Weekly Market Update 8/4/22

Here is your weekly market update from the Garden City Co-op Grain Origination Team.

1. What is "Lammas Day"?

2. August has 3 birthstones, what are they?

Answers at the bottom.

Market News

• Ukraine loaded its first ship of grain on Monday morning after the agreement brokered through Turkey and the United Nations last month. The corn shipment left Odesa, was inspected by officials from Russia, Ukraine, Turkey and the UN, and is headed to Lebanon, This original shipment was considered to be "proof of concept" and the vessel safely out of the Black Sea indicates that the deal could be successful. Reuters reports that Ukraine says they have 17 more vessels loaded with agricultural products awaiting approval to set sail. 

• China deployed over 100 planes, 10 warships, and fired live missles near Taiwain today in its biggest-ever drills in the Taiwan Strait, following House Speaker Nancy Pelosi's trip to the island this week. Chinese Foreign Minister Wang Yi called Pelosi's visit to Taiwan a "manic, irresponsible and highly irrational" act. Pelosi is the highest-level U.S. visitor to Taiwan in 25 years, and said her delegation wanted to make it unequivocally clear that the U.S. would not abandon Taiwan in their ongoing sovreignty conflict with China.

• Stocks are struggling for direction today in a mostly uneventful session. First-time filings for unemployment were up 6,000 from last week to 260,000, which was on par with estimates. The biggest action today is WTI crude oil falling below $90/bbl for the first time since early February, as traders remain concerned over the possibility of an economic recession later this year that could crush energy demand. U.S. crude inventories unexpectedly surged this week, while implied gasoline demand was lower. 

Weather

After a cooler, wetter weekend, we are back to more of the same in the 6-10 day forecast - below average chances for precipitation and above average temperatures. Highs in the next week will be hanging out mostly in the high 90s, with chances for thunderstorms Sunday and Monday.

Corn

Monday and Tuesday gave back almost all of last week’s rally due to the fact of China threatening Taiwan and the U.S. over Speaker Pelosi’s trip to Taiwan. This would not be a good deal for the grain market giving that China is the largest importer of corn in the world and the U.S. is the largest export of corn. Throw on top that shipments of grain out of the Black Sea region are starting to make it to destinations. Wednesday and today have rebounded some of those losses over the previous days with China not following through with shooting planes down in the Taiwan airspace. After that excitement we are back to trading weather and weather maps. The Eastern Corn Belt is seeing some rain showers, but the Western Corn Belt and Great Plains remains hot and dry. Export inspections reported 33.7 million bushels shipped, Mexico, China, and Japan were the top destinations. Export sales were poor with 2.3 million bushels of old crop sold and 10.1 million bushels of new crop, Mexico was the number one buyer. This keeps our head just above water for USDA estimates. We will have to have a solid month of sales in August to finish up the trading year above estimates. Mexico was the number one buyer. Managed money sold 4,515 contracts and trimmed their long to 120,788 contracts. Old crop corn basis remains strong with strength carrying over into new crop

Wheat

Wheat is continuing its pattern of volatilty and large daily ranges, with the market seeming to struggle to hang onto gains made during this week's sessions. Today is the first close in the green for the week, as the market faces headwinds from Ukraine beginning to load grain ships. The first corn shipment left Odessa on Monday, which pressured all of the commodities. However headlines continue on both sides of this issue, as Russia did attack the Ukrainian port of Mykolaiv over the weekend, killing Ukrainian grain tycoon Oleksiy Vadatursky. Export sales this morning were lacking at 2.7 million bushels. Export inspections were an incredibly low 1.6 million bushels, significantly short of the recent pace. Managed money sold 827 contracts to bring their net long to 11,041 contracts. USDA pegs the HRW crop at 82% harvested, with Kansas complete. Weather will be critical across the plains as we inch closer to planting, with the outlook currently hot and dry. Spring wheat ratings jumped 2% to 70% good-to-excellent, nearing 5-year highs. Local basis remains mostly steady.

Soybeans

Beans started the week off weaker with China’s saber rattling previously mentioned with corn. Crop conditions caught some by surprise with an improvement to 60% good to excellent, up from 59% g/e last week. Many anticipated soybean conditions taking another hit. Nothing to see from export inspections with 20.4 million bushels shipped, Mexico and China were the top destinations. Export sales saw a net cancellation of 400k of old crop bushels and 15.1 million bushels of new crop sold. The CFTC report showed soybeans as very light sellers of 156 contracts lowering the long to 87,676 contracts. We are seeing beans bounce mid-morning and making up the losses from Tuesday and Wednesday. Weather is the main focus and August is the make-or-break month for beans. If timely rains and some cooler temps manifest soybeans should meet USDA projections. Next week we have August’s USDA WASDE report. This could be a pot stirring report or we could kick the can down the road a little longer.

Milo 

Overall, it has been a quiet week for milo. Export inspections showed 3.6 million bushels of milo shipped, China was the number one destination. Export sales pegged milo with 2.7 million bushels of new crop sold, no old crop bushels sold. Milo crop condition dropped 2% to 28% good to excellent for the U.S. Kansas dropped 1% to 30% good to excellent. Basis saw a slight bump but has continued to remain stagnant.

Trivia Answers

1. Lammas is a celebration observed in the British Isles and other places in Northern Europe. The word “lammas” comes from the Old English hlaf, meaning "loaf,” and maesse meaning "mass” or “feast.” This observance marked the beginning of the harvest, and celebrated the first wheat crop, or that of corn. It is also known as a “Quarter Day.”

2. Peridot, sardonyx, and spinel.