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Grain prices firm ahead of WASDE

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Afternoon report: Traders place their bets ahead of Friday’s highly anticipated report from USDA

Tomorrow morning, USDA releases the agency’s next World Agricultural Supply and Demand Estimates (WASDE) report, and traders are anxious to see how bullish or bearish those numbers turn out to be. But adverse weather earlier this year has generated a fair amount of uncertainty around the true size of this season’s corn and soybean crops. That led to a round of technical buying that lifted prices moderately higher today. Corn prices firmed 1.5%, and soybeans moved 1.25% higher. Wheat gains mostly ranged between 1.25% and 1.75%.

Between Friday and Monday, more rains will fall on the Northern Plains and upper Midwest, while areas farther south will stay relatively dry, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts drier conditions will return to the Northern Plains and upper Midwest between August 18 and August 24, with seasonally cool weather likely for most of the Corn Belt.

On Wall St., the Dow moved 70 points higher in afternoon trading to 33,380 as investors continue to process some better-than-expected inflation data that came out earlier this week. Energy futures trended higher, with crude oil climbing 2.5% this afternoon to $94 per barrel. Diesel rose more than 2%, while gasoline was trading at near-even. The U.S. Dollar softened fractionally.

On Wednesday, commodity funds were net buyers of all major grain contracts, including corn (+3,500), soybeans (+500), soymeal (+500), soyoil (+2,000) and CBOT wheat (+7,500).

Corn

Corn prices made moderate inroads again today on another round of technical buying as plenty of questions about this season’s true production potential are still lingering. September futures added 8.25 cents to $6.2950, with December futures up 9.5 cents to $6.28.

Corn basis bids were steady to soft after eroding 3 to 15 cents lower across seven Midwestern locations on Thursday.

Corn exports saw 15.1 million bushels in old and new crop sales for the week ending August 4. That was near the middle of trade estimates, which ranged between 3.9 million and 35.4 million bushels. Cumulative totals for the 2021/22 marketing year are still trending moderately below last year’s pace, with 2.249 billion bushels.

Corn export shipments fell 28% below the prior four-week average, with 27.8 million bushels. Mexico, China, Japan, Canada and El Salvador were the top five destinations.

“Growers are fighting to maintain positivity after receiving some lucky breaks amid another turbulent growing season,” observes Farm Futures grain market analyst Jacqueline Holland after reviewing the latest comments collected from Feedback From The Field. Click here to catch up on what farmers have been saying and learn how you can participate.

Whether you’re bullish or bearish on grain prices right now, USDA’s WASDE report tomorrow is “likely to be met with mixed emotion from all sides of the industry,” according to Naomi Blohm, senior market adviser with Stewart Peterson. “Remember though, on this report, the USDA gathers their yield information with farmer survey, satellite imagery and their own fancy statistical formulas; no one is actually stepping into a field to measure anything.” Blohm peeled through 15 years of data to look at the differences in new crop ending stocks between the July and August WASDE reports in today’s Ag Marketing IQ blog – click here to learn more.

Brazil’s Conab moderately lowered its estimates for the country’s 2021/22 corn production to 4.515 billion bushels. That includes a declining second corn crop, with a new estimated production of 3.441 billion bushels. Brazilian corn exports are expected to reach 1.476 billion bushels this marketing year.

And in Argentina, the Rosario Grains Exchange expects the country’s 2022/23 corn production to reach 2.165 billion bushels, plus a total soybean production of 1.727 billion bushels and a total wheat production of around 650 million bushels.

Preliminary volume estimates were for 248,310 contracts, tracking 27% below Wednesday’s final count of 339,343.

Soybeans

Soybean prices captured double digit gains on another round of technical buying today, as analysts are generally expecting USDA to lower its production estimates in tomorrow’s WASDE report. August futures rose 20.75 cents to $17.0950, with September futures up 11.75 cents to $15.2075.

Soybean basis bids were steady across the central U.S. on Thursday with a couple of notable exceptions after climbing 30 cents higher at an Indiana processor and dropping 7 cents lower at an Ohio elevator today.

Private exporters announced to USDA the sale of 103,400 metric tons of soybean cake and meal for delivery to Mexico during the 2022/23 marketing year, which begins October 1.

Soybean exports reached 15.1 million bushels last week, with new crop sales more than making up for some slight reductions in old crop sales. It was also near the middle of trade estimates, which ranged between 7.3 million and 33.1 million bushels. Cumulative totals for the 2021/22 marketing year are still slightly behind last year’s pace, with 2.013 billion bushels.

Soybean export shipments jumped 92% above the prior four-week average, with 32.9 million bushels. China, Germany, the Netherlands, Japan and Pakistan were the top five destinations.

Brazil’s Conab made no changes in its latest forecast for 2021/22 soybean production, holding that estimate steady at 4.558 billion bushels. Brazilian soybean exports this marketing year are expected to reach 2.764 billion bushels.

Preliminary volume estimates were for 134,653 contracts, moving moderately below Wednesday’s final count of 168,527.

Wheat

Wheat prices trended moderately higher on solid export data from USDA, with a European heatwave and spillover strength from corn and soybeans lending additional support today. September Chicago SRW futures gained 11.75 cents to $8.1150, September Kansas City HRW futures rose 15.75 cents to $8.8850, and September MGEX spring wheat futures added 11 cents to $9.1725.

Wheat exports saw sales totaling 13.2 million bushels, which was 44% better than the prior week’s tally but still 34% below the prior four-week average. It was also near the middle of analyst estimates, which ranged between 7.3 million and 22.0 million bushels. Cumulative totals for the 2022/23 marketing year have started off a bit below last year’s pace, with 114.2 million bushels since the beginning of July.

Wheat export shipments carved out a new marketing-year high, with 22.6 million bushels. Mexico, Japan, Nigeria, Brazil and the Philippines were the top five destinations.

Brazil’s Conab expects the country’s 2022 wheat production to reach 336.6 million bushels, which would be a year-over-year increase of more than 19%, if realized.

Strategie Grains has lowered its forecast for 2022/23 European Union soft wheat exports by 4.6% from a month ago, sliding to 1.066 billion bushels. The consultancy’s estimates for EU soft wheat production held steady, at 4.530 billion bushels.

Preliminary volume estimates were for 124,531 CBOT contracts, slipping slightly below Wednesday’s final count of 128,823.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel      
22-Sep 630.75 618.75 629.25 8.25
22-Dec 628.5 615.25 627.75 9.5
Soybeans        
22-Sep 1537 1489.25 1520.25 11.75
22-Dec 1453.75 1418.25 1448.5 23
Soymeal                $/ton        
22-Sep 461.2 449.8 456.5 9
Soyoil                    cents/lb        
22-Sep 69.37 66.55 69.3 1.84
Wheat                    $/bushel        
22-Sep 820.75 794.5 810.75 11.75
22-Dec 836 810.75 826.25 10.5
KC Wheat        
22-Sep 894.75 865.25 889.25 15.75
22-Dec 897 870.5 892 14.5
MPLS Wheat        
22-Sep 928.25 901 921.75 11
22-Dec 941 914 935 12
Live Cattle             cents/lb        
22-Aug 140.65 139.275 140.45 1.25
Feeder Cattle         cents/lb        
22-Sep 185.9 183.85 184.3 -0.7
Lean Hogs             cents/lb        
22-Oct 101.65 100.55 101.125 0.275
Crude Oil  $/barrel *Energy prices may not represent final settlements
22-Sep 95.05 91.24 94.08 2.15
Diesel        
22-Aug 3.5262 3.3893 3.4765 0.0662
Unleaded Gasoline   $/gallon        
22-Aug 3.1199 3.0381 3.0541 -0.0162
Natural Gas        
22-Oct 8.979 8.171 8.945 0.752
U.S. Dollar Index        
22-Sep 105.335 104.52 105.025 -0.055
Gold                      $/ounce        
22-Sep 1799 1784 1785.7 -9.9
Copper        
22-Aug     3.6555  
Fertilizer Swaps     (as of 08/05)  
DAP Tampa-index              912.5 -4
DAP-New Orleans              837.8 0
Urea-New Orleans              661.4 79.92
Urea-Middle East              765.0 57.5
Urea-Black Sea              585.0 35
UAN (32%) New Orleans              439.8 0

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