The agricultural complex was dominated this week by Wednesday’s highly anticipated August WASDE and Crop Production reports. While the USDA surprised the trade by finding an additional 1.4 million planted acres for both corn and soybeans, significant cuts to national yield expectations offset the acreage expansion and sparked short-covering. Geopolitical headlines also resurfaced early in the week, as fresh overnight attacks on two Russian shipping ports provided an additional underlying bid to wheat and global energy markets.
Corn: Corn was the clear winner of Wednesday's report. The USDA slashed national average corn yields to 180.7 bushels per acre down 2.3 bushels from July and well below the trade expectation of 182.5 bpa. Although the harvested area was raised to 88.59 million acres, the yield reduction pulled new-crop ending stocks down to 1.653 billion bushels. December corn surged over 20 cents following the release, breaking above resistance before giving some back Thursday and rebounding Friday closing at $4.83 ¾ . This was the first August yield print below trend in four years.
Soybeans: Soybeans ended up 24 cents on the week. The USDA reduced national yield to 52.7 bpa, but a 1.38 million-acre increase in harvested area pushed projected U.S. production to 4.519 billion bushels. New-crop ending stocks rose slightly to 320 million bushels. November soybeans had a solid reaction to the report and ended the week in the green at $11.91 ¼ .
Wheat: Wheat drew support from both internal USDA balance sheet adjustments and Black Sea disruptions. The USDA lowered U.S. new-crop wheat ending stocks to 717 million bushels . Meanwhile, overnight military strikes near Russian port infrastructure renewed fears over Black Sea shipping safety. However, Ukraine proposed a deal that would allow the ports to be open, but Russia has yet to respond as of time of writing. Chicago December wheat closed Friday at $6.89, while KC December wheat closed at $7.66 ¾ .
Cotton: Cotton futures closed higher on the week with the December contract testing the 85 level for the first time since May. Support from persistent dry conditions in the Southern Plains was balanced against sluggish export sales commitments. December cotton closed Friday at 84.72 cents/lb. Wednesday’s report showed increased acres being offset by lower yield, lower production and lower ending stocks.
The cattle complex found solid footing early in the week before coming under sharp pressure Thursday and Friday due to (now) confirmed rumors of potential meatpacking plant closures, which sparked fear among traders regarding near-term slaughter capacity and cash demand.
Live Cattle: Cash fed cattle trade held firm early in the week, supported by Choice boxed beef values rebounding. However, futures contracts took a sharp downward turn late in the week as confirmed rumors of Tyson shutting down 2 packing plants prompted aggressive fund liquidation. Concerns that reduced packer capacity could back up fed cattle supplies in feedlots erased early-week gains, sending October live cattle lower to close Friday at $219.
Feeder Cattle: Feeder cattle contracts mirrored the late-week sell-off. While the CME Feeder Cattle Index held relatively steady early on, the confirmed rumors of packer interruptions weighed heavily on feeder sentiment due to fears of reduced feedlot placement demand. September feeder cattle closed Friday down at $335.
Macro markets navigated the aftermath of inflation data releases and shifting geopolitical risks in Eastern Europe and the Middle East.
Crude Oil: WTI Crude Oil caught a bid early in the week following continued back and forth between the US & Iran and steady domestic demand data. Prices rose before consolidating into the weekend, closing Friday around $82.50 per barrel.
S&P 500: Equities traded with an upward bias as markets digested the latest CPI/PPI figures and quarterly corporate earnings. The S&P 500 continued to hit new all time highs this week, closing Friday around the 7800 level.
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