Afternoon report: USDA’s latest crop progress data encouraged technical buying on Tuesday
Grain prices made significant inroads today after USDA showed lower-than-expected quality ratings for both corn and soybeans, which triggered plenty of technical buying. Corn prices saw the most upside, climbing 4.25% higher. Soybeans also raked in big gains, with nearby contracts rising more than 2.75%. Most wheat contracts were up between 1% and 1.5%.
Some rainy weather is returning to parts of the Northern Plains and upper Midwest between Wednesday and Saturday, while areas farther south will remain relatively dry during this time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s new 8-to-14-day outlook predicts seasonally dry weather for much of the Corn Belt between August 30 and September 5, with near-normal temperatures also likely.
On Wall St., the Dow fell another 130 points lower in afternoon trading to 32,933 as investors remain concerned over the possibility of aggressive interest rate hikes from the Federal Reserve later this year. Energy futures swung significantly higher, with crude oil up more than 3.5% to $93 per barrel. Diesel and gasoline each rose around 1.75% higher. The U.S. Dollar softened moderately.
On Monday, commodity funds were net buyers of all major grain contracts, including corn (+3,000), soybeans (+8,500), soymeal (+5,000), soyoil (+3,000) and CBOT wheat (+5,000).
Corn
Corn prices jumped higher after USDA unexpectedly trimmed quality ratings by two points in its latest crop progress report. That led to ample technical buying today that lifted prices by more than 4%, reaching the highest level in nearly two months. September and December futures each rose 26.75 cents to close at $6.6025 and $6.5575, respectively.
Corn basis bids were mostly steady across the central U.S. on Tuesday but did tilt 15 cents higher at an Illinois processor today.
USDA reported that as of August 21, 55% of this season’s corn crop was rated in good-to-excellent condition, falling another two points from a week ago. Another 27% is rated fair (unchanged from last week), with the remaining 18% rated poor or very poor (up two points from last week).
Physiologically, nearly all (97%) of the crop is now silking, up from 94% last week. Three-fourths has reached the dough stage, up from 62% a week ago. And 31% is dented, up from 16% last week. All maturity stages are tracking a bit behind the prior five-year average.
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Preliminary volume estimates were for 391,593 contracts, moving well above Monday’s final count of 221,459.
Soybeans
Soybean prices were up 1.75% to 2.75% Tuesday after USDA trimmed quality ratings another point lower, which spurred a round of technical buying. September futures climbed 43 cents to $15.70, with November futures up 25.5 cents to $14.6075.
Soybean basis bids jumped 25 cents higher at an Illinois processor and tumbled 100 cents lower at an Illinois river terminal while holding steady elsewhere across the central U.S. on Tuesday.
Private exporters announced to USDA the sale of 4.0 million bushels of soybeans for delivery to China during the 2022/23 marketing year, which begins September 1.
Soybean quality ratings dipped a point lower this past week, despite analysts expecting them to hold steady. Fifty-seven percent is rated in good-to-excellent condition through Sunday. Another 30% of the crop is rated fair (unchanged from last week), with the remaining 13% rated poor or very poor (up a point from last week).
Nearly all (97%) of this year’s crop is now blooming, which mirror’s the prior five-year average. Eighty-four percent is setting pods, versus 2021’s pace of 87% and the prior five-year average of 86%.
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Preliminary volume estimates were for 187,721 contracts, trending moderately above Monday’s final count of 151,321.
Wheat
Wheat prices made moderate inroads on a round of technical buying largely supported by spillover strength from a broad set of other commodities. A weakening U.S. Dollar generated additional tailwinds today. September Chicago SRW futures gained 12.5 cents to $7.83, September Kansas City HRW futures rose 18.25 cents to $8.8350, and September MGEX spring wheat futures added 12.25 cents to $9.0075.
Both the spring and winter wheat harvests are underway. Winter wheat is much further along, with 95% harvested through August 21. That’s slightly behind the prior five-year average of 97%. Spring wheat harvest progressed from 16% complete a week ago up to 33% through Sunday – keeping it distantly behind the prior five-year average of 54%.
Spring wheat crop quality shifted somewhat. Sixty-four percent is still rated in good-to-excellent condition, but the G/E spread went from 58/6 a week ago to 56/8. Another 28% of the crop is rated fair (down two points from last week), with the remaining 8% rated poor or very poor (up two points from last week).
Egypt’s state grains buyer has purchased 8.8 million bushels of wheat from Russia. Sources close to the matter indicated that additional sales are potentially still being negotiated.
Meantime, Russia’s overall wheat sales are off to a sluggish start. Over the first two months of the 2022/23 marketing year, wheat exports reached 216.8 million bushels, which is 27% below last year’s pace so far, according to the country’s Sovecon consultancy. Russia is the world’s No. 1 wheat exporter.
A German farmers association estimates that the country’s 2022 wheat production will reach 801 million bushels, which would be a year-over-year increase of 3.8%, if realized – despite battling widespread hot, dry conditions this season.
Japan issued a regular tender to purchase 4.4 million bushels of food-quality wheat from the United States, Canada and Australia that closes on Thursday. Of the total, 49% is expected to be sourced from the U.S. The grain is for shipment in October.
A Brazilian flour milling association, Abitrigo, estimates that the country’s wheat production could reach 367.4 million bushels, which is noticeably above governmental estimates of 330.7 million bushels. Brazil is currently a net importer of wheat, but Abitrigo expects improvements to planted area and yield potential will allow self-sufficiency within five years.
Jordan passed on multiple offers in its international tender to purchase 4.4 million bushels of milling wheat that closed earlier today. A similar tender will likely be issued that closes next week.
Preliminary volume estimates were for 104,890 CBOT contracts, which was 26% higher than Monday’s final count of 83,407.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-Sep
666.75
635.75
660
26.75
22-Dec
662
631.25
655.25
26.75
Soybeans
22-Sep
1581
1528.25
1566.75
43
22-Nov
1474.75
1431.25
1461
25.5
Soymeal $/ton
22-Oct
434.5
420.8
431.7
10.4
Soyoil cents/lb
22-Oct
68.38
66.34
67.69
0.74
Wheat $/bushel
22-Sep
802.5
767.25
782.75
12.5
22-Dec
819.75
785
800.5
12.25
KC Wheat
22-Sep
904.25
862.5
882.5
18.25
22-Dec
895
862.75
879
12
MPLS Wheat
22-Sep
915
884.5
900
12.25
22-Dec
926.25
896.5
912
8.5
Live Cattle cents/lb
22-Aug
142
141
141.575
0.35
Feeder Cattle cents/lb
22-Sep
183.575
181.6
182.4
-1.95
Lean Hogs cents/lb
22-Dec
87
83.975
84.4
-0.075
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Sep
94.22
90.42
93.68
3.32
Diesel
22-Sep
3.868
3.752
3.8397
0.0635
Unleaded Gasoline $/gallon
22-Sep
2.9663
2.8451
2.9351
0.0439
Natural Gas
22-Oct
9.987
9.021
9.24
-0.407
U.S. Dollar Index
22-Sep
109.205
107.99
108.545
-0.436
Gold $/ounce
22-Sep
1753
1730
1745.1
11.1
Copper
22-Aug
3.7535
3.6985
3.702
0.0315
Fertilizer Swaps
(as of 08/19)
DAP Tampa-index
840.0
-47.5
DAP-New Orleans
826.8
-2.76
Urea-New Orleans
617.3
-3.31
Urea-Middle East
747.5
-15
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
454.7
13.78
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