The Final Yield Estimates Just Dropped!

The USDA reported export flash sales this morning of 205,000 metric tons of corn to unknown destinations, 712,000 mt of soybeans to China and 720,000 mt of soybeans to unknown destinations.

The monthly Cattle on Feed Report had on-feed supply at 101.8% of last year, slightly under the average trade estimate of 102.4%. Placements during July were 89% of last year, below the average trade guess of 93.3%. Marketings during July matched pre-report expectations at 92.6% of last year.

Grain and Oilseeds Wrap Up

December corn was sitting near $4.60 heading into the August 12th USDA Supply/Demand report and it was that day that the fire was lit under prices. The USDA made a yield cut that was more than offset by an acreage increase, but strong demand expectations had carryout falling to 1.65 billion bushels. The Crop Tour threw gas on the fire this week, showing that yields probably need to be cut further. December corn rallied 25 cents for the week and kept the strength rolling into the close on Friday with a fresh high for the year set at $5.09. The market is adjusting to the potential for smaller supplies while demand stays hot. We’ll find out Sunday night and into next Monday whether or not the Pro Farmer yield estimate keeps the fire going. It’s certainly causing eyebrows to raise. Maybe the euphoria dies down to some extent if the bullish news flow dries up, but it’s clear buyers will stay active following any pullbacks.

November soybeans erupted to 25 cent gains on Monday and would end up with gains of nearly 50 cents for the week as thoughts of lower yield potential and some bigger Chinese demand showed up. The November contract peaked at $12.56 back in July so there’s a little more work to be done to reach fresh highs. The Crop Tour showed some areas are struggling while others still have big production potential and we think that could have prices backtracking a portion of the recent rally. Longer-term, the super El Nino can bring a troubling weather setup to Brazil and Argentina and that should keep high volatility in place. The market just jumped 50 to 60 cents in a short amount of time, and we see the latest strength as a spot to reduce upside exposure and consider hedge protection for unsold bushels.

The wheat markets weren’t totally left in the dust this week, but the focus was certainly on corn and beans. December Chicago wheat gained a dime for the week and finds itself toeing the line at $7.00. Headlines out of the Black Sea conflict and tightening world wheat supplies should keep an overall upward bias intact.

Cattle

The already ailing cattle markets got off to a rough start this morning with losses of $5.00 shortly after the opening bell following a social media post by President Trump announcing a deal was secured for up to 300,000 metric tons of ground beef imports over the next 90 days at no tariff rate and to be sold at 25% below current market prices. There was a lot of back-and-forth price action today, but prices ultimately did a good job mitigating the damage with October live cattle nearly making it back to unchanged to close $5.00 off their morning lows while September feeders ended the day $7.00 off session lows. Past trips below $220 for October live cattle have been short-lived, but weakness in the cash market and fund liquidation are playing a role in limiting recovery potential. We saw a few rally attempts fail early in the week to be maintained. The cattle markets have shown the ability to bounce following damaging headlines, but it appears rallies need to be sold.

Hogs

October hogs tested waters below $80.00 for a little while this morning before popping back above $80.00. Failure to keep their head above water at $80.00 could open the flood gates to further downside risk. Pork cutout values have been weakening back into the $95 to $96 area while cash markets can’t maintain much strength either to continue to leave little to be desired for any remaining market bulls. A bullish biased seasonal indicator comes into play starting next week, but we’ll suggest keeping a tight leash on any upside exposure.

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