Good morning!
Grains mixed overnight… Corn futures have traded on both sides of unchanged overnight but are currently weaker, soybeans have continued Wednesday’s rally and wheat futures are trading near unchanged. As of 6:30 a.m. CT, corn futures are around 2 cents lower, soybean futures are 6 cents higher, winter wheat futures are steady and spring wheat futures are 3 to 5 cents higher. Front-month crude oil futures are steady after falling sharply yesterday and the U.S. dollar index is around 175 point higher.
Day 3 Crop Tour results for Illinois and western Iowa… Scouts on day 3 of the Pro Farmer Crop Tour found an average corn yield of 193.72 bu. per acre in Illinois, up from 190.71 bu. per acre last year and the three-year average of 192.14 bu. per acre. Soybean pod counts in a 3’x3’ square averaged 1,270.61 for Illinois, up from 1,249.70 last year and the three-year average of 1,258.96.
In western Iowa, average corn yields for Districts 1, 4 and 7 were 182.58 bu., 167.71 bu. and 184.84 bu. per acre, respectively, compared to 183.37 bu., 188.74 bu. and 173.70 bu. per acre, respectively, in 2022. The three-year averages for Iowa Districts 1, 4 and 7 are 182.11 bu., 184.77 bu. and 183.64 bu. per acre, respectively.
Western Iowa pod counts for Districts 1, 4 and 7 averaged 1,137.24, 1,120.30 and 1,170.28, respectively, compared with 1,089.74, 1,258.94 and 1,223.85 in 2022. The three-year averages for Iowa Districts 1, 4 and 7 are 1,064.13, 1,220.53 and 1,251.83, respectively.
On Day 4 of the Crop Tour today, scouts will sample fields in eastern Iowa and southern Minnesota. The Tour concludes tonight in Rochester, Minnesota.
Weekly Export Sales Report out this morning… For the week ended Aug. 17, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | 0-250,000 | 233,471 | 200,000-450,000 | 704,694 |
Wheat | N/A | N/A | 250,000-450,000 | 359,539 |
Soybeans | 0-200,000 | 93,616 | 550,000-1,250,000 | 1,407,507 |
Soymeal | 75,000-200,000 | 126,413 | 100,000-250,000 | 220,535 |
Soyoil | 0-10,000 | 731 | 0-10,000 | 0 |
BRICS invites six nations to join coalition… The group currently comprised of Brazil, Russia, India, China and South African is holding a summit in South Africa and expansion was a major topic of discussion. More than 40 countries have requested to join, the group has extended invitations to Saudi Arabia, Iran, Egypt, Argentina, Ethiopia and the United Arab Emirates. The inclusion of Saudi Arabia with several developing large consumers opens the door for trade for energy in alternative currencies, coinciding with the group’s effort to avoid trade in the dollar. Several of the original members are still open for additional expansion, but Brazil is concerned over alienating the West.
Jackson Hole symposium begins tonight… The annual meeting of the world’s monetary policymakers will hold investors’ attention over the next two days, with Fed Chair Jerome Powell giving remarks tomorrow morning. How Powell addresses the inflation fight will be key as there are disagreements in how much work is left to do as inflations remains above the Fed’s goal. Recently, the bond market has been selling off in longer dated securities, sending the 10-year treasury to the highest level since 2007. This indicates expectations of potential higher inflation for longer and higher rates for longer.
The first GOP debate of the election cycle was last night… Candidates were split on support of the Ukraine war, nearly all candidates supported sending troops to the southern border to combat fentanyl trafficking and candidates were split on support of former President Trump if he is convicted. Trump hosted his own discussion with Tucker Carlson on X (formerly twitter), where he mostly talked about current President Biden.
Wagner Group head dead in jet crash… Yevgeny Prigozhin, the leader of the mercenary Wagner Group who led an unsuccessful mutiny in Russia in June, was among ten individuals who died in a private jet crash near Moscow on Wednesday. The exact cause of the crash is still unknown, but witnesses reported hearing explosions prior to the crash, sparking speculation that the plane might have been targeted by air defenses. Within about 30 seconds, the aircraft plummeted 8,000+ feet from its cruising altitude of 28,000 feet.
Brazil seeks to guarantee exports to Argentina in yuan… Brazil’s government has proposed a plan to Argentina that would use the Chinese yuan to guarantee export payments in order to bypass the Argentine peso, which is facing hyperinflation (113% annualized). Brazil is concerned with Argentine cash shortages and wants to keep trade flowing, according to Brazilian Finance Minister Fernando Haddad.
India expected to ban sugar exports… The nation is expected to ban mills from exporting sugar beginning in October, as a lack of rain has cut yields. India has already banned the export of wheat flour and some rice exports in an effort to control domestic prices. India has exported about 10% of the world’s sugar in recent years.
China bans Japanese seafood as nuclear wastewater is released… Japan has started the release of nuclear wastewater from their 2011 disaster. China, the largest export market for Japanese seafood at a value of nearly half a billion dollars last year, suspended imports of all aquatic products under steps to protect food safety. Japan is slowly releasing the water over 30 years to avoid any potential side effects, even though the water has been deemed safe by International Atomic Energy Agency.
Hog futures continue to slide… The steep discount that the October future holds to current cash prices has done little to dampen the weakness seen in the futures markets recently. The CME lean hog index is seen as falling another 67 cents to $97.37 as of Tuesday, August 22. Wholesale prices continue to slide as well, falling $2.86 on the day to $100.79, extending yesterday’s midsession decline. The weakness is surprising given the continued high volume, suggesting there is substantial inventory to sell. Bellies continue to lead the way lower, falling $17.19 Wednesday, over $70 below the August peak.
Cattle futures lack direction… October futures have been supported by technical support, but the absence of cash trade thus far this week has made it difficult for traders to peg a direction thus far this week. Wholesale prices have remained firm for the most part, with Choice values steady yesterday at $317.05 and Select firming $2.08 to $291.59, bringing the Choice/Select spread to $25.46. Once reports of cash trade begin to circulate the market, that will likely dictate the short-term direction of futures.
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Today’s reports
· 7:30 a.m. Weekly Export Sales — FAS
· 2:00 p.m. Livestock Slaughter — NASS
· 2:00 p.m. Poultry Slaughter — NASS