Good morning!
Grains lower overnight... Corn and spring wheat futures were unable to build on Monday’s gains during the overnight session, while soybeans and wheat faced followthrough selling. As of 6:30 a.m. CT, corn futures are trading 2 cents lower, soybeans are 14 to 15 cents lower, winter wheat is 3 to 5 cents lower and spring wheat is 1 to 3 cents lower. The U.S. dollar index is modestly firmer, while front-month crude oil futures are marginally lower.
Cordonnier raises U.S. yield, production forecasts... Crop consultant Dr. Michael Cordonnier raised his U.S. corn yield by 1.5 bu. to 183.5 bu. per acre, noting generally favorable conditions and no threatening weather in the forecast. Cordonnier has adopted USDA’s new harvested acreage estimate of 82.71 million acres, which pushes his corn production forecast to 15.17 billion bushels. For soybeans, Cordonnier raised his yield by 1 bu. to 53.5 bu. per acre. At USDA’s harvested acreage figure of 86.27 million acres, his soybean production estimate is now 4.61 billion bushels.
Assessing August acreage data... After analyzing the FSA acreage data released on Monday, USDA total U.S. planted acres match very well with past years’ August data compared to final planted acres. There may be some individual states that could see adjustments, but we are comfortable using USDA’s acreage figures for corn, soybeans, wheat and cotton.
Corn, bean CCI ratings slip while HRS crop modestly improves... USDA rated 67% of the corn crop as “good” to “excellent” and 10% “poor” to “very poor.” The soybean crop was rated 68% “good” to “excellent” and 8% “poor” to “very poor.” On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 0.9 point to 373.7 while the soybean crop slipped 0.7 point to 367.8. USDA rated 72% of the spring wheat crop as “good” to “excellent” and 5% “poor” to “very poor.” On the CCI, spring wheat crop improved 1.2 points to 381.9, despite the overall ratings decline, as improvement in top producer North Dakota offset declines in some of the other states. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of Aug. 11:
· Corn: 67% good/excellent (67% last week); 94% silking (94% average); 60% dough (56% average); 18% dented (12% average).
· Soybeans: 68% good/excellent (68% last week); 91% blooming (90% average); 72% setting pods (70% average).
· Spring wheat: 72% good/excellent (74% last week); 18% harvested (21% average).
· Cotton: 46% good/excellent (45% last week); 96% squaring (95% average); 74% setting bolls (73% average); 13% bolls opening (12% average).
· Winter wheat: 93% harvested (91% average).
Railway strike in Canada appears imminent... The Canada Industry Relations Board (CIRB) cleared a key hurdle that had paused the strike threat, raising odds of a lockout if no agreement is reached between the Teamsters Canada Rail Conference and CN and CKCP railways by Aug. 22, according to realagriculture. Kyle Larkin, executive director of Grain Growers of Canada, warns that a dual railway strike could have devastating effects, particularly on the agriculture industry, as 94% of all grain in Canada moves by rail. Larkin outlines three government options to prevent or end the strike: back-to-work legislation, binding arbitration or a “maintenance of activities” designation, though the success of each varies.
China pledges more aid to disaster-stricken regions... China will provide an additional 100 billion yuan ($14 billion) to banks to support rebuilding areas devastated by floods, after recent extreme weather damaged around 6 million acres of crops. The People’s Bank of China (PBOC) will direct the funding towards Fujian, Guangdong, Henan, Heilongjiang, Hunan, Jilin, Jiangxi, Liaoning, Shaanxi and Sichuan provinces, along with the megacity of Chongqing and the Guangxi region, and to farmers, small and micro-sized firms and households, a statement said. PBOC had already issued a total of 2.61 trillion yuan in re-lending quotas to support agriculturalists and small firms. Vice Premier Liu Guozhong “urged measures to drain accumulated water, promote the restoration of affected crops and guide farmers in replanting areas where crops were destroyed,” state-run Xinhua news reported.
China’s bank loan gauge contracts for first time in 19 years... China’s yuan-denominated bank loans that exclude those extended to financial institutions shrank by 77 billion yuan ($10.7 billion) at the end of July from a month ago, according to data from the People’s Bank of China. That marked the first drop since July 2005, as more debt was repaid than taken out, which could exacerbate deflation and slowed growth. Non-financial companies took out just 152 billion yuan of loans in July, the smallest amount since October 2019. Aggregate financing, a broad measure of credit, increased 771 billion yuan last month, according to Bloomberg calculations, falling short of a 1 trillion-yuan median forecast by economists. A gauge of new loans, which includes borrowing by financial firms, rose 268 billion yuan, also worse than the 427 billion yuan forecast.
Euro zone economic sentiment plunges... The ZEW Indicator of Economic Sentiment for the euro zone plummeted to a nine-month low of 17.9. That marked the second consecutive month of deterioration in the morale gauge, amid ongoing uncertainty about the economic outlook and the direction of monetary policies. In August, about 54.3% of surveyed analysts expected no changes in economic activity, 31.8% predicted an improvement and 13.9% anticipated deterioration.
IEA lowers 2025 global oil demand outlook amid weak Chinese economy... The International Energy Agency (IEA) kept its 2024 global oil demand growth forecast unchanged but trimmed its 2025 outlook, citing impacts of a weakened Chinese economy on consumption. IEA forecasts global oil demand will rise 970,000 barrels per day (bpd), unchanged from last month. It cut global oil demand growth to 950,000 bpd for next year, down 30,000 bpd from its previous forecast.
Cash cattle drop, wholesale beef strengthens... Cash cattle averaged $191.34 last week, down $3.11 from the previous week and the lowest price since the first week of June. Wholesale beef prices firmed $3.12 for Choice to $315.83 and $1.58 for Select to $300.17 on Monday. Falling cash prices and rising wholesale values will improve packer margins, though they remain solidly in the red.
Cash hog index accelerates decline... The CME lean hog index is down 98 cents to $90.92 as of Aug. 9, extending the recent decline to six straight days during which price drops have accelerated each day. August lean hog futures, which expire Wednesday and are settled against the index on Friday, ended Monday at an 89.5-cent discount today’s cash quote.
Overnight demand news... Egypt purchased 280,000 MT of wheat from its tender for 3.8 MMT – 180,000 MT of Ukrainian and 100,000 MT of Bulgarian 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
· 11:00 a.m. Feed Grains Database — ERS
· 2:00 p.m. Season Average Price Forecasts — ERS
· 2:00 p.m. Wheat data — ERS