Good morning!
Grains firmer overnight... Corn, soybean and winter wheat futures traded higher overnight. As of 6:30 a.m. CT, corn futures are trading mostly 9 cents higher, soybeans are 10 to 12 cents higher, SRW wheat is 7 to 8 cents higher, HRW wheat is 4 to 5 cents higher and HRS wheat is near unchanged. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is mildly weaker.
Cordonnier keeps yields unchanged... Crop consultant Dr. Michael Cordonnier kept his corn and soybean yield forecasts at 175 bu. and 50.5 bu. per acre, respectively, despite improved crop conditions and recent rains. Cordonnier has a neutral to lower bias toward the corn yield and is neutral for soybeans. He estimates production at 15.10 billion bu. for corn and 4.17 billion bu. for soybeans.
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 5.3 points to 349.9, though that was still 13.4 points (3.7%) below year-ago. Condition improvements was noted in 11 of the top 18 corn production states. The soybean CCI rating rose 7.6 points to 339.3, though that was still 14.2 points (4.0%) below last year on this date. Of the top 18 soybean production states, 15 improved. The two highest producing corn and soybean states, Iowa and Illinois, led the crop ratings gains. The spring wheat crop jumped 10.9 points on the CCI to 339.2, though that was still 37.8 points (10.0%) below last year at this time. Top producer North Dakota improved 10.1 points, while modest changes in the other five states were virtually offsetting. Click here for more details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of July 16.
- Corn: 47% silking (43% average); 7% dough (6% average); 57% good/excellent (55% last week).
- Soybeans: 56% blooming (51% average); 20% setting pods (17% average); 55% good/excellent (51% last week).
- Cotton: 64% squaring (69% average); 25% setting bolls (26% average); 45% good/excellent (48% last week).
- Spring wheat: 83% headed (83% average); 51% good/excellent (47% last week).
- Winter wheat: 56% harvested (69% average).
Russia strikes Ukrainian grain port, warns about unsecure shipments... Russia struck Ukraine’s port of Odesa with missiles and drones on Tuesday, a day after pulling out of the Black Sea grain deal. Russia called the attack on the port “mass revenge strikes” in retaliation for attacks by Ukraine that knocked out its road bridge to the occupied Crimean Peninsula. The Kremlin also warned shipping grain out of Ukrainian Black Sea ports without security guarantees from Russia would carry risks because Ukraine uses those waters for military activities.
Russia faces criticism for leaving Black Sea grain deal... Russia’s decision to end the Black Sea grain deal “will strike a blow to people in need,” United Nations Secretary-General Antonio Guterres said. Multiple countries, including the U.S., accused Russia of using food as a weapon by pulling out of the deal. Russia rejected the criticism, saying it would continue to supply grain to poor countries.
Firm raises Russian grain production, export forecasts... IKAR agriculture consultancy raised its forecasts for Russia’s grain production this year to 134.5 MMT from 132 MMT previously. That includes 86.5 MMT of wheat, up 500,000 MT from its prior outlook. IKAR now expects Russia to export 58.5 MMT of grain in 2023-24, including 46 MMT of wheat, up from the previous forecasts of 55 MMT and 44 MMT, respectively.
Small refiners plan challenge to SRE denials... A group of small refiners intends to sue EPA over its refusal to grant small refinery exemptions (SREs) under the Renewable Fuel Standard (RFS). Ashimi Patel, from Par Pacific, a company whose SRE request was rejected, has criticized EPA’s decision as being “arbitrary, capricious and contrary to law,” according to Reuters. The firm said financial reports reveal the significant financial obligations that these refineries face in relation to Renewable Identification Numbers (RINs) and environmental credits. Par Pacific reported such obligations totaling $347 million at the end of the first quarter, while CVR Energy has disclosed an outstanding liability of $582 million.
China urges cotton growers to mitigate drought impacts... China’s ag ministry urged cotton growers to irrigate and fertilize more to cope with scorching temperatures that have hit major growing areas during the critical flowering period. Recent temps broke records in parts of Xinjiang, which produces about 90% of China’s cotton. Acreage in the region already declined around 8% this year due partly to cold, rainy weather during spring, a China-based trader told Reuters.
China’s pork imports slowed a little in June but still well ahead of year-ago... China imported 130,000 MT of pork in June. While that was down 7.1% from May, it was up 4.5% from June 2022. Through the first half of 2023, China imported 940,000 MT of pork, up 16.5% from the same period last year.
Japan halts poultry imports from second Brazilian state... Japan temporarily suspended imports of chicken meat from Brazil’s Santa Catarina state after confirmation of a highly pathogenic avian influenza (HPAI) case in a backyard chicken flock, Brazilian meat lobby ABPA said. Japan halted purchases of poultry from the Brazilian state of Espirito Santo last month after HPAI was confirmed at non-commercial farm there. Santa Catarina is Brazil’s second largest chicken meat processor after Parana.
Packer beef margins turn red... The combination of rising cash cattle prices and falling wholesale beef values dropped beef cutting margins into the red for the first time since mid-December, according to Hedgersedge.com. Cash cattle prices are expected to firm again this week after rising $2.21 to an average of $184.27 last week. Choice beef prices firmed 84 cents on Monday, while Select dropped 87 cents. Eroding margins are causing some plants to further reduce kill runs to manage tight market-ready cattle supplies, which should help the product market put in a seasonal bottom.
Pork margins in the black... Packer pork margins aren’t overly strong but they rose to the highest level since last October on Monday as gains in the pork cutout value have outpaced the seasonal rise in the cash hog market. However, the CME lean hog index is up another 57 cents to $101.60 today (as of July 14), while the pork cutout value fell $2.79 to start the week, which tightens margins a little.
Overnight demand news... Iran tendered to buy up to 180,000 MT of corn that can be sourced from Brazil, Europe, the Black Sea region, Russia or Ukraine. Japan is seeking 106,366 MT of milling wheat in its 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
- 10:00 a.m. Fruit and Tree Nuts Data — ERS
- 10:00 a.m. Vegetables and Pulses Data — ERS
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: July 2023 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: July 2023 — ERS
- 2:00 p.m. Dairy: World Markets and Trade — FAS