures may gain followthrough support from Tuesday’s strong close, which pushed the October contract to its highest close in over two weeks. However, this week’s cash direction remains unclear, which could limit buyer interest. Showlist numbers are larger this week but packers will also be buying cattle for a full slaughter schedule next week, resulting in uncertainty whether cash prices will continue to slip or rebound from weakness seen the past two weeks. If live cattle futures are able to build on price gains the past two trading sessions it could cause feedlots to dig in their heels and trigger firmer cash cattle prices. Choice beef cutout values rose $1.05 Tuesday to $260.47 on strong movement of 125 loads.
October live cattle rose 50 cents Tuesday to $145.05, the highest closing price since Aug. 19.
HOGS: Lean hog futures may gain followthrough technical support from a strong close Tuesday, but cash weakness could limit the upside. The CME lean hog index is down another $1.48 to $103.26, near a three-month low but $12.16 above where October futures finished on Tuesday. Pork cutout values rose $2.08 Tuesday to $104.33, a two-week high. October led hog futures rose $1.075 to $91.10, after falling earlier near a two-month intraday low at $89.575.
China imported 660,000 MT of meat during August, up 3.1% from July but 13.2% below last year’s tally. The preliminary data doesn’t break down meat imports by category, but the sharp year-over-year decline was due to fewer pork imports than August 2021. Through the first eight months of the year, China imported 6.69 MMT of meat, down 28.9% from the same period last year.