Good morning!
Weaker bias this morning... Overnight price action was two-sided and relatively quiet, though corn, soybeans and winter wheat all lower and near session lows this morning. As of 6:30 a.m. CT, corn futures are trading 3 to 5 cents lower, soybeans are 14 to 18 cents lower, winter wheat is 4 to 6 cents lower and spring wheat is steady to 5 cents higher. Front-month U.S. crude oil futures are around $2.50 lower and the U.S. dollar index is nearly 800 points higher, hitting a fresh 20-year high.
Ukraine, Russia confirm progress on grain export deal... Ukraine is “definitely a step closer” to clinching a deal to export grain through its Black Sea ports after Wednesday’s talks with Russia, the United Nations and Turkey, Ukrainian Infrastructure Minister Oleksandr Kubrakov said. The talks delivered some elements of a possible deal, Russia’s foreign ministry said. “There has indeed been a substantive discussion on this issue,” a Russian foreign ministry spokesperson said. “It was possible to formulate some elements of a possible agreement which Russia, Ukraine and Turkey are now discussing in their capitals through their military departments.” A preliminary date for the next four-way meeting is July 20 or July 21, Russian RIA news agency reported, citing a source familiar with the situation. No significant obstacles remain to signing the agreement, its source added.
U.S./EU coordinating Russian sanctions... The European Union is working with the U.S. on a joint approach to enforcing their economic sanctions against Russia, European Commission Director General for Trade Sabine Weyand said. Meanwhile, a U.S. Treasury official doesn’t anticipate Washington applying sanctions on countries or companies that fail to join a proposed price cap on Russian oil.
Weekly Export Sales Report out this morning... For the week ended July 7, traders expect:
| 2021-22 expectations (in MT) | 2021-22 last week | 2022-23 expectations (in MT) | 2022-23 last week |
Corn | (100,000)-300,000 | (66,577) | 100,000-400,000 | 111,237 |
Wheat | NA | NA | 200,000-500,000 | 286,385 |
Soybeans | (200,000)-200,000 | (160,035) | 100,000-300,000 | 240,089 |
Soymeal | 50,000-300,000 | 148,812 | 0-50,000 | 30,430 |
Soyoil | 0-20,000 | (12) | 0 | 0 |
Firm raises Russian wheat crop forecast... IKAR raised its 2022 Russian wheat crop forecast by 1.8 MMT to 90.5 MMT. The Russia-based ag consulting firm increased its 2022-23 Russian wheat export forecast by 2 MMT to 44 MMT. It expects total grain production of 138.5 MMT, with grain exports of 56.1 MMT in 2022-23.
China’s wheat production increased 1%... China’s wheat output will rise 1% this year, boosted by a 0.7% increase in yields and a slight gain in acreage. The National Statistics Bureau estimated China’s wheat production at 135.76 MMT. An ag ministry official said the quality of wheat was “the best in recent years” due to good weather and timely harvests. USDA projects China’s wheat crop at 135 MMT.
Exchange lower Argentine wheat crop estimate amid dry weather... Argentina’s 2022-23 wheat production estimate was lowered by 800,000 MT to 17.7 MMT by the Rosario Grain Exchange amid a reduction in planted area due to dryness/drought. The exchange cut wheat planted area by 300,000 hectares to 5.9 million hectares. The exchange raised its 2021-22 corn production estimate to 51 MMT, up 1.8 MMT from its prior forecast.
Consultancy lowers EU wheat crop forecast... Strategie Grains cut its 2022 EU wheat crop forecast by 1.1 MMT from last month to 123.3 MMT. That would be down 6.6 MMT from last year. The consultancy also cut its EU barley and corn production forecasts to 49.6 MMT and 65.4 MMT, respectively.
Bigger German wheat crop despite heat, dryness... Germany’s 2022 wheat crop will increase 5.3% from last year to 22.51 MMT, despite a recent heatwave and dryness, the country’s association of farm cooperatives said. However, the production estimate was cut by 140,000 MT from last month’s forecast because of the unfavorable conditions. The group estimates Germany’s 2022 winter rapeseed crop at 3.77 MMT, up 8.2% from last year.
EU cuts euro zone growth forecasts, revises up inflation outlook... The European Commission cut its forecasts for economic growth in the euro zone for this year and next and revised up its estimates for inflation. The commission now predicts growth of 2.6% this year for the 19-country currency bloc, slightly less than the 2.7% it had forecast in May. But next year, when the impact of the Ukraine war and of higher energy prices may be felt even more acutely, growth is now forecast to be 1.4%, instead of the 2.3% previously estimated. For the broader 27-country European Union, the growth forecast was unchanged at 2.7% this year, but revised down to 1.5% in 2023 from 2.3%. In a major change, the commission also raised its estimates for euro zone inflation, which this year is now expected to peak at 7.6% before falling to 4.0% in 2023. In May, it had forecast prices in the euro zone would rise 6.1% this year and 2.7% in 2023.
White House not ready to get directly involved in West Coast port labor talks... The White House is monitoring labor talks in the logistics industry as unions representing 115,000 rail workers and 22,000 West Coast dockworkers negotiate fresh contracts but says it won’t get directly involved at this stage. Dock- and railroad-worker unions are currently negotiating contracts with employers, with the latter threatening to strike as soon as July 18.
Brazilian BRF plant cleared to export pork to Canada... Brazilian food company BRF received approval to ship pork to Canada. The approved unit, located in Santa Catarina state, will be able to export fresh and frozen pork cuts. It is the second Canadian authorization granted to BRF this year. In May, a Parana facility unit was cleared to export cooked poultry into Canada. Ottawa approved meat imports from Brazil in March. The BRF pork plant is the eighth facility granted permission to export meat to Canada, according to meat industry group ABPA.
Cash cattle trade around steady... This week’s cash trade started around $137 in the Southern Plains and $145 in the northern market – both around steady prices with last week. Given the much stronger prices in the northern market, the number of cattle that are traded there will largely determine whether this week’s weighted average price rises or falls a little from last week. Nearby live cattle futures continue to trade well below the cash market.
Cash hog fundamentals continue to strengthen... The CME lean hog index rose another 24 cents to $112.80 (as of July 12). That’s up $2.13 from the same date last year, though still $9.88 below the 2021 seasonal summer peak. The pork cutout value firmed 81 cents to $118.28 – a new high for the year, though 53 cents below this time last year and $16.66 below the June 2021 peak. Strengthening cash fundamentals are keeping a premium in front-month July lean hog futures, which expire on Friday, and causing traders to narrow the discount in the August contract.
Overnight demand news... Japan purchased 130,900 MT of wheat from its weekly tender, including 53,260 MT U.S., 48,737 MT Canadian and 28,903 MT Australian. South Korea purchased 135,000 MT of corn from unspecified origins and 65,000 MT of Australian feed wheat. Jordan tendered to buy 120,000 MT of optional origin 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
- 7:30 a.m. Weekly Export Sales — FAS
- 11:00 a.m. Cotton and Wool Outlook: July 2022 — ERS
- 11:00 a.m. Oil Crops Outlook: July 2022 — ERS
- 2:00 p.m. Feed Outlook: July 2022 — ERS
- 2:00 p.m. Rice Outlook: July 2022 — ERS
- 2:00 p.m. Wheat Outlook: July 2022 — ERS