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3 Big Things Today, August 3, 2022

Wheat Futures Higher Overnight; China Response Measured After Pelosi Visit

1. Wheat Rises on Slow Pace of Ukraine Exports

Wheat futures were higher in overnight trading as investors keep an eye on agricultural shipments coming out of Ukraine, which likely will continue to move at a snail's pace.

A lone cargo ship called the Razoni was allowed to move out of the Ukrainian grain port city of Odesa to Lebanon after a deal was brokered last week between Russia and Ukraine.

The move led to a decline in prices amid concerns that global supplies would rise, but so far that's the only ship that's moved.

The Razoni was carrying 26,000 metric tons of corn, but Ukraine producers are still sitting on more than 20 million metric tons of grain awaiting export.

Corn and soybeans also were higher in overnight trading as hot weather persists in the U.S. Midwest.

Heat index values will again reach into the triple digits today as heat advisories are widespread throughout the region.

Crops in parts of the Dakotas, Kansas, central and southern Iowa, northeastern Missouri and west-central Illinois likely will see the most stress this week, Commodity Weather Group said in a report.

About 61% of the U.S. corn crop was in good or excellent condition as of Sunday with 26% now in the dough stage, the Department of Agriculture said in a report on Monday.

Sixty percent of soybeans earned top ratings, with 44% now setting pods, the USDA said. Seventy percent of spring wheat in the U.S. was in good or excellent condition at the start of the week.

Winter-wheat continues with 82% in the bin as of Sunday, up from 77% a week earlier but just behind the 85% average for this time of year.

Wheat for September delivery rose 11 1/4¢ to $7.86 a bushel overnight on the Chicago Board of Trade while Kansas City futures added 11 1/4¢ to $8.53 ¼ a bushel.

Corn futures for December delivery gained 1 3/4¢ to $5.96 a bushel.

Soybean futures for November delivery added 3 1/2¢ to $13.90 a bushel. Soymeal dropped $2 to $401.10 a short ton, while soybean oil futures rose 0.82¢ to 62.21¢ a pound.

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2. Tensions With China Stable After Pelosi Visits Taiwan

Tensions between the U.S. and China were stable after House Speaker Nancy Pelosi became the most senior U.S. politician to visit Taiwan in 25 years.

Taiwan is an independent state but China believes it to be a breakaway province.

Pelosi met with Taiwan President Tsai Ing-wen, a move that was met with anger from China, whose response was more measured than some expected.

NAB Markets Research, an Australian firm, said in a note to clients that Pelosi's visit "seemed to proceed without too much political angst."

China suspended imports of thousands of food products from Taiwan. While the exact number of banned products isn't known, they include edible oils, seafood and certain citrus fruits, according to several media reports.

There was concern among traders and investors that China would retaliate against the U.S. by suspending or curbing purchases of important agricultural products including soybeans. So far, there's been no indication Beijing will take such actions.

China made a strong military showing but its response was not "unhinged," NAB said.

"China sent fighter jets over the Taiwan Strait and the Xinhua News Agency has reported China would conduct live-fire exercises in the airspace and sea waters around Taiwan for four days starting Thursday noon," the analysts said.

Because of the measured response, gold prices were lower and the dollar was little changed as investors took a more risk-off approach in the overnight session.


3. Hot Weather Again Expected in Much of Central, Eastern Midwest

Hot weather remains parked over parts of the central and eastern Corn Belt today as heat advisories stretch from Texas into Ohio, according to the National Weather Service.

In eastern Kansas and western Missouri, heat indexes are forecast from 103 to 108 degrees Fahrenheit, the NWS said in a report early this morning.

Values in central Illinois will rise as high as 105 degrees this afternoon, while indexes in southern Michigan and northern Ohio will top out at around 101 degrees.

"Take extra precautions if you work or spend time outside," the NWS said. "When possible reschedule strenuous activities to early morning or evening. Know the signs and symptoms of heat exhaustion and heat stroke."

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