Good morning!
Corrective buying overnight... Soybeans led a corrective rebound in the grain and soy markets overnight. As of 6:30 a.m. CT, corn futures are trading 5 to 6 cents higher, soybeans are 20-plus cents higher, the winter wheat markets are 1 to 2 cents higher and spring wheat is mostly 6 cents higher. Front-month crude oil futures are near unchanged and the U.S. dollar index is down more than 250 points this morning.
Weekly Export Sales Report out this morning... For the week ended July 6, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | 50,000-400,000 | 251,693 | 50,000-400,000 | 418,031 |
Wheat | NA | NA | 50,000-550,000 | 405,763 |
Soybeans | 0-300,000 | 187,801 | 100,000-600,000 | 592,813 |
Soymeal | 40,000-300,000 | 148,758 | 0-120,000 | 32,997 |
Soyoil | 0-10,000 | (6,269) | 0-10,000 | 0 |
June Chinese soybean imports up sharply from year-ago... China imported 10.27 MMT of soybeans during June. While that was down from the all-time record of 12.02 MMT in May it was up 24.5% from the 8.25 MMT imported in June 2022. Through the first half of 2023, China imported 52.58 MMT of soybeans, up 13.6% from the same period last year. Chinese soybean imports are expected to be between 10 MMT and 11 MMT this month, but demand is likely to slow after that amid weakened feed demand from the hog industry.
Troubling Chinese trade data for June... China’s exports fell 12.4% from year-ago levels to $285.32 billion in June – the steepest drop since February 2020 amid slowing global demand. China’s imports dropped 6.8% to $214.70 billion, the fourth straight monthly decline due to deteriorating domestic demand. That left China with a $70.62 billion trade surplus, down from $97.41 billion the previous month. China’s trade surplus with the U.S. widened slightly to $28.72 billion from $28.16 billion in May.
Firm cuts EU wheat production, export forecasts... Strategie Grains cut its EU wheat production forecast by 2.5 MMT to 126.2 MMT as heat and dryness trimmed yields. Wheat production is now forecast to rise marginally from last year’s drought-hit crop. The firm cut its EU 2023-24 wheat export forecast by 1.3 MMT to 30.1 MMT, which would be down 1.7 MMT (5.3%) from last year.
Lavrov hasn’t heard of UN proposal for Black Sea grain deal... As we reported in “Evening Report” on Wednesday, U.N. Secretary-General Antonio Guterres reportedly has proposed to President Vladimir Putin that he extend the deal in return for connecting a subsidiary of Russia’s agricultural bank to the SWIFT international payment system. Russian Foreign Minister Sergei Lavrov said he had not heard of any new proposals on the Black Sea grain deal. But he also noted Moscow is working with Turkey for ways to ensure Russian grain exports continue regardless of the grain deal.
Russia pitches use of local currencies in appeal to ASEAN... Lavrov appealed to Southeast Asian countries to work together to revive flagging trade with his country, using a forum to pitch the use of national currencies, rather than dollars, to evade Western sanctions. The sanctions have led to a 4.4% drop in trade between Russia and ASEAN member states, the Russian foreign ministry said.
EPA asks Eighth Circuit to halt WOTUS action... The Environmental Protection Agency (EPA) requested the Eighth Circuit to halt its appeal concerning an injunction that is currently blocking implementation of a new wetlands protection rule in 24 states. This comes because of the agency’s decision to revise its current rule, temporarily suspending several ongoing legal challenges directed at it. EPA is aiming to formulate a new regulation by Sept. 1, in accordance with a Supreme Court ruling from May that significantly reduced the scope of federal regulators’ authority over wetland regulation.
IEA lowers oil demand forecast amid economic headwinds... Economic headwinds and interest rate hikes are slowing world oil demand growth, according to the International Energy Agency (IEA), though it is still expected to hit a record this year. IEA says China is due to make up more than two-thirds of this year’s demand growth despite its current economic struggles.
Chinese meat imports rise... China imported 670,000 MT of meat in June, up 12.1% from May and 11.1% more than last year. China doesn’t break down the preliminary meat trade data by category, but the increase was driven by pork imports, which have been on the rise since late 2022. During the first half of 2023, China imported 3.81 MMT of meat, up 10.2% from the same period last year.
Cash cattle trade in limbo... Momentum was favoring feedlots in this week’s cash cattle negotiations until futures finished low-range with sharp losses on Tuesday. While most cash sources still expect steady/slightly firmer cash cattle trade, active followthrough selling in futures could cause packers to be more conservative with bids.
Cash hog index continues to climb, pork pulls back... The CME lean hog index is up another 70 cents to $99.36 (as of July 11). As of Thursday’s close, July hogs had a $1.815 premium to today’s cash quote, while the August contract was at a $4.01 discount. The pork cutout value dropped $1.33 on Wednesday amid notable losses in primal prices for bellies, ribs, butts and picnics.
Overnight demand news... South Korea purchased 68,000 MT of corn expected to be sourced from South America. Japan purchased 123,770 MT of wheat in its weekly tender, including 30,164 MT of U.S., 62,806 MT of Canadian and 30,800 MT of Australian.
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
- 11:00 a.m. Feed Grains Database — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS