Pelosi leaves Taiwan. Will markets replace feared Chinese import losses?

Grain futures are recovering today as Nancy Pelosi leaves Taiwan after a 19-hour stint without any fanfare. Other than China imposing a hold on numerous imports of Taiwan goods and conducting live military drills in the Straits of Taiwan, there has been no announcement of repercussions to US/Chinese relations. It’s hoped that US Pres. Biden will be dropping a portion of the Trump-imposed trade tariffs before the US November midterm elections, which China does not want to miss out on.

Yesterday afternoon brokerage firm StoneX estimated their 2022 US corn yield at 176 BPA with soybeans at 51.3 BPA following a survey of their clients. This is a survey-based estimate, not an actual tour estimate, and the August NASS data will also be survey results from farmers. StoneX yield guesses are typically higher than the NASS estimates and final numbers.

Only one ship has left Ukraine to date after all the fanfare, you would’ve thought multiple ships per day would be leaving. Ukrainian Pres. Zelinski indicated that the one vessel so far leaving is “nothing.” The lack of Ukrainian exports picking up steam quickly is detrimental to receiving hard currency in Ukraine. A meeting yesterday in Kyiv of economists indicated that financial conditions are so dire for farmers that winter wheat planting this fall will not likely occur for most Ukrainian farmers. They will choose to wait through the winter and try to acquire equity from grain sales and go with spring crops. This puts 2023 world wheat supplies again at risk.

Both the US and European weather models remain far apart in their trends. The GFS model continues to show limited rainfall for Iowa/Nebraska/Dakotas for the next two weeks, while the EU models bring out the rain for Minnesota/Iowa on August 8-9th with totals of .25-1.25”. Recent heat/dryness across W Midwest and the plains makes the coming two-week forecast highly important on US yield prospects. Some key areas of Iowa have not seen meaningful rain in nearly a month.

Cattle futures were lower yesterday, but a steady outlook is anticipated this morning. Again we had seen limited cash trade with a few small numbers sold at $143, which was steady with last week in that area. Box beef values continued lower with choice cutout down $2.14 and select slipping $1.35. The board continues to work sideways, but at least there are no collapsing down-trending values from the spring cash high. The seasonal cash low for cattle comes in either before or shortly after Labor Day weekend, and the board is already reflecting the start of the bull market of tightening numbers which starts to occur in the fourth quarter.