NEWS

Some U.S. railroads will start halting crop shipments, threatening exports and feed deliveries for livestock. With farmers starting to harvest autumn crops that are shipped to meat and biofuels producers, the shipping disruptions could add to already high inflation. Farmers also plan to add fertilizer to fields after the harvest, and shipments of fertilizer are being delayed. Railroads are trying to reach tentative deals with holdout unions representing about 60,000 workers.

CORN

ANALYSIS

Corn closed the week $.07 3/4 lower. Last week, private exporters did not announce any export sales.

In the weekly export inspections report for the week ended Sept. 8, U.S. corn export inspections were 17.6 million bushels and were down from the previous week’s 20.9 million bushels but well above last year’s very weak 7.1 million bushels. With the 2022-23 marketing year just underway, cumulative export inspections of 22 million bushels compare to 8.6 million a year ago, while weekly shipments will need to average roughly 41.2 million bushels per week to reach the USDA’s 2.375 billion bushel export projection vs. 42.1 million per week average from this point forward a year ago.

In the weekly crop progress and conditions report, U.S. national corn crop conditions fell 1% to 53% good/excellent vs. 54% expected, 54% last week and 58% last year. Ninety-five percent of the crop is in the dough stage, while 77% is dented and 25% is considered mature. Corn harvest is 5% done vs. 4% expected and 4% average.

In the weekly Environmental Impact Assessment (EIA) report; U.S. ethanol production came in at 963,000 barrels per day (bpd) vs. 989,000 the prior week and 937,000 last year. U.S. ethanol stocks fell to 22.8 million bushels, down from 23.1 million bushels the previous week but up from 20 million bushels last year.

In the monthly supply/demand report; the USDA lowered their 2022-23 corn yield estimate from 175.4 to 172.5 bushels per acre, in line with the average guess. Harvested acres were lowered by 1 million to 80.8 million, which in turn lowered production to 13.944 billion bushels vs. 14.088 billion estimated. This would be the smallest U.S. corn crop since the U.S. grew a 13.619 billion bushel crop in 2019. 2021-22 corn ending stocks were pegged at 1.525 billion vs. 1.547 billion bushel estimate, and 2022-23 ending stocks were 1.219 billion vs. 1.217 billion estimated. Ethanol use was cut 50 million bushels, and exports and feed use were each cut 100 million. Total usage was lowered to 14.175 billion bushels. World corn ending stocks totaled 304.53 MMT (Modern Monetary Theory) vsv 302.29 MMT estimate.

STRATEGEY & OUTLOOK

The corn market has found technical support on the charts and fundamental support from yield losses in the west. The trade believes the eastern cornbelt will have yields large enough to compensate for losses in the west.

SOYBEANS

ANALYSIS

Soybeans closed the week $.34 3/4 higher. Last week, private exporters did not report any export sales.

In the weekly export inspections report, U.S. soybean export inspections last week were 12.1 million bushels down from the previous week’s 18.4 million bushels, but above last year’s same-week exports of 7.1 million bushels. Through the first eight days of the 2022-23 marketing year, cumulative export inspections of 14 million bushels compare to 8.2 million last year. Weekly shipments will need to average roughly 41 million bushels over the course of the year to reach the USDA’s 2.155 billion bushel export projection vs. last year’s 40.4 million per week average from this point forward.

In the weekly crop progress and conditions report, soybean crop conditions fell 1% to 56% good/excellent vs. 57% expected, 57% last week and 57% last year. Ninety-seven percent is setting pods, while 22% of the crop is dropping leaves.

In the monthly supply/demand report, the USDA lowered their soybean yield estimate from 51.9 to 50.5 bushels per acre, well below the 51.5 average trade guess. Harvested acres were down 600,000 to 86.6 million and production was 4.378 billion bushels vs. the 4.496 billion estimate.

This is the smallest soybean crop since the U.S. grew 4.213 billion bushels in 2020. 2021-22 ending stocks were 240 million vs. 236.3 million estimate, and 2022-23 ending stocks fell 45 million bushels to 200 million vs. the 247 million estimate. Crush was lowered by 40 million bushels and exports dropped 70 million bushels. The stocks to usage ratio is 4.5%, the tightest since 2.6% was noted in 2013. World soybean ending stocks were 98.92 MMT vs. 101.19 MMT estimate.

The NOPA crush report has August crush at 165.538 million bushels vs. estimates of 166.1 million bushels, down from last month of 170.2 million bushels and above last year’s 158.8 million bushels. Oil stocks were pegged at 1.565 bp vs. 1.658 bp estimated and 1.684 bp last month and 1.668 bp last year.

STRATEGY & OUTLOOK

Tight stocks suggest the market will be very sensitive to weather issues. The balance sheets show little room for error, but weather over the next 30 days will determine yield potential.

WHEAT

ANALYSIS

For the week, Chicago wheat closed $.22 lower; Kansas City wheat closed $.02 1/4 lower and Minneapolis wheat $.05 1/4 higher. Last week, private exporters did not announce any export sales.

In the weekly export inspections report, U.S. wheat export inspections last week were solid at 27.1 million bushels, up from the previous week’s 19.8 million bushels, above last year’s 20.9 million bushels and were a marketing year high through the first 15 weeks of 2022-23.

Cumulative exports of 235 million bushels are still down nearly 11% from last year’s 264 million, but continue to gain ground after being down nearly 23% on the year just five weeks ago.

Wheat export inspections will need to average roughly 14.3 million bushels per week over the remainder of the marketing year to reach the USDA’s 825 million bushel export projection vs. last year’s 12.7 million/week average from this point forward.

In the weekly crop progress and conditions report, spring wheat harvest moved to 85% complete vs. 83% expected, 71% last week and 89% average. Winter wheat seedings are now 10% complete vs. 10% expected, 3% last week and 7% average.

In the monthly supply/demand report, the report held no changes for U.S. wheat balance sheets as the USDA will wait until the end of the month and the small grains summary report to make adjustments. The USDA left the 2022-23 U.S. wheat balance sheet unchanged, with production at 1.783 billion bushels and ending stocks at 610 million bushels. World wheat ending stocks were up 1.23 MMT to 268.57 MMT vs. 268.1 MMT estimates. Russian wheat was raised 3 MMT to a record high 91 MMT and Ukraine up 1 MMT to 20.5 MMT.

The Stats Canada production report forecast all wheat stocks at 34.7 mmts vs. estimates of 34.5 mmts and 34.6 mmts in August; spring wheat at 26.0 mmts; canola at 19.1 mmts and durum at 6.1 mmts.

STRATEGY & OUTLOOK

The fall in wheat values has now seen U.S. SRW become the cheapest wheat in the world. Seasonally, wheat demand improves but a higher U.S. dollar index is keeping foreign buyers away from the U.S. market.

LIVE AND FEEDER CATTLE

ANALYSIS

Last week, live cattle closed $.25 lower while feeder cattle closed $5.07 lower.

Last week, moderate to active fed cattle cash trade occurred in the North at mainly $143 to $144 live and $226 to $227 dressed, mostly $1 higher than last week. Moderate volumes traded in the South at $142, which is $1 firmer than last week.

Last week, the Feed Conversion Efficiencey (FCE) had 1,281 head offered for sale and no cattle sold.

The latest USDA steer carcass weights were steady last week at 904 pounds, which is 2 pounds below last year.

The weekly export sales report has net beef sales of 15,100 mts with shipments of 15,200 mts.

American beef exports again topped the $1 billion mark in July and posted the fifth-largest volume ever. July beef exports totaled over 126,500 metric tons, 3 percent higher year-over-year. Export value topped the $1 billion mark for a sixth time this year, finishing at $1.006 billion in July.

STRATEGY & OUTLOOK

Producers should have window or fence strategies to protect the downside but allow for upside potential. A struggling economy looks to cap rallies in 2022. Commercials have turned both live and feeder cattle.

LEAN HOGS

ANALYSIS

Lean hogs closed the week $3 higher.

Iowa/southern. Minnesota weekly hog weights for the week ending Sept. 10 has weights at 280 pounds vs. 277.7 pounds vs. 282.1 pounds last year.

The weekly export sales report has net pork sales of 25,100 mts with shipments of 23,900 mts.

U.S. pork exports topped 208,000 metric tons in July, 6% lower than last year. July export value reached $625 million, 5% lower than 2021.

STRATEGY & OUTLOOK

As prices near weekly resistance, producers need to hedge inventory as commercials are becoming bearish to the market.