Good morning!
Price pressure overnight... Corn, soybean and wheat futures faced heavy pressure overnight after initially trying to work to the upside. As of 6:30 a.m. CT, corn futures are trading 11 to 12 cents lower, soybeans are 25 to 28 cents lower and wheat futures are 14 to 19 cents lower. Front-month U.S. crude oil futures are around $4.50 lower and the U.S. dollar index is near unchanged after earlier hitting a fresh 20-year high.
July crop reports out this morning... USDA’s updated balance sheets in this morning’s 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. The average pre-report estimates for old-crop ending stocks are 1.488 billion bu. for corn and 208 million bu. for soybeans. Old-crop wheat ending stocks were set at 660 million bu. by June 1 stocks. For new-crop ending stocks, the average pre-report estimates are 1.442 billion bu. for corn, 211 million bu. for soybeans and 638 million bu. for wheat. All-wheat production is expected to come in at 1.745 billion bu., with winter wheat at 1.186 billion bu., other spring wheat at 458 million bu. and durum at 63 million bushels. Click here for details.
Corn, soybean and spring wheat CCI ratings improve... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 1.1 points to 365.2, though that was still 3.6 points below the five-year average for the second week of July. The soybean crop improved 1.5 points to 356.4, which was a modest 0.8 point above average. The spring wheat crop improved 7.2 points to 375.8, which was 42.0 points above the five-year average for the date. The spring wheat crop is behind in development, but after a slow start, it’s rated relatively strong. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended July 10.
- Corn: 15% silking (25% average), 2% dough (3% average), 64% rated good/excellent (64% last week)
- Soybeans: 32% blooming (38% average), 6% setting pods (9% average), 62% rated good/excellent (63% last week)
- Spring wheat: 44% headed (77% average), 70% rated good/excellent (66% last week)
- Winter wheat: 63% harvested (61% average)
- Cotton: 57% squaring (58% average), 22% setting bolls (18% average), 39% rated good/excellent (36% last week)
Russia, Ukraine to hold another round of talks on grain exports... Russian President Vladimir Putin and Turkish President Tayyip Erdogan held a phone call Monday in which they discussed coordinating efforts to ship grain from the Black Sea, the Kremlin said. A fresh round of talks between Russia, Ukraine, Turkey and the United Nations over grain exports from Ukraine will take place on Wednesday in Istanbul, Interfax news agency reported, citing the Russian foreign ministry. There have been regular talks on restarting Ukrainian grain exports but no real movement on that front.
France expects 7% drop in wheat production... France’s ag ministry forecasts the country’s wheat crop at 32.9 MMT, down 7.2% from last year and 5.9% below the five-year average as adverse weather impacted yields. But planted area also declined. The ag ministry said, “Crops suffered from a rainfall deficit, from heat and, in some places, from damage caused by storms.” The ministry projected this year’s total barley production, including both winter and spring crops, at 11.2 MMT, down 2.4% from last year.
Euro reaches near parity with U.S. dollar for first time in 20 years... The euro is worth about the same as the U.S. dollar for the first time in nearly two decades. This is a result of the euro dropping around 20% over the past 14 months due to economic issues. The last time it happened the euro dropped below 90.00 in 2000, one year after the formation of the European Union and its unified currency.
IEA: Worst of global energy crisis may still be ahead... “The world has never witnessed such a major energy crisis in terms of its depth and its complexity,” International Energy Agency (IEA) Executive Director Fatih Birol said Tuesday at a global energy forum in Sydney. “We might not have seen the worst of it yet — this is affecting the entire world.” Like the oil crises of the 1970s, which prompted huge gains in fuel efficiency and a boom in nuclear power, the world may see faster adoption of government policies that speed the transition to cleaner energy, Birol said. In the meantime, security of oil and gas supplies will continue to pose a challenge for Europe, and also for other regions, he said. “This winter in Europe will be very, very difficult,” Birol said. “This is a major concern, and this may have serious implications for the global economy.”
Russian oil price cap key to avoid new cost shock... A senior U.S. Treasury official said a proposal being explored by several of the world’s leading economies to cap the price of Russian oil exports will be crucial for preventing another global price spike to around $140 a barrel. G7 leaders agreed last week to explore the price limit plan. Separately, the EU and U.K. are planning to ban the insurance of tankers carrying Russian petroleum products. Because the EU, U.K. and U.S. insure an estimated 90% of Russia’s seaborne oil shipments globally, the move could deprive the global market of as much as 5 million barrels a day of oil and refined petroleum products. Pulling that much Russian product off the market would increase the price of oil significantly, possibly to about $140 a barrel, according to analysis done by the Treasury Department. However, the official emphasized that was based on modeling estimates that may not prove highly accurate.
Short-covering supported cattle... Funds reduced long positions in live cattle futures as of July 5, but they covered some shorts late in the session on Monday. Commercials also covered short positions in cattle futures yesterday. Typically, commercial willingness to cover shorts or add new long positions is a bullish sign for the market. But macroeconomic concerns remain a headwind for the market.
Cash hog index rises again... The CME lean hog index is up another 81 cents today (as of July 8) to $111.77. July lean hog futures finished Monday at a $1.38 premium to today’s cash quote, while the August contract ended at a $3.395 discount. That price structure suggests traders sense the cash index will rise a little more near-term but then begin to weaken seasonally, though not sharply.
Overnight demand news... South Korea purchased 68,000 MT of optional origin corn. Japan is seeking 130,900 MT of milling wheat in its regular weekly tender.
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
- 11:00 a.m. WASDE — ERS
- 11:00 a.m. Crop Production — NASS
- 11:15 a.m. Cotton: World Markets and Trade — FAS
- 11:15 a.m. Grain: World Markets and Trade — FAS
- 11:15 a.m. Oilseeds: World Markets and Trade — FAS
- 11:15 a.m. World Agricultural Production — FAS
- 2:00 p.m. Livestock: World Markets and Trade — FAS