3 Big Things Today, July 27, 2022
1. Wheat futures are higher in overnight trading
Wheat prices have risen again on skepticism about how much grain will come out of Ukraine amid uncertainty in the Black Sea region.
Ukraine and Russia have reached an agreement on the shipment of grain from the war-torn country after continued Russian attacks since February. The deal, brokered by Turkey and the United Nations, was reached last week.
Over the weekend, however, Russian forces attacked the port city of Odessa, a move Ukrainian President Volodomyr Zelensky called ‘barbarism’ while Moscow claimed it was simply an attack Ukrainian troops.
Russia has also cut off the flow of gas to parts of Europe, partly in retaliation for Western sanctions that would have hurt the country’s economy.
As for the grain deal, about 80 cargo ships carrying about 20 million tons of grain are ready to leave Ukraine, the White House announced on Tuesday.
Soybean and corn prices rose overnight as water stress builds up in parts of the US Midwest.
Water stress is expected this week in parts of North Dakota, South Dakota, Nebraska, Iowa, Minnesota, Illinois and Indiana, which account for about 30% of soybean crops and corn, Commodity Weather Group said in a report.
In the six- to 10-day outlook, temperatures will be slightly above average across much of the Corn Belt, while precipitation levels are likely to be below average for this time of year, CWG said. .
Warmer, drier weather is expected to lead to increased stress that will spread to around 40% of the northern plains wheat areas, the forecaster said.
Wheat for September delivery rose 9 3/4¢ to $8.13 ½ a bushel overnight at the Chicago Board of Trade while Kansas City futures added 7 1/4¢ to 8, $84 a bushel.
Soybean futures for November delivery jumped 13 1/4¢ to $13.97 a bushel. Soybean meal fell 80¢ to $417 a short ton, while soybean oil futures rose 1.6¢ to 59.55¢ a pound.
Corn futures for December delivery rose 3 1/2¢ to $6.04 ¼ a bushel.
2. Soybean Meal May Have More Potential Than Corn, Says ADM CEO
Soybean meal has the potential to overtake corn in demand as consumers shift to poultry over beef due to inflation, Archer Daniels Midland managing director Juan Ricard Luciano said. during a presentation of the results yesterday.
Animal feed has been hit by increased demand as consumers switch from beef to chicken, he said.
“(Poultry) is a more affordable protein,” Luciano said, according to a transcript of the earnings call. “And chicken is where we get most of the soybean meal. If you think about what’s happening with soybean meal, it’s — it has a cost advantage over corn. So it continues to have… more demand right now.”
ADM posted revenue of $27.3 billion in the three months ended June 30, up from $22.9 billion a year earlier. Cost of sales increased from $21.5 billion to $25.2 billion.
The company reported earnings of $2.15 per share on an adjusted basis, down from $1.33 a year earlier.
Looking ahead, ADM will be watching demand closely, Luciano said.
“I would say we saw demand substitution, demand moving here or there,” he said, according to the transcript. “And you see it in retail, maybe private label. We’ve seen a bit of people looking for smaller packaging to make things more affordable.”
3. Flood warnings remain in effect for the St. Louis area
Flood warnings remain in effect for areas around St. Louis after at least one person was killed yesterday as more than 9 inches of rain fell in the area, according to National Weather Service data.
Heavier than expected rains caused river levels to rise above their banks.
Last night Dardenne Creek in St. Peters was at 23.5 feet, well above the 22.5 foot flood stage. Water levels are expected to drop throughout the day.
Still, a flood warning will remain in effect for the area until Thursday evening, the NWS said.
Further south, more extreme heat is expected in eastern Oklahoma.
Heat indices today will reach 112 degrees Fahrenheit with actual temperatures around 106 degrees, the agency said.
“Extreme heat and humidity will greatly increase the potential for heat-related illnesses, especially for those who work or participate in outdoor activities,” the NWS said.