Good morning!
Soybeans firmer, corn and wheat weaker overnight... Soybeans posted modest corrective gains overnight, while the corn and wheat markets faced light followthrough selling. As of 6:30 a.m. CT, corn futures are trading fractionally lower, soybeans are 4 to 5 cents higher, winter wheat markets are mostly 2 to 3 cents lower and spring wheat is steady to fractionally lower. The U.S. dollar index is down around 100 points and front-month crude oil futures are modestly weaker.
France’s wheat crop showing mixed milling quality... This year’s rain-soaked French soft wheat crop that will be the smallest since the 1980s is also showing mixed milling quality, with satisfactory protein levels close to last year but erratic test weights, the country’s ag ministry said. Hagberg falling numbers, a milling specification, were generally satisfactory, FranceAgriMer said in a joint statement with crop institutes Arvalis and Terres Inovia, without giving figures for wheat quality results.
Ukraine’s corn crop may fall as low as 20 MMT... Ukraine’s corn production may fall to 20 MMT to 21 MMT from around 30 MMT in 2023 if drought continues, producer group Ukrainian Agrarian Council told Reuters. Most of Ukraine experienced a heatwave in July, which producers expect will decrease the yield of late crops by around 30%. Analysts and traders have predicted Ukraine’s corn crop at between 23 MMT and 25 MMT, while USDA earlier this week cut its forecast by 500,000 MT to 27.2 MMT.
Payment terms limited Egypt’s wheat buy... Egypt’s push for delayed payment terms backfired in its bid to secure 3.8 MMT of wheat, as it only purchased 380,000 MT earlier this week. GASC, Egypt’s state wheat buyer required 270-day letters of credit, which led to higher-than-expected offers and limited the purchase volume. Reuters reported Tuesday GASC is in private talks with exporters to buy 30 cargoes (up to 1.8 MMT) of wheat. Russian wheat was said to be among the origins discussed in the talks but it was unclear whether supplies from other countries could also be involved.
Port of Los Angeles moves record volume in July... The Port of Los Angeles saw a record volume of goods processed last month as importers rushed to bring in holiday merchandise early. This surge was driven by efforts to avoid tariffs, disruptions from Red Sea cargo diversions and a potential strike by East and Gulf Coast dockworkers in October. Additionally, the port handled 54% more empty containers than last year, indicating that even more cargo is expected to arrive soon.
Panama Canal struggling to regain shippers’ trust... The Panama Canal is struggling to regain the trust of traders in liquefied natural gas (LNG) and food commodities after a historic drought last year forced significant restrictions on transit, the Financial Times reports. The canal’s operations, which are critical for global trade, have been impacted by reduced rainfall, leading to fewer ships, particularly LNG and dry bulk carriers, using the route. Although the canal hopes to return to near-full capacity in September, ongoing challenges, including climate change and the need for more reliable water sources, threaten its long-term viability. The situation has also led to increased costs and the rerouting of some shipments via longer, but more reliable, alternatives. Panama is working on long-term solutions to the water crisis, but the process is complex and faces domestic political challenges.
Chinese traders seeking to avoid big state banks as bond buying continues... Chinese traders are paying a premium for government bonds to evade regulators seeking to tame an unprecedented rally, people familiar with the matter told Bloomberg. Traders from non-bank financial firms, including insurers, are specifying in their orders to brokers that they don’t want to buy from any of the big state banks since regulators have told the nation’s largest lenders to keep records of their counterparties. This end-around comes amid Beijing’s efforts to rein in a record-breaking rally in bonds amid concerns over financial stability. Chinese authorities delivered a harsh warning to bond investors on Wednesday, saying they will crack down on any illegal actions that disrupt the bond market and threaten systemic risk, according to a commentary Wednesday in a newspaper backed by the People’s Bank of China.
Euro zone GDP stable in Q2... Euro zone GDP expanded 0.3% in the second quarter, the same as the previous period and in line with the preliminary estimate. Key economies including France (0.3%), Italy (0.2%) and Spain (0.8%) grew in the quarter, while Europe’s largest economy Germany contracted 0.1%. Second quarter GDP expanded 0.6% on an annualized basis, the highest growth in five quarters. Meanwhile, euro zone industrial production fell 3.9% from year-ago in June following an upwardly revised 3.3% decline in May.
UK consumer inflation rises but core prices ease... The annual consumer inflation rate in the UK increased 2.2% in July from 2% in June, though that was below forecasts of a 2.3% rise. Core inflation, excluding food, energy, alcohol and tobacco, rose 3.3% in July, down from 3.5% in June.
Wholesale beef prices continue to strengthen... Wholesale beef prices firmed for a third straight day, with Choice rising $1.10 to $316.93 and Select increasing 44 cents to $300.61 on Tuesday. Despite the stronger prices, movement increased to 138 loads, signaling active retailer buying.
Cash hog index slide continues... The CME lean hog index is down another 58 cents to $90.34 as of Aug. 12, the seventh straight daily decline. During that span, the index has fallen $3.30 after posting a seasonal peak on Aug. 1. August lean hog futures, which expire today and are settled against the index on Friday, closed yesterday at a 44-cent discount to the index. October hogs finished yesterday at a $17.49 discount to today’s quote.
Overnight demand news... Jordan tendered to buy 120,000 MT of optional origin 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
· 9:30 a.m. Weekly Ethanol Production — EIA
· 11:00 a.m. Cotton and Wool Outlook: August 2024 — ERS
· 11:00 a.m. Meat Price Spreads — ERS
· 11:00 a.m. Oil Crops Outlook: August 2024 — ERS
· 2:00 p.m. Dairy Monthly Tables and Dairy Quarterly Data — ERS
· 2:00 p.m. Feed Outlook: August 2024 — ERS
· 2:00 p.m. Rice Outlook: August 2024 — ERS
· 2:00 p.m. Wheat Outlook: August 2024 — ERS
· 2:00 p.m. Broiler Hatchery — NASS
· 2:00 p.m. Turkey Hatchery — NASS