Good morning!
Wheat firmer, corn and beans weaker overnight... Wheat futures posted modest corrective gains overnight, while corn and soybeans faced light selling pressure. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are 2 to 3 cents lower and wheat futures are mostly 3 cents higher. The U.S. dollar index is around 275 points higher and front-month crude oil futures are about 70 cents higher this morning.
Middle East tensions rise... Top Iranian officials will meet the representatives of its regional allies from Lebanon, Iraq and Yemen to discuss potential retaliation against Israel after the killing of the Hamas leader in Tehran, five sources told Reuters. The region faces a risk of widened conflict between Israel, Iran and its proxies after Ismail Haniyeh’s assassination in Tehran on Wednesday and the killing of Hezbollah’s senior commander on Tuesday in an Israeli strike on the outskirts of the Lebanese capital Beirut. Oil prices extended Wednesday’s strong gains amid the rising tensions. These developments came ahead of today’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) at which ministers reportedly kept oil output unchanged, despite the rising tensions.
Weekly Export Sales Report out this morning... For the week ended July 25, traders expect:
| 2023-24 expectations (in MT) | 2023-24 last week | 2024-25 expectations (in MT) | 2024-25 last week |
Corn | 275,000-600,000 | 331,380 | 400,000-800,000 | 745,193 |
Wheat | NA | NA | 250,000-550,000 | 309,319 |
Soybeans | 75,000-300,000 | 88,649 | 300,000-900,000 | 829,675 |
Soymeal | 50,000-350,000 | 258,117 | 100,000-350,000 | 520,886 |
Soyoil | 0-10,000 | 6,870 | 0-10,000 | (3,066) |
Soy crush, corn ethanol use expected to slip from May levels... Analysts expect USDA to report soybean crush totaled 184.8 million bu. during June, which would be down 6.9 million bu. (3.6%) from May but up 10.2 million bu. (5.8%) from last year. Corn-for-ethanol use is expected to be 450.0 million bu., which would be down 3.7 million bu. (0.8%) from May but up 7.9 million bu. (1.8%) from last year.
China to stockpile more wheat to support domestic prices... China state stockpiler Sinograin will buy more new-crop wheat for reserves to support prices that are near three-year lows amid ample supplies and poor demand. The recent downpour in northern China, a major production hub for wheat, has worsened the glut as farmers rush to sell rather than risk moisture damage to their crops in storage. China reported a bumper wheat harvest of 138 MMT, 2.7% higher than last year. Meanwhile, imports in the first half of the year jumped 16% to 9.3 MMT. At the same time, China’s weak economy is hampering consumption of flour for items like noodles and bread. On Tuesday, Sinograin said it would increase wheat storage.
Additional signs of contraction in China’s manufacturing sector... The Caixin/S&P Global manufacturing purchasing managers index (PMI), which gauges smaller and privately owned factory activity in China, fell to 49.8 in July. That marked the lowest reading in nine months and the first contraction during that span. This followed a third straight month of contraction in China’s official PMI, which tracks large and state-run factories, released the previous day.
PBOC to change one-year loan operation date in policy shift... The People’s Bank of China (PBOC) plans to move the date on which it injects one-year liquidity to domestic lenders to the 25th of each month, people familiar wit the matter told Bloomberg. This is part of a shift to relying primarily on a short-term interest rate to steer markets. The change will take effect as early as this month. PBOC now conducts its medium-term lending facility operation on the 15th of every month. The aim is to gradually de-link the MLF from the benchmark lending rates, known as the loan prime rates and published on the 20th of every month, according to the people.
China’s home sales slump drags on despite rescue efforts... Prices of new homes in China rose at their slowest pace in seven months in July, a private survey showed, suggesting the crisis-hit property sector was struggling to recover despite a bevy of support policies. The average price for new homes across 100 cities edged up 0.13% from a month earlier, weaker than the 0.15% rise in June, according to data from property researcher China Index Academy. The average price of second-hand homes fell 0.74% in July from a 0.73% fall the previous month, the 27th straight monthly decline.
BOE cuts interest rates but will remain cautious... The Bank of England (BOE) cut interest rates by 25 basis points to 5.0% but noted it will move cautiously in loosening monetary policy until officials are more certain that inflation will remain subdued. The cut lowered the benchmark rate after remaining at 16-year highs for a full year and was done in a “finely balanced” fashion, with four members of the Monetary Policy Council opting to hold borrowing costs unchanged.
Beef movement stays strong... Choice boxed beef prices firmed 29 cents on Wednesday, while Select dropped $1.22. Spot movement totaled 145 loads, signaling there’s still solid retailer demand even though it’s into a timeframe when beef demand slows.
Cash hog rally extends... The CME lean hog index is up another 49 cents to $93.08 as of July 30, the 13th straight daily gain. During that span, the cash index has firmed $4.70. Even after a $1.10 rally on Wednesday, August lean hog futures held an 80.5-cent discount to today’s cash quote.
Overnight demand news... Japan purchased 119,145 MT of milling wheat via its weekly tender, including 57,575 MT U.S., 33,040 MT Canadian and 28,530 MT Australian. Taiwan purchased 105,650 MT of U.S. milling wheat.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
· 7:30 a.m. Weekly Export Sales — FAS
· 2:00 p.m. Cotton System Consumption and Stocks — NASS
· 2:00 p.m. Fats and Oils: Oilseed Crushings — NASS
· 2:00 p.m. Flour Milling Products — NASS
· 2:00 p.m. Grain Crushings and Co-Products Production — NASS
· 2:00 p.m. Honey Bee Colonies — NASS