Grain and hog markets were lower early Tuesday, with cattle higher.
Corn, Soybeans Fall on Weather
After two days of sideways trade corn and soybean futures are lower Tuesday morning and testing support areas. Dec corn has had good support at the 50-day moving average around $4.57 and Nov soybeans at the 100-day moving average around $11.71.
Mike Minor with Professional Ag Marketing says weather is one of the dominant features for the market and more favorable forecasts are having a bigger impact on soybeans due to the crop development stage.
“You’re looking at a 10-day forecast even locally in the Western Corn Belt that yesterday we had a chance of rain, a small one, every chance for 10 straight days. And anytime you kind of see that beginning of August, normally that bodes pretty well for soybeans and and honestly kernel fill on the corn side too because the modern day corn killer is tip back and if we do have kind of cooler moderate temps with some nice rains here and there that can save a lot of the a lot of the crop towards the end of its growing season,” he explains.
In the Western Corn Belt there are spots beyond saving but for the rest of the crop this will be welcome weather.
WASDE Positioning
Corn and soybean are gearing up for the August WASDE with an average trade guess on corn yield at 182.4 bu. per acre and soybeans at 52.9 bu. So both are close to July estimates.
He says, “Yes,182.4 and your range is from basically 180 to 185. And, you know, Stonex was coming out at around that 184.8. So kind of the upper range of expectations. And they’ve been pretty close. Normally, they’re within about a bushel of what the August WASDE shows. So they track through a survey method, which is going to be very similar to what the August WASDE is from NASS. They do survey and then satellite imagery.”
Minor adds that corn yield is always a moving target and a lot of the satellite imagery initially pegged yield at 186 to 189, which is the high water mark. Now the estimates are showing the crop is getting smaller and closer to trend line yield, which still puts corn at $4.50 in a comfortable position.
“I think you saw that in last year’s WASDE, how we posted a 188 plus, kind of like what StoneX had last year with big yield estimates. This
year around, if StoneX is coming in around 184.8, it helps show that we have started to deteriorate that crop a little bit from a bigger number,” he says.
Pro Ag Crop Tour
Professional Ag Marketing did their own crop tour of eight states and came up with a corn yield estimate of 184 bu. per acre, with soybeans at 53 bu.
He says one of the trends they found was looking at the states in a vertical pattern...South Dakota, North Dakota, Nebraska, the Western Corn Belt, all have problems and it is worse than one it looks like from the road.
Minor notes that tip back was very present in Sioux Falls, SD and South, parts of North Dakota and Nebraska. Those areas have been dry, so the crop is below a year ago.
“But Minnesota, Iowa, Missouri are what’s pulling our average up to a 184 compared to some folks closer to a 182, for example. Our Minnesota and Iowa number is actually really, really big. I think we have less disease this year. In Minnesota, we don’t have the problem that we had northern wise like we had last year in a key growing area,” he explains.
He says Illinois has some problem spots that were too wet early, while Indiana and Ohio look fine with no problems.
“So what we saw anyways was not quite as good as last year. We came in a little bit higher than that last year. We would say we’re comfortable saying a little bit smaller than that, but not nearly enough to change the price situation I think we’re in,” he says.
Crop Conditions
Crop conditions were steady on corn nationally on Monday afternoon at 61% good to excellent while soybean ratings were at 63% down 1%. He says that is expected this time of year.
There is a wide range of conditions looking at the state-by-state breakouts with Iowa showing the highest ratings and North Dakota near the lowest. With that variability it will also make it difficult to get trend line yields nationally.
Minor says, “We caught some really nice key rains, weather, temperature backed off a little bit. If I can keep the seasonal from declining crop condition scores at this time of the year, that’s kind of a win. Like you typically won’t try to rally that crop condition score back again at
this time of the year. So anything steady week over week over week here is a win, I think.”
Iowa, Illinois and other Eastern Corn Belt areas got some nice one inch rains over the weekend and to start the week, with milder temperatures to finish out the crop nicely.
Wheat Falls as Ukraine Talks Alternative Export Route
Wheat futures were lower early Tuesday with talk from Ukraine about finding an alternative export route. This comes after the Ukrainian Ag Ministry said exports could be down around 12% without some resolution to the fighting.
Minor says it is hard to gauge from one day to the next if the market or the funds will be trading the war headlines or not but overall he thinks the price reaction has been disappointing.
“You’re talking about massive EU production disruptions with massive high temps there. You’re looking at a poor wheat crop in the United States. You’re looking at declining global ending stocks. You’re looking at massive things going on in two wars with Iran and the Strait of Hormuz and then the Russia-Ukraine war. And both of those should be somewhat supportive. And it’s just been a little bit disappointing,” he explains.
Cattle Higher with Cash
Live and feeder cattle futures were higher to start Tuesday working in last week’s higher cash. The five area weighted average steer price was at $245.21, up $2.15 from the previous week.
Choice boxed beef was up over $7 on Monday’s closing report at $371.42 which was also supportive.
Still the futures can’t get above key moving average resistance areas in live or feeder cattle.
Minor is tracking ground beef prices and thinks that may be part of what is holding cattle back. He says ground beef prices dropped all through July, while other primals held.
“But that’s a really big beef demand indicator in my opinion and and seeing that a little weaker is quite disturbing normally the month of August shows a really nice rally in that cutout and folks are a little worried you may not see that,” he says.
Minor points to the lack of a summer rally in the pork market as an indicator of slower protein demand in general.
Cattle Death Loss
One thing that may be offsetting the slower demand is weights and cattle death losses due to heat are climbing.
“So when you and I first talked about it there after it happened, the estimates were closer to 15 to 30,000 was the numbers. Those have actually picked up closer to about 100,000 now. It’s still a wild guess, but it is much higher than what it was previously expected. So those losses are greater. And that obviously matters a lot more when we have light cattle supplies like we have right now.”
Minor says that is cutting into the supply and adds up quickly which supports cash and cutouts.
Hogs Can’t Extend Gains
Lean hog futures were up the last two sessions seeing short covering but there was a lack of follow through buying on Tuesday.
Minor says the market is having difficulty recovering due to demand.
“You’ve had four straight weeks now of lighter kills. Weights have still been coming down for the most part here. Maybe a little bit of a pop here lately, but we’ll see if we can continue that trend or not. But nonetheless, production’s less than last year, it’s much less than 2024. Yet cutout is weaker than both of those years. I think it’s a demand problem,” he states.
Comparing pork to to competing proteins like chicken, they are over producing and have had less disease this year.
“They had more product available at the grocery store levels and they’ve been pushing that product a lot harder. So, I feel like that has taken pork back maybe just based on what we’re seeing compared to the chicken and poultry side because that the demand for that product has really been huge.”
The Lean Hog Index is also running $14 under year ago levels as a result.
