Corn Futures Jump to Two-Month High
Corn: December corn futures rose 14 1/4 cents to $6.64 1/4, a gain of 41 cents for the week and the contract’s highest closing price since $6.74 on June 24. Corn futures rose for the seventh time in the past eight sessions and posted a two-month closing high amid ongoing concern Midwest heat and dryness will hamper yield potential. Reports from the Pro Farmer Crop Tour indicated Iowa’s corn yields will be down from last year. On Day 4 of the Tour on Thursday, scouts calculated an average Iowa corn yield estimate of 183.81 bu. per acre, down from last year’s 190.76 bu. per acre estimate and about even with the three-year Tour average of 183.80 bu. per acre. For Minnesota, the Tour determined an average corn yield of 190.39 bu. per acre, up from a 177.44 bu. per acre estimate in 2021 and up from the three-year Tour average of 180.96 bu. per acre.
Tour-based national corn yield and production estimates released after today’s close indicate the crop will fall short of previous forecasts, illustrating the impact of extreme heat and dryness in the Midwest earlier this summer. Pro Farmer estimates 2022 U.S. corn production at 13.759 billion bu. and an average yield of 168.1 bu. per acre. The Pro Farmer numbers, combined with a strong technical performance this week, could generate follow-through price upside next week, with market bulls likely targeting this week’s high at $6.71, as well as late June highs around $6.76 and $7.92.
Soybeans: November soybeans surged 30 cents to $14.61 1/4, a gain of 57 cents for the week and the contract’s highest close since July 29. September soymeal rose $20.10 to $478.10, while September soy oil rose 173 points to 70.82 cents. Soybeans rebounded from corrective selling the past two sessions, boosted on ongoing concern over reduced production potential from adverse Midwest weather. Crop Tour reports indicated Iowa’s crop may yield less than last year, with scouts determining an average soybean pod count in a 3’x3’ square of 1,174.43, down from an average of 1,217.80 in 2021 but up from the three-year Tour average of 1,157.00. In Minnesota, soybean pod counts in a 3’x3’ square averaged 1,100.75, up from an average of 1,027.33 in 2021 and up from the three-year Tour average of 1,026.16.
Tour-based national yield and production estimates convey a stronger outlook for soybeans compared with corn. Pro Farmer estimates the 2022 U.S. soybean crop at 4.535 billion bu. and the average yield at 51.7 bu. per acre. Also today, USDA reported a sale of 146,000 MT of soybeans for delivery to “unknown destinations” during the 2022-23 marketing year. Earlier this week, USDA reported two soybean sales totaling 627,000 MT to China.
Wheat: December SRW wheat futures 16 1/4 cents to $8.05 1/4, up 34 1/4 cents for the week. December HRW wheat gained 16 cents to $8.82 1/4, up 35 1/4 cents for the week. December spring wheat rose 13 3/4 cents to $9.09 1/2, up 22 1/2 cents for the week. Wheat futures posted strong weekly advances behind spillover strength from corn and soybeans and technical buying fueled by ideas the markets have established near-term bottoms. Weather in major global wheat regions is largely price neutral. World Weather said wheat in Canada’s Prairies, the U.S. Pacific Northwest and the Northern Plains is being harvested in mostly favorable weather.
Cattle: October live cattle fell 60 cents to $143.05, down $2.20 for the week and the lowest closing price since Aug. 2. September feeder futures fell $2.05 to $182.20, down $2.55 for the week. Live cattle seemed to follow feeders lower amid pressure from the corn market’s rally to two-month highs. Live cattle futures were also pressured by indications a recent run of cash strength was ending. Live steers averaged $144.45 through Thursday morning, down about $2.43 from last week’s average. Choice beef cutout values fell 19 cents early today to $263.35. Packers next week will likely accelerate slaughter ahead of the Labor Day holiday weekend. Retailers probably won’t be buying actively next week, but may step up purchases the following week. History suggests the cash market will work sideways to higher in late summer and fall.
Hogs: October lean hogs hogs fell 45 cents to $90.65, down $2.475 for the week. Hog futures fell sharply a second straight week on pressure from slumping cash fundamentals, including a tumbling wholesale market. Retailers appeared to scale back bacon purchases, sending belly prices sharply lower. Pork cutout values fell $3 early today to $99.66, the lowest since mid-May, but middy movement was strong at 226 loads. The CME lean hog index fell $1.95 to $116.05, a drop of $3.13 over the past two days and the lowest level in nearly six weeks. The next index is expected to drop another $2.73, which may further pressure futures next week. However, this week’s hog slaughter was an estimated 2.393 million head, down 2,000 from last week. This suggests the price breakdown in cash and futures may be overdone and it’s not uncommon for the hog market to strengthen after Labor Day.