Good morning!
Wheat firmer, corn and beans weaker overnight... Corn and soybeans faced mild followthrough selling overnight, while wheat posted modest corrective gains. As of 6:30 a.m. CT, corn futures are trading fractionally lower, soybeans are mostly a penny lower and wheat futures are 2 to 4 cents higher. The U.S. dollar index is around 120 points lower and front-month crude oil futures are trading just above unchanged this morning.
Weekly Export Sales Report out this morning... For the week ended Aug. 1, traders expect:
| 2023-24 expectations (in MT) | 2023-24 last week | 2024-25 expectations (in MT) | 2024-25 last week |
Corn | 100,000-400,000 | 167,864 | 475,000-1,000,000 | 710,888 |
Wheat | NA | NA | 250,000-500,000 | 286,598 |
Soybeans | 100,000-300,000 | 376,398 | 400,000-900,000 | 632,134 |
Soymeal | 0-300,000 | 43,722 | 100,000-350,000 | 232,391 |
Soyoil | 0-10,000 | 517 | 0-10,000 | (3,473) |
Argentine soy worker strike continues... A strike launched by Argentine oilseed industry unions on Tuesday is set to continue for a third straight day, halting shipments from ports that have soy processing facilities. Only two ports among Argentina’s main ag shipping hubs, all located north of the city of Rosario on the Parana River, do not host soybean crushing plants.
Strategie Grains cuts EU wheat production, export forecasts... Strategie Grains slashed its EU wheat production forecast by 5.8 MMT to 116.5 MMT, which would be down 10.7 MMT (8.4%) from last year. Months of heavy rain in France has reduced prospects for the EU’s biggest wheat grower and exporter, with wheat output now expected at 25.6 MMT, down 27% from last year and the lowest since 1986. Strategie Grains cut its 2024-25 EU wheat export forecast by 4.1 MMT to 26.9 MMT, down 6.7 MMT (19.9%) from last year, reflecting the production cuts, sluggish demand and lack of competitiveness with other origins like the Black Sea region.
Exchange issues frost warning for Argentina’s wheat crop... Expected cold temps next week could cause frosts and damage crops in areas of Argentina, the Buenos Aires Grain Exchange warned, with the wheat crop most at risk. The western part of the country’s grain growing region could be affected most, it added.
Update on EPA’s UCO probe... Yesterday we alerted you EPA is investigating the supply chains of renewable fuel producers, focusing on the origins of used cooking oil (UCO) used in renewable fuel production, per a Reuters report. Bloomberg reports at least two probes are nearing completion and others are expected to start soon, according to people familiar with the matter. An EPA spokesperson described the inspections as part of “routine evaluation of compliance” with U.S. biofuels policy.
Chinese exporters hoarding dollars... Chinese exporters want to hold onto their dollars rather than convert them into yuan, despite the currency’s sudden sharp gains this week, bankers told Reuters. Rampant dollar hoarding by exporters has been one big factor behind the yuan’s depreciation, which hit an eight-month low of 7.2776 per dollar late July. The latest official data showed that the market’s foreign exchange settlement ratio, which measures how much foreign revenue is converted into yuan, fell to a near 2 1/2 year low of 58.1% in June.
China ramps up fight against record bond rally... China widened its battle against bond speculators, as state banks unexpectedly began selling seven-year bonds to pull up yields, undermining a popular sweet spot in the market. Local authorities asked some rural lenders in one of the most affluent provinces to suspend trading in sovereign notes. And regulators were reported to have slowed the approval for new bond funds. The National Association of Financial Market Institutional Investors (NAFMII) said in a statement four rural commercial banks – all based in eastern Jiangsu province – “were suspected of manipulating prices and transferring benefits in the secondary market trading of treasury bonds.” NAFMII said it found misbehavior in bond trading by some small financial institutions and has reported some serious rule-breakers to the People’s Bank of China for punishment.
U.S. overtakes China as Germany’s largest trading partner... The U.S. overtook China as Germany’s biggest trading partner in the first half of 2024, according to preliminary German statistics office data. German imports and exports to the world’s largest economy totaled around 127 billion euros ($139 billion) from January to June, while for China the figure was 122 billion euros. The shift comes as Germany has said it wants to shrink its exposure to China, citing political differences and accusing Beijing of “unfair practices.”
Odds of recession rising... The odds of a U.S. recession by the end of the year are now about 35%, according to JPMorgan, up from about a 25% chance at the start of July. The bank cited a sharper-than-expected weakening in labor demand.
China’s July meat imports drop sharply from year-ago... China imported 540,000 MT of meat during July, up 25,000 MT (4.9%) from June but down 125,000 MT (18.8%) from last year. Through the first seven months of 2024, China imported 3.835 MMT of meat, down 14.5% from the same period last year.
Light cash cattle trade at lower prices... Light cash cattle trade started in the Southern Plains at $1.00 lower prices on Wednesday. While movement was light, that may be enough to set a lower tone for the week. Bids and asking prices weren’t well established in the northern market.
Cash hog fundamentals weakening... The CME lean hog index is down 23 cents to $93.10 as of Aug. 6, the third straight daily decline. The pork cutout dropped $1.99 on Wednesday to $100.32, led by a $7.62 drop in primal bellies, though all cuts except hams declined.
Overnight demand news... Japan purchased 83,445 MT of milling wheat via its weekly tender, including 27,925 MT U.S., 27,400 MT Canadian and 28,120 MT Australian. Egypt purchased 36,600 MT of sunflower oil from unspecified origins.
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. U.S. Agricultural Trade Data Update — ERS