Good morning!
Grains post strong corrective gains overnight... Corn, soybeans and wheat traded sharply higher overnight amid rising geopolitical tensions after Ukraine attacked a major Russian Black Sea port. As of 6:30 a.m. CT, corn futures are trading 10 to 12 cents higher, soybeans are 13 to 17 cents higher, SRW wheat futures are 14 to 19 cents higher, HRW wheat is 9 to 10 cents higher and HRS wheat is 6 to 8 cents higher. Front-month crude oil futures and the U.S. dollar index are both modestly higher.
Ukrainian drone attack hits Russian port... A Ukrainian drone attack on Russia’s Black Sea navy base at Novorossiysk briefly halted operations at the port, which handles 2% of the world’s oil supply and also exports grain. A source with knowledge of the port’s operations told Reuters oil and grain loadings were still taking place at the port, which resumed normal operations hours after the attack.
Russia wants actions, not words, to resume Black Sea grain deal... Russia said on Friday it needed actions, not promises, from the U.S. to meet the conditions it has set for a return to the Black Sea grain deal. “If they want to contribute to fulfilling the part of the grain deal that is due to Russia, the Americans must fulfil it, not promise that they will think about it,” Kremlin spokesman Dmitry Peskov said. “As soon as this is done, this deal will immediately be renewed.” The comments came after U.S. Secretary of State Antony Blinken on Thursday said the U.S. would make sure everyone including Russia would be able to export food products safely in the event of a resumption of the Black Sea grain deal.
Chinese flooding moves into northeast grain belt... Northeastern Heilongjiang, known as China’s “great northern granary,” is the latest area to suffer the aftermath of Typhoon Doksuri. Heavy downpours and flooding have already impacted farmland in the province and more rains are in the near-term forecast.
FAO global food price index increases slightly in July... The UN Food and Agriculture Organization global food price index rose 1.3% in July amid a sharp rise in vegoil prices, which more than offset a significant decline in sugar and smaller decreases for cereal grains, dairy and meat. The index was still 11.8% below last year. Compared to year-ago, prices declined 5.1% for meat, 20.6% for dairy, 14.5% for cereal grains and 23.1% for vegoils, while sugar prices jumped 29.7%.
July employment data out this morning... Economists polled by Reuters expect the Labor Department to report non-farm payrolls increased 200,000 in July, which would be down from a gain of 209,000 the previous month. However, some economists increased their expectations after private payroll figures came in higher than anticipated. The unemployment rate is expected to hold at 3.6%.
China ends duties on Australian barley... China’s commerce ministry said anti-dumping and anti-subsidy tariffs on Australian barley would end on Saturday, roughly three years after the 80.5% duties were first established. The barley decision puts a spotlight on the few remaining Australian products restricted by China, including wine, which also faces tariffs, as well as unofficial restrictions on lobster and meat exports from certain abattoirs.
Vietnam looking to boost rice exports... Vietnam’s trade minister said a surge in global rice prices offered an opportunity to increase exports but stressed the need to ensure domestic food security. He called on the country’s rice exporters to honor export contracts signed before the recent price surge to maintain demand and seek to sign new contracts based on “current market conditions.” Vietnam, the world’s third largest rice exporter after India and Thailand, is expected to export 7.8 MMT of rice in 2023-24, up from 7.1 MMT last year.
China regulator approves rural commercial banks in Henan, Liaoning... China’s National Financial Regulatory Administration (NFRA) said it had approved the setting up of rural commercial banks in Liaoning and Henan provinces as part a push to reform the country’s rural credit system. The new bank in Liaoning is being created through the merger of dozens of local rural credit unions and an existing rural commercial bank, NFRA said. It did not offer details of the new rural lender in Henan.
France raises wheat crop estimate... France’s ag ministry raised its estimate of the country’s 2023 soft wheat production to 35.59 MMT, up 590,000 MT from its initial forecast last month. At that level, France’s wheat production would increase 5.6% from last year.
ECB: Underlying inflation has peaked... Underlying inflation in the euro zone has probably peaked, pointing to slower growth in other prices too, the European Central Bank said. ECB noted most of the around 10 indexes of underlying inflation is gauges were now “showing signs of easing” and the latest reading for July was “broadly in line” with its own expectations.
Slow developing cash cattle trade... Packers showed a little more interest in buying cattle on Thursday, but negotiations remained at a standstill as feedlots had no interest in moving cattle at steady/lower prices. With contract supplies to pull from, it’s unlikely packers will get too aggressive with cash bids, which suggests it could be another week of light cash trade.
Pessimistic hog futures discounts... The seasonal climb in the cash hog market may have stalled, but prices haven’t rolled over. The CME lean hog index is up 6 cents today (as of Aug. 2), meaning it has posted a net 2-cent gain the five days this week. After sharp losses on Thursday, discounts in futures stood at $4.86 for August hogs, $23.81 for October hogs and $31.31 for December hogs.
Overnight demand news... Algeria purchased around 40,000 MT of corn expected to be sourced from Brazil or Argentina.
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. Employment Data — BLS
- 2:00 p.m. Cash Rents- State — NASS
- 2:00 p.m. Dairy Products — NASS
- 2:00 p.m. Land Values — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC