Good morning!
Corrective buying in grains overnight... Corn, soybeans and wheat traded higher amid corrective buying during the overnight session. As of 6:30 a.m. CT, corn futures are trading fractionally higher, soybeans are 3 to 4 cent higher and wheat is mostly 8 to 10 cents higher. The U.S. dollar index and front-month crude oil futures are both marginally higher this morning.
Argentine oilseed workers strike continues... A pair of Argentine oilseed industry unions announced a one-day extension to an ongoing strike that has halted operations at the country’s major ag export hubs. Today will be the fourth day of inactivity by the oilseed workers, who are seeking better wages. The number of grain ships facing loading delays due to the strike had risen to 36 by midday Thursday.
IKAR raises Russian wheat production, export forecasts... Consultancy IKAR raised its Russian wheat crop forecast by 600,000 MT to 83.8 MMT, with total grain production now expected to reach 129.5 MMT. IKAR raised its 2024-25 export forecast for the country to 44.5 MMT, up 500,000 MT from its prior outlook. Total grain exports are expected to total 56.2 MMT.
France slashes wheat crop estimate... France’s ag ministry slashed its estimate of the country’s wheat crop by 3.33 MMT to 26.32 MMT, which would be the smallest crop since 1986. However, that’s above estimates from private firms Strategie Grains and Argus Media, which were cut to 25.6 MMT and 25.17 MMT, respectively, earlier this week.
ERP payback?... To qualify for USDA’s Emergency Relief Program (ERP) payments, farmers must have federal crop insurance or Noninsured Crop Disaster Assistance Program (NAP) coverage for their crops. This requirement is intended to encourage participation in risk management programs and ensure that aid is directed to those who have taken steps to mitigate their risks. However, this stringent requirement has led to complications. If a farmer indicated that every acre of eligible crops was insured but an audit or review found that any portion of their land was uninsured, they might be required to repay ERP funds. This includes marginal land that may not have been planted with crops but was still considered part of the farm’s total acreage. Recent legal challenges have further complicated the ERP landscape. A federal judge in Texas ruled USDA’s practice of providing additional aid to socially disadvantaged farmers was unconstitutional, arguing that it discriminated against white farmers. This ruling has raised questions about the fairness and implementation of USDA’s relief programs. Farmers who are required to repay ERP funds due to the insurance requirement face significant financial strain. The repayment demands can be seen as punitive, especially if the uninsured land was not actively used for crop production.
China’s consumer inflation rises, producer deflation continues... China’s consumer prices rose at a slightly faster-than-expected rate in July largely due to weather disruptions to food supplies, while producer deflation persisted, keeping the country’s underlying consumption trends soft. China’s consumer price index rose to a five-month high of 0.5% above year-ago in July. Food prices jumped from a 2.1% decline in June to unchanged with year-ago last month, led by a 20% surge in pork. China’s producer prices dropped 0.8% annually in July, the same pace as the prior month, marking the 22nd consecutive month of producer deflation.
China continues to crack down on bond trading... The China Securities Regulatory Commission (CSRC) ordered some brokerages to inspect their bond trading activities, three people with knowledge of the matter told Reuters, as authorities seek to rein in frenzied buying of Chinese government bonds. The Chinese brokerages have been told to conduct compliance checks on all parts of their bond trading operations. Among other recent measures to cool the bond market rally, CSRC asked major mutual fund companies to cap the duration of their new bond funds to two years. China’s central bank has also asked some financial institutions to report daily changes in their long-term treasury bond positions. And this week, big state banks sold large volumes of Chinese government bonds.
China challenges EU tariffs on EVs... China has lodged a complaint with the World Trade Organization (WTO) over the European Union’s decision to impose anti-subsidy duties on Chinese electric vehicles (EVs), the country’s commerce ministry said. The aim is to “safeguard the development rights and interests” of China’s EV industry. “Judgment in the EU’s provisional conclusion lacks factual and legal foundation,” the ministry said. “It severely violated WTO rules and undermined the global cooperation on dealing with climate change.”
U.S. adds five Chinese entities to forced labor list... The Department of Homeland Security expanded its list under the Uyghur Forced Labor Prevention Act (UFLPA) by adding five entities whose products are associated with forced labor and are therefore prohibited from entering the United States (link). This move is part of ongoing efforts to prevent products made with forced labor, particularly those linked to the Uyghur region, from entering the U.S. market, aligning with broader human rights enforcement measures.
India maintains sugar export curbs... India will retain curbs on sugar exports to ensure adequate domestic supplies and boost the country’s ethanol output, people familiar with the matter told Bloomberg. India introduced a quota system for sugar exports for 2023-24, limiting shipments to about 6 MMT. Local sugar mills and exporters have asked for the restrictions to be lifted.
Summit Carbon pipeline start pushed back... The Summit Carbon Solutions carbon capture and storage pipeline is now expected to start operation in late-2026 or early 2027, according to Summit Agricultural Group CEO Justin Kirchoff. Summit Carbon Solutions is developing a 2,500-mile carbon capture and storage pipeline designed to transport carbon dioxide (CO2) from ethanol plants across five Midwestern states to an underground sequestration site in North Dakota. The project aims to capture and store up to 12 MMT of CO2 annually, contributing to significant reductions in greenhouse gas emissions. Originally slated to begin operations in 2024, the Summit Carbon Solutions pipeline has faced multiple delays due to regulatory hurdles and opposition from various stakeholders, including farmers and environmentalists.
Money flow remains key for cattle futures... Money flow, primarily long liquidation, remains the key driver of price action in cattle futures. Fundamentals and big discounts to the cash market have been pushed to the back burner. Key to price action to close out the week could be whether Monday’s reaction lows hold. If not, a fresh wave of technical-based selling would be likely.
Cash hog fundamentals further weaken... The CME lean hog index is down another 30 cents to $92.80 as of Aug. 7, the fourth straight daily decline, prompting increased thoughts the index posted seasonal top at $93.64 on Aug. 1. The pork cutout value fell 73 cents on Thursday to $98.23. That’s down from what appears to be the seasonal peak of $106.78 on July 29 and the lowest level since July 11.
Overnight demand news... Exporters reported no tenders or sales.
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. Peanut Prices — NASS
· 2:30 p.m. Commitments of Traders — CFTC