Good morning!
Strong price gains to start the week... Corn, soybean and wheat futures gapped sharply higher at the start of overnight trade. While prices remain sharply higher, futures are trading under their opening levels and low range this morning. As of 6:30 a.m. CT, corn futures are trading 16 to 18 cents higher, soybeans are 18 to 20 cents higher, SRW wheat is 9 to 10 cents higher, HRW wheat is 14 to 15 cents higher and spring wheat is 20 to 23 cents higher. Front-month U.S. crude oil futures are around $2.25 lower and the U.S. dollar index is more than 700 points higher this morning.
Drier trend this week, heat returns late week... Rains are falling across areas of the western Corn Belt this morning but are expected to dissipate around midday and not extend into the eastern Belt. Rainfall will be limited across the Corn Belt, Central and Southern Plains and Delta this week. World Weather Inc. says, “Temperatures in the 90s to 105 degrees Fahrenheit will occur in the western Corn Belt briefly late this week and again for a longer period of time next week. This will accelerate drying and deplete soil moisture very quickly, raising the need for generalized rain once again, but that is not likely to come anytime soon leading to rising levels of crop stress next week. Completely dry weather is not expected, but it will be dry enough and hot at times to accelerate drying rates.”
Russia destroying Ukraine grain crops... Aiming to induce a global food crisis, Russian forces in Ukraine are systematically destroying grain crops, Ukrainian Foreign Ministry Spokesperson Oleg Nikolenko said via Twitter. Nikolenko posted a photo of a fire consuming a grain field in southeastern Ukraine. “Russia’s troops set fire to grain fields in Ukraine’s fertile Zaporizhzhya region,” said Nikolenko. “Remember this picture every time Russians say they care about global food security. Millions of people across the world will face hunger – because Russia launched a brutal war against Ukraine.” Other pictures and video on social media corroborated Nikolenko’s claim of Russian troops destroying Ukraine grain fields.
Ukraine war is pushing millions of the world’s poorest toward starvation... The World Food Program says increases in the cost of food and fuel since March have pushed an additional 47 million people into acute food insecurity, when a person is no longer able to consume enough calories to sustain his/her life and livelihood, taking the total to 345 million people worldwide. Of those, some 50 million are living on the edge of famine. In Somalia, Ethiopia, South Sudan, Yemen and Afghanistan, nearly 900,000 people already face starvation and death. That is a more than tenfold increase from 2019 — and, by some estimates, could result in more people dying from hunger in 2022 and 2023 than in any years since the 1960s and China’s disastrous Great Leap Forward agricultural policies, the Wall Street Journal notes.
Chinese producer prices ease, consumer prices rise... China’s producer price inflation eased to a 15-month low of 6.1% above year-ago in June from 6.4% in the prior month. This marked 18th straight month of slowing producer prices, amid measures to contain Covid-19 infections and fears about global recession that triggered a selloff in ferrous metals. China’s annual consumer inflation rate climbed 2.5% in June from 2.1% in the prior month. This was the highest consumer inflation since July 2020, with food prices rising the most in 21 months.
China’s June new bank loans rise more than expected... Chinese banks extended 2.81 trillion yuan ($419.3 billion) in new yuan loans in June, up from May and beating analysts’ expectations, as the country’s central bank sought to spur credit growth. Outstanding yuan loans were up 11.2% from a year earlier at the end of June compared with 11.0% growth the previous month. Broad M2 money supply grew 11.4% from a year earlier, up from an 11.1% rise in May.
The week ahead in Washington... U.S. lawmakers return to work for a final legislative push as midterm elections approach. The biggest measure on the Democrats’ wish list ahead of midterm elections is another reconciliation bill. Senate Majority Leader Chuck Schumer (D-N.Y.) is working closely with centrist Sen. Joe Manchin (D-W.Va.) on the Democrats’ climate, prescription drug pricing and tax bill, which Democrats could pass without any Republican votes via reconciliation. On the economic front, U.S. consumer inflation data for June will be released on Wednesday. The big data for ag is Tuesday’s Supply & Demand and Crop Production Reports. The Supply & Demand Report will reflect changes to old-crop demand forecasts based on June 1 stocks and its new-crop planted acreage estimates. USDA will also release its first all-wheat production estimate, including the first survey-based forecasts for other spring wheat and durum.
Freight rates starting to fall as shipping demand wavers, U.S. economy slows... The reduction in transportation costs is good news for manufacturers and retailers after two years of rapidly rising expenses. The Wall Street Journal reports it also suggests the contribution of the freight sector to inflation is at least leveling off, though shippers note they are still paying several times more than they did before the Covid-19 pandemic snarled supply chains worldwide.
Labor Secretary upbeat on port talks... U.S. Labor Secretary Marty Walsh remained optimistic about contract negotiations between workers and shipping companies for some of the country’s most important ports, even as talks extend past a previous deadline. He added talks often move past their deadline, while declining to comment on the department’s preparation for any potential strike.
Canada waives Russia sanctions to ease Germany’s gas shortage... Canada is going to allow the export of vital equipment for the main Russian gas pipeline to Germany, clearing a potential obstacle to the resumption of increased gas deliveries to Europe. Ottawa late on Saturday granted an exemption to its sanctions on Moscow, bringing potential relief in Berlin, which fears it could be forced to ration supplies. The Nord Stream 1 pipeline supplies Germany with much of its Russian gas. Canada had blocked the delivery of a gas turbine used in the pipeline, which was being repaired by German manufacturer Siemens Energy at its plant in Montreal, because of its sanctions on the Russian energy sector. Moscow blamed this delay for its decision last month to cut the flow of gas through the pipeline by 60%, sending gas prices soaring.
Biden: No decision made on rolling back China import tariffs... President Joe Biden said Friday he hasn’t decided whether to roll back any of the tariffs on Chinese imports imposed by his predecessor. Commerce Secretary Gina Raimondo on Sunday said she expects a decision shortly. “No, we are having further discussions on that,” Biden said Sunday when asked if there was a decision.
Biden seeking global price cap on Russian oil... Negotiating and selling Biden’s plan is a crucial task facing Treasury Secretary Janet Yellen as she travels to Asia. But others think if Russia feels really backed into a corner, Putin will take Russian oil off the global market. A New York Times account says, “Analysts have calculated that such a depletion in supply could send oil prices soaring to $200 per barrel or more, translating to Americans paying $7 a gallon for gasoline. Global growth could slam into reverse as consumers and businesses pull back spending in response to higher fuel prices and as central banks, which are already raising interest rates in an effort to tame inflation, are forced to make borrowing costs even more expensive.”
Wholesale beef likely to weaken... Boxed beef prices softened Friday and movement was light at only 91 loads, suggesting retailers completed their post-Fourth restocking. With no major “beef holidays” until Labor Day, the wholesale market is likely to soften through the heart of summer. But tight market-ready supplies could keep the cash cattle market relatively well supported even if wholesale beef trade slows.
Cash hogs expected to firm... The CME lean hog index is up 81 cents today (as of July 7) at $110.97. July hogs finished Friday $1.88 above that level, signaling traders anticipate more near-term cash market strength ahead of the contract’s expiration Friday and settlement July 19. August hogs finished at a $1.795 discount, suggesting traders sense the cash market will post a seasonal peak soon.
Weekend demand news... The Philippines purchased up to 60,000 MT of feed wheat expected to be sourced from Australia and up to 60,000 MT of corn expected to be sourced from South America. Taiwan tendered to buy 44,725 MT of U.S. milling wheat.
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
- 10:00 a.m. Export Inspections — AMS
- 3:00 p.m. Crop Progress — NASS