Good morning!
Grains mildly weaker overnight... Soybeans faced light followthrough selling overnight, while corn and wheat erased Tuesday’s modest corrective gains. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are fractionally to 2 cents lower, winter wheat markets are 3 to 5 cents lower and spring wheat is mostly a penny lower. The U.S. dollar index and front-month crude oil futures are both modestly weaker this morning.
India’s monsoon favorable for crops... India’s monsoon continues to perform relatively well and most locations of the country have ample moisture to support generally good crop establishment and growth, according to World Weather Inc. Rainfall as a percent of normal ranged from 101% to 249% from June 1 to July 9. World Weather notes, “Soil moisture is rated adequate to excessive in a large section of India. However, many areas in western Rajasthan and western Gujarat still have a shortage of moisture. Portions of Tamil Nadu also have moisture shortages in the topsoil due to a lack of rain this month. Long-term production potentials are generally favorable across the country outside areas impacted by severe flooding.”
India to sell wheat reserves into domestic market... India plans to sell wheat from its state reserves to bulk consumers such as flour millers and biscuit makers starting in August, according to a government order seen by Reuters. The government will allow state-run Food Corporation of India (FCI) to start offering wheat from its inventories from next month at 23,250 rupees ($279) a ton, the order said, nearly 12% lower than prevailing open market prices. FCI has yet to decide the quantity of wheat that it plans to sell on the open market. Last year, FCI began selling reserve wheat into the domestic market in June and sold a record of more than 10 MMT in the fiscal year to March 2024.
Study highlights potential risks to gov’t data... The New York Times highlighted a new study by the American Statistical Association (ASA) warning the reliability of U.S. economic data is at risk due to shrinking budgets, declining survey response rates and potential political interference. Currently, government statistics remain dependable, but the study, authored by statisticians from various institutions including George Mason University and the Urban Institute, likens the statistical system to infrastructure that is often neglected until a crisis occurs. Despite these challenges, there is no current evidence of declining quality in U.S. economic data, according to statistical agencies and the ASA report. The report urges Congress to increase funding for statistical agencies, enhance data sharing and ensure protections against political interference.
China’s deflation risks persist amid weak domestic demand... China’s consumer price index eased to 0.2% above last year in June, the fifth straight month of inflation but the lowest figure since March. Food prices declined from year-ago for the 12th consecutive month despite an 18.1% jump in pork prices. China’s producer prices fell 0.8% from year-ago. While that was the softest decline in factory-gate prices since January 2023, it marked 21st straight month of producer deflation, reflecting fluctuations in global commodity prices and insufficient domestic demand for some industrial goods.
China investigates EU trade barriers... China is investigating whether the European Union’s recent tariffs constitute an illegal barrier to free trade. China’s ministry of commerce said the investigation would span a range of sectors, including rail, solar/wind power and security equipment – areas the EU has targeted recently. If Beijing determines an EU measure to be illegal, Chinese officials could conduct bilateral talks, start a multilateral dispute settlement and take “other appropriate measures,” including “retaliatory measures.” The investigation will last from July 10 to Jan. 10, 2025, and could be extended to April 10, 2025, under special conditions, the ministry said.
Increased focus on forced labor in China... The U.S. Department of Homeland Security announced it is ramping up its enforcement focus on industries including aluminum, PVC and seafood, as part of the agency’s increased attention on forced labor in China. This initiative is part of the broader enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), which aims to prevent the importation of goods produced with forced labor, especially from the Xinjiang Uyghur Autonomous Region (XUAR). Of note: Other high-priority sectors include apparel, cotton, polysilicon and tomatoes.
U.S. paper industry urges EU to delay anti-deforestation law, citing inflation concerns... The American Forest and Paper Association is urging the European Union to delay a forthcoming law designed to ensure supply chains for key consumer goods, like diapers and sanitary pads made from timber-derived pulp, saying they do not contribute to deforestation. Mark Pitts, the association’s executive director, warns that implementing this law will lead to higher prices for these goods, resulting in inflationary pressures. U.S. government officials have also requested a postponement, according to a Bloomberg News report. The EU Deforestation Regulation aims to reduce the 10% of global deforestation and the associated biodiversity loss linked to EU consumption of commodities such as timber, beef, coffee and cocoa.
Concerning pattern in cattle futures... Cattle futures repeated Monday’s price action yesterday in which gains early in the session gave way to a late selloff that produced a sharply lower close. The futures price pattern this week is not only concerning but could impact cash cattle trade, with cash sources expecting “steady at best” cash cattle trade and some calling for a downturn after four weeks of record prices.
Traders erase premium in August hogs... August lean hog futures finished Tuesday’s session at $88.40, three cents below today’s CME lean hog index quote for July 8. Fall- and winter-month contracts sharply extended their big discounts to the cash index, signaling traders expect heavy pressure on the cash hog market as slaughter supplies build seasonally during the second half of the year.
Overnight demand news... Japan purchased 18,030 MT of feed wheat and 220 MT of feed barley. Jordan tendered to buy 120,000 MT each of optional origin milling wheat and feed barley.
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
· 2:00 p.m. Broiler Hatchery — NASS