Good morning!
Corn and wheat mildly weaker, soybeans mixed... Corn, soybeans and wheat traded narrowly on either sides of unchanged during the overnight session. As of 6:30 a.m. CT, corn futures are trading near a penny lower, soybeans are fractionally on either side of unchanged and wheat futures are 2 to 3 cents lower. The U.S. dollar index and front-month crude oil futures are both modestly weaker.
Cordonnier leaves U.S. crop, yield estimates unchanged... Crop consultant Dr. Michael Cordonnier left his U.S. corn yield forecast at 183.5 bu. per acre, though he has a neutral to slightly lower bias as weather turned hotter and drier, noting if that pattern persists it could trim yields. He forecasts corn production at 15.17 billion bushels. Cordonnier left his soybean yield at 53.5 bu. per acre, with production estimated at 4.61 billion bushels.
Lowest CCI ratings of the growing season for corn, soybeans and spring wheat... USDA rated 65% of the corn crop as “good” to “excellent” and 13% “poor” to “very poor.” The soybean crop was rated 67% “good” to “excellent” and 9% “poor” to “very poor.” On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn and soybean crops each dropped 4.4 points to 368.1 and 363.0, respectively, which are the lowest ratings of the growing season. Illinois led declines in both crops, falling 1.8 points for corn and 2.2 points for soybeans. USDA rated 69% of the spring wheat crop as “good” to “excellent” and 10% “poor” to “very poor.” On the CCI, spring wheat crop fell 7.3 points to 372.9. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of Aug. 25:
· Corn: 65% good/excellent (67% last week); 84% dough (83% average); 46% dented (42% average); 11% mature (6% average).
· Soybeans: 67% good/excellent (68% last week); 89% setting pods (88% average); 6% dropping leaves (4% average).
· Spring wheat: 69% good/excellent (73% last week); 51% harvested (53% average).
· Cotton: 40% good/excellent (42% last week); 89% setting bolls (88% average); 25% bolls opening (23% average).
Argentine farmers to plant more soybeans, less corn... Argentine farmers are likely to plant more soybeans for the 2024-25 growing season, trimming the area dedicated to corn after the leaf hopper plague caused a corn stunt disease outbreak last year. The disease devastated an estimated 2 million hectares of corn in 2023-24. Of the 2 million hectares expected to be switched out of corn, a large part will go to soybeans, said Cristian Russo, head of agricultural estimates at the Rosario Grains Exchange. Also, the weather outlook for early September remained dry, with more rain forecast for October, another incentive for soybeans whose planting starts that month.
Japan warns against panic buying of rice... The threat of a “megaquake,” a series of typhoons and a week-long national holiday have some Japanese consumers scrambling to purchase rice amid shortages, prompting the government to warn against panic buying. “The rice crop is growing steadily and farmers in some regions could harvest about one week earlier than usual. The shortages will be resolved gradually,” said Agriculture Minister Tetsushi Sakamoto.
Brazil’s wildfires threaten global sugar supply, prices... Recent wildfires in Brazil’s sugar-cane fields, especially in São Paulo, are poised to significantly impact global sugar supply and prices. The fires, affecting around 60,000 hectares and potentially destroying up to 5 MMT of sugar cane, are being compared to the severe frost of 2021, but with even greater consequences. This damage represents 1.4% of São Paulo’s sugar-cane production and has already caused raw sugar futures in New York to surge by 4.2%, reflecting market fears over reduced supply. The fires, fueled by extreme drought and heatwave conditions, have damaged newly sprouting cane, potentially reducing yields for the upcoming season and possibly prolonging the impact into the following year. This situation could disrupt global supply chains, increasing reliance on other producers like India, Thailand and China, though India’s ability to respond is limited by export restrictions.
Ruling blocks enforcement of DOL rule designed to protect H-2A farmworkers... U.S. District Judge Lisa Godbey Wood found the Department of Labor (DOL) rule designed to protect H-2A farmworkers from retaliation related to union organizing in 17 states unconstitutional because it conflicted with the National Labor Relations Act (NLRA) by granting collective bargaining rights to farmworkers, a right Congress has not legislated for under the H-2A program. The ruling specifically restricts the enforcement of this rule in the states that were part of the lawsuit – Florida, Georgia, South Carolina, Louisiana, Arkansas, Kansas, Idaho, Indiana, Iowa, Missouri, Montana, Nebraska, North Dakota, Oklahoma, Tennessee, Texas and Virginia. She said DOL overstepped its authority by creating rights not granted by Congress, effectively acting beyond its constitutional powers. Bottom line: The ruling affects agricultural employers’ compliance costs by potentially reducing the immediate financial and administrative burdens associated with the blocked provisions. While the ruling alleviates some immediate compliance burdens, agricultural employers must still navigate the complexities of the H-2A program.
UBS challenges Powell’s view on inflation decline... UBS economists expressed skepticism about Fed Chair Jerome Powell’s claim the retreat of U.S. inflation was primarily due to “vigorous” interest-rate hikes and the central bank’s long-term efforts to anchor public expectations. While acknowledging that tightening monetary policy was appropriate, UBS suggests inflation might have decreased even without significant rate hikes, drawing a parallel to the post-World War II inflation period, which saw similar economic disruptions and shifts in demand. They also questioned the emphasis on inflation expectations, noting that some forecasters, including Fed staff, are less convinced of its critical role.
Cash cattle extend price slide... Cash cattle averaged $185.54 last week, down $3.60 from the previous week. That was the fourth straight weekly decline and the lowest average price since the last week of April. Packers are thought to be well supplied for immediate needs, suggesting cash prices will weaken further this week.
Cash hog fundamentals weaken... The CME lean hog index is down another 36 cents to $87.86 as of Aug. 23, extending the pullback from the seasonal peak on Aug. 1. The pork cutout dropped $4.07 on Monday to $94.98 amid sharp declines in hams, bellies, loins and butts.
Overnight demand news... South Korea purchased 66,000 MT of corn expected to be sourced from South America. Algeria passed on a tender to buy up to 120,000 MT of corn from Brazil or Argentina and 35,000 MT of optional origin feed barley but issued a new tender for the same amounts.
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
· 2:00 p.m. Livestock and Meat Domestic Data — ERS
· 2:00 p.m. Outlook for U.S. Agricultural Trade: August 2024 — ERS