Good morning.
New week at the CBOT has started off rather macro in nature, as the ag markets are receiving spill-over selling from the equities world to start Monday. The tech-led decline in stock index futures has trumped further incendiary headlines out of the Middle East in the last 48 hours, which has produced wide-ranging selling across the commodity space to start the third trading session in August. Today’s weekly crop update likely keeps record yield potential intact for corn and soybeans, with Midwest forecasts continuing to be largely non-threatening. Specific to the ag markets, this remains the number one driver of price direction in the short term, along with the August WASDE report that is due out one week from today. Corn futures this morning are trading 5-6 cents lower, soybean futures are trading 8-10 cents lower, and the Chicago wheat market is down 13-16 cents. Products are lower, soybean meal is down $4-5/ton, and soybean oil is down around 100 points. Outside markets are sharply lower, crude oil futures are down $1.50-1.60/bbl, the Dow Jones index is down 900 points, and the US$ index is down 60 points. The S&P500 is down 200 points, and the NASDAQ down is 900 points as well. The NASDAQ is nearly 300 points off its overnight lows as of this writing.
Friday afternoon’s CFTC commitment of traders report for the week ending July 30th showed fund traders were surprisingly net buyers of corn in the week; funds bought 23,454 contracts and are now net-short 295,096 contracts. In soybeans, funds sold 14,993 contracts, and are now net-short 178,591 contracts.
Funds were sellers of Chicago wheat futures, selling 2,341 contracts. This makes them now net-short 77,616 contracts. In soy products, funds sold 29,967 contracts of bean oil, and bought 16,389 contracts of soybean meal. They are now net-short 59,587 contracts of oil and are net-long 31,370 contracts of meal.
According to data from Ukraine’s ag ministry, grain exports out of the country as of August 5th had reached nearly 3.7 mmt’s, up almost 40% from the 2.6 mmt’s exported as of the same day last year. Total cumulative exports in the 2023/24 season reached roughly 51 mmt’s.
Malaysian stocks of palm oil reached a five-month high in July, totaling 1.85 mil tons data shows. This is up 1.1% from June, and nearly 7% higher than same month last year. Production on the month was up 13% at 1.83 mil tons, which outweighed a nearly 25% increase in exports during the month.
US federally inspected beef production in the week ending August 3rd was seen at 499 mil lbs., down 1.2% on the week. Pork production was seen at 519 mil lbs., which was up 0.7% from last week. For the year, beef production is down 1.5% from last year, while pork production is up 1.4%.
Following the assassinations of officials from both Hamas and Hezbollah in recent days, Israel is preparing for retaliatory strikes from Iran. Some sources say those strikes could occur in as little as a few hours, as tensions continue to rise in the Middle East.
Otherwise, equity markets have continued the tech-based selling that began last week, as ongoing fears of a slowing economy have investors heading for the exits. The CME’s Fed watch tool showed a more than 90% chance at a 0.5-point basis cut in the September meeting in early trade on Monday.
On top of this, traders now see a more than 60% chance at an emergency rate cut sometime in the next week, as labor market data continues to point to a rapidly worsening economic situation in the US.
Shares of Nvidia and Apple were both down more than 5% in pre-market trading to start the week, illustrating the tech role in the market sell-off. In Apple’s case, investors are concerned over a delay in the company’s well-publicized AI rollout; Berkshire Hathaway cut its chares in the company by nearly 50%.
On the US political front, Vice President Kamala Harris met with potential candidates to be her running mate in the upcoming election over the weekend, with sources familiar saying they expect a decision to be made sometime this week.
Tropical storm Debby is forecast to make landfall across Florida’s west coast this afternoon as a category 1 hurricane. Models are in better agreement on the storm than last week, but the EU sees the storm making it further north with heavy rainfall than the GFS does.
Nonetheless, this will remain the main forecast feature this week, with upwards of 20″ of precipitation possible for areas of FL/GA and the Carolina’s. The broader East coast all the way into New England is seen receiving a more general 1-4″.
The Corn Belt sees a drier bias this week, with rainfall mostly limited to areas of NE/the Dakota’s and MN/WI. These areas also received the best rainfall over the weekend in the Midwest, picking up 0.1-1.5″. Rains also continued to be seen up the East coast, as well as in the southeast.
Temps stay above average in the Plains and southcentral part of the Midwest through roughly the middle of this week, before cooler air from Canada drops down and returns temps to a more seasonal level. The northern Corn Belt will be below average, with highs by the end of the week topping out in the mid/lower 70’s in parts of N IA.
Week two forecasts trended slightly warmer/drier again over the weekend, which will need monitoring this week. 8–14-day guidance from the CPC shows near normal temps for most of the Corn Belt, while precipitation is seen as more likely in the west than the east.
China’s National Meteorological Center on Monday said it sees continued risk for high precipitation in the country’s main growing regions in the north and eastern parts of the country over the next 10 days. These areas have seen flooding rains over the past month, following extreme heat at the beginning of the season.
Have a great day.
Grain Comments: 08-05-2024
Good morning.
New week at the CBOT has started off rather macro in nature, as the ag markets are receiving spill-over selling from the equities world to start Monday. The tech-led decline in stock index futures has trumped further incendiary headlines out of the Middle East in the last 48 hours, which has produced wide-ranging selling across the commodity space to start the third trading session in August. Today’s weekly crop update likely keeps record yield potential intact for corn and soybeans, with Midwest forecasts continuing to be largely non-threatening. Specific to the ag markets, this remains the number one driver of price direction in the short term, along with the August WASDE report that is due out one week from today. Corn futures this morning are trading 5-6 cents lower, soybean futures are trading 8-10 cents lower, and the Chicago wheat market is down 13-16 cents. Products are lower, soybean meal is down $4-5/ton, and soybean oil is down around 100 points. Outside markets are sharply lower, crude oil futures are down $1.50-1.60/bbl, the Dow Jones index is down 900 points, and the US$ index is down 60 points. The S&P500 is down 200 points, and the NASDAQ down is 900 points as well. The NASDAQ is nearly 300 points off its overnight lows as of this writing.
Friday afternoon’s CFTC commitment of traders report for the week ending July 30th showed fund traders were surprisingly net buyers of corn in the week; funds bought 23,454 contracts and are now net-short 295,096 contracts. In soybeans, funds sold 14,993 contracts, and are now net-short 178,591 contracts.
Funds were sellers of Chicago wheat futures, selling 2,341 contracts. This makes them now net-short 77,616 contracts. In soy products, funds sold 29,967 contracts of bean oil, and bought 16,389 contracts of soybean meal. They are now net-short 59,587 contracts of oil and are net-long 31,370 contracts of meal.
According to data from Ukraine’s ag ministry, grain exports out of the country as of August 5th had reached nearly 3.7 mmt’s, up almost 40% from the 2.6 mmt’s exported as of the same day last year. Total cumulative exports in the 2023/24 season reached roughly 51 mmt’s.
Malaysian stocks of palm oil reached a five-month high in July, totaling 1.85 mil tons data shows. This is up 1.1% from June, and nearly 7% higher than same month last year. Production on the month was up 13% at 1.83 mil tons, which outweighed a nearly 25% increase in exports during the month.
US federally inspected beef production in the week ending August 3rd was seen at 499 mil lbs., down 1.2% on the week. Pork production was seen at 519 mil lbs., which was up 0.7% from last week. For the year, beef production is down 1.5% from last year, while pork production is up 1.4%.
Following the assassinations of officials from both Hamas and Hezbollah in recent days, Israel is preparing for retaliatory strikes from Iran. Some sources say those strikes could occur in as little as a few hours, as tensions continue to rise in the Middle East.
Otherwise, equity markets have continued the tech-based selling that began last week, as ongoing fears of a slowing economy have investors heading for the exits. The CME’s Fed watch tool showed a more than 90% chance at a 0.5-point basis cut in the September meeting in early trade on Monday.
On top of this, traders now see a more than 60% chance at an emergency rate cut sometime in the next week, as labor market data continues to point to a rapidly worsening economic situation in the US.
Shares of Nvidia and Apple were both down more than 5% in pre-market trading to start the week, illustrating the tech role in the market sell-off. In Apple’s case, investors are concerned over a delay in the company’s well-publicized AI rollout; Berkshire Hathaway cut its chares in the company by nearly 50%.
On the US political front, Vice President Kamala Harris met with potential candidates to be her running mate in the upcoming election over the weekend, with sources familiar saying they expect a decision to be made sometime this week.
Tropical storm Debby is forecast to make landfall across Florida’s west coast this afternoon as a category 1 hurricane. Models are in better agreement on the storm than last week, but the EU sees the storm making it further north with heavy rainfall than the GFS does.
Nonetheless, this will remain the main forecast feature this week, with upwards of 20″ of precipitation possible for areas of FL/GA and the Carolina’s. The broader East coast all the way into New England is seen receiving a more general 1-4″.
The Corn Belt sees a drier bias this week, with rainfall mostly limited to areas of NE/the Dakota’s and MN/WI. These areas also received the best rainfall over the weekend in the Midwest, picking up 0.1-1.5″. Rains also continued to be seen up the East coast, as well as in the southeast.
Temps stay above average in the Plains and southcentral part of the Midwest through roughly the middle of this week, before cooler air from Canada drops down and returns temps to a more seasonal level. The northern Corn Belt will be below average, with highs by the end of the week topping out in the mid/lower 70’s in parts of N IA.
Week two forecasts trended slightly warmer/drier again over the weekend, which will need monitoring this week. 8–14-day guidance from the CPC shows near normal temps for most of the Corn Belt, while precipitation is seen as more likely in the west than the east.
China’s National Meteorological Center on Monday said it sees continued risk for high precipitation in the country’s main growing regions in the north and eastern parts of the country over the next 10 days. These areas have seen flooding rains over the past month, following extreme heat at the beginning of the season.
Have a great day.
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