Good morning!
Corn and wheat are relatively flat, soybeans continue to slide… Corn and wheat prices have held up relatively well following Monday’s rejection lower, but soybeans have not benefited from the realized hot and dry conditions. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 8 to 14 cents lower, winter wheat is steady to 2 cents lower and spring wheat is steady to 2 cents higher. Front-month crude oil futures are around $1 weaker at $78.50, and the U.S. dollar index is around 300 points higher.
Day 2 Crop Tour results for Nebraska and Indiana… Scouts on day 2 of the Pro Farmer Crop Tour found an average corn yield of 167.22 bu. per acre in Nebraska, up from 158.53 bu. per acre last year but down from the three-year average of 172.01 bu. per acre. Soybean pod counts in a 3’x3’ square came in at 1,160.02 for Nebraska, up from last year at 1,063.72 but down from the three-year average of 1,196.02.
In Indiana, samples yielded an average corn yield of 180.89 bu. per acre, up from 177.85 bu. per acre last year but down from the three-year average of 183.72 bu. per acre. Soybean pod counts in a 3’x3’ square totaled 1,309.96 for Indiana, up from 1,165.97 last year and the three-year average of 1,228.94.
On Day 3 of the Crop Tour, scouts on the western leg will sample fields in western Iowa, while scouts on the eastern leg will sample western Illinois and eastern Iowa.
Grain infrastructure on the Danube attacked… Russian drones struck Ukrainian grain infrastructure near the Danube River overnight, damaging a storage and cargo complex in the Odesa region. Nine drones were shot down as Russia is desperately trying to shut down Ukrainian grain exports. Ukraine has been using river channels to export more than 60% of their current grain exports, with rail and trucks accounting for most of the rest, according to UkrAgroConsult.
Farm bill update… Sen. Chuck Grassley (R-Iowa) is predicting that if a new farm bill is not finalized by the end of 2023, there will likely be a one-year extension of the 2018 Farm Bill, ensuring that there’s a safety net for the farming industry. Grassley made these comments during a weekly call with reporters. The House Agriculture Committee plans to release a draft in September, with Committee markup a week or so later.
BRICS seeks to reduce reliance on the dollar… BRICS, a coalition made up of Brazil, Russia, India, China and South Africa, began their 15th summit Tuesday. The coalition is seeking to reduce reliance on the U.S. dollar by using “practical measures to facilitate trade and investment flows through the increased use of local currencies,” South African President Ramaphosa said. Nations of the group also are backing an expansion of BRICS on a country-by-country basis, as long as there is consensus. There are currently over 40 nations seeking to join the group.
Russian President Putin seeking to stabilize the ruble… Putin has called for measures to manage the movement of money leaving Russia and to stabilize the country’s financial markets. There are concerns of increased inflation due to the decline of the ruble, which has been in a steady decline against the dollar for most of the Ukraine conflict. Putin emphasized the need for collaboration between the government and the Bank of Russia to curb unproductive and speculative economic activities, oversee the flow of capital out of the country, and closely observe the actions of other participants in the financial markets. He made these remarks during a televised meeting with officials.
Investors anxiously waiting for the Jackson Hole Symposium… Federal Reserve president Jerome Powell and European Central Bank President Christine Lagarde are set to give speeches. The speeches are expected to provide insights into the future monetary policy direction of their respective central banks. The ECB is expected to pause its recent tightening cycle in their September meeting, while U.S interest rates are projected to remain elevated for an extended period due to significant upward inflation pressure. Ears will be listening for a potential shift in the Fed’s inflation goal. An upward revision to the Fed’s goal of 2% would have severe implications for the bond market, particularly longer dated U.S. treasuries, likely increasing treasury rates which are already at the highest level since 2007.
Home sales slow in the U.S…. In July, home sales in the U.S. experienced a decline, marking the fourth drop in five months and further extending a significant downturn in the housing market. The National Association of Realtors reported that sales of existing homes, which constitute the majority of purchases, decreased by 2.2% in July compared to the previous month. The seasonally adjusted annual rate of home sales was 4.07 million, marking the slowest pace of sales since January and the slowest July rate since 2010. This data underlines a persistent and notable slump in the housing market, reflecting challenges and changes in the real estate landscape. Buyers are discouraged from higher interest rates, the average 30-year fixed mortgage hit 7.48% early this week, the highest level since 2000.
First GOP debate set to take place tonight… The first GOP presidential candidate is taking place tonight in Milwaukee and will be televised and hosted by Fox News. Former President Donald Trump is not expected to take part as he is set to have his own debate with former Fox News anchor Tucker Carlson. Florida Governor Ron DeSantis is the highest polling candidate taking part and the debate is seen as a
“make or break” moment for his campaign. The debate is expected to focus on the war in Ukraine, Fed chairman Jerome Powell and the 2020 election.
Dour economic data out of Europe... PMI dropped to 47.9 in August from 50.8 in July in the United Kingdom, heavily missing expectations of 50.3. This points to the deepest level of contraction in the country’s private sector since 2021. Output has been falling steadily for the past six months but has accelerated more recently. Private sector output is falling despite inflation easing to the lowest level since February 2021 for the nation. Eurozone manufacturing PMI edged higher to 43.7 in August versus 42.7 in July, but any reading under 50 indicates contraction. This marks the 14th consecutive month of factory activity contraction, led by new orders for goods extending their decline at one of the fastest paces since the global financial crisis.
Japan plans to release treated nuclear wasteland into Pacific… Japan is seeking to discharge more than 1 million cubic meters of treated radioactive water- enough to fill 500 Olympic size swimming pools- into the Pacific Ocean from their 2011 nuclear disaster. The plan has been met with opposition led by China, with Chinese officials calling the move selfish and irresponsible. China vows to take necessary measures to protect the marine environment, food safety and public health if releases proceed as planned. This includes restricting agricultural and seafood purchases from Japan, valued at $1.9 billion last year.
Diesel prices in precarious spot… Fuel prices are high relative to the crude oil from which it is made, which indicates scarcity that could fuel price higher into the winter months. Last year, diesel prices were high as well following the Russian invasion of Ukraine, but a mild winter kept prices relatively tame. Generally, world stocks of diesel build into September and October, but there are concerns that supply is not ample enough to have a meaningful stockpile, which could supercharge prices once heating begins this fall/winter.
Hog futures tumble as fundamentals weaken… Traders continue anticipating a seasonal breakdown in cash hog and wholesale pork values over the coming weeks and months, exemplified by the $18 spread between October futures and current cash prices. That spread has weakened over the past few weeks as the cash index has turned lower. The CME cash index is projected to fall another 77 cents to $98.04 as of Monday. Wholesale prices continue to face weakness as well, with yesterday’s quote continuing midsession weakness and falling $1.56 to $103.65, led lower by bellies for the most part.
Cattle futures turned fail against resistance… October futures struggled against resistance Tuesday despite strength last Friday into Monday. Cash trade has yet to develop this week as packers and producers seemingly believe they have the edge and are holding out for their respective better prices. Wholesale prices reversed Monday’s weakness, with Choice cutout rising $1.49 to $317.05 and Select cutout rising $2.18 to $289.51, narrowing the Choice/Select spread to $27.54. Increased wholesale prices should give packers confidence to up cash bids, especially if the recent uptrend continues after prices were relatively flat at $300 in late July/early August.
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Today’s reports
· 9:30 a.m. Weekly Ethanol Production — EIA
· 11:00 a.m. Rice Stocks — NASS
· 2:00 p.m. Broiler Hatchery — NASS
· 2:00 p.m. Cold Storage — NASS