Good morning!
Sharp price pressure overnight... Corn futures nearly wiped out corrective gains from the previous four days overnight, while soybeans and wheat gave back a portion of yesterday’s price strength. As of 6:30 a.m. CT, corn futures are trading 16 to 18 cents lower, soybeans are 16 to 19 cents lower and wheat futures are 8 to 11 cents lower. Front-month U.S. crude oil futures are around $2 lower and the U.S. dollar index is down more than 900 points this morning.
Corn, soybean CCI ratings decline to the lowest of the year... 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 dropped 1.8 points to its lowest level of the year at 363.4 and 5.1 points below the five-year average for mid-July. The soybean crop fell 3.0 points to 353.4, which is also it’s lowest rating of the year and 2.1 points below average. The spring wheat crop continues to improve, with the CCI rating up 1.5 points for the week and now 46.1 points above the five-year average, though that includes last year’s drought-ravaged crop. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended July 17.
- Corn: 37% silking (48% average), 6% dough (7% average), 64% rated good/excellent (64% last week)
- Soybeans: 48% blooming (55% average), 14% setting pods (19% average), 61% rated good/excellent (62% last week)
- Spring wheat: 68% headed (90% average), 71% rated good/excellent (70% last week)
- Winter wheat: 70% harvested (71% average)
- Cotton: 74% squaring (70% average), 31% setting bolls (27% average), 38% rated good/excellent (39% last week)
Consultant switches back to neutral/lower bias toward U.S. corn, soybean yields... Crop Consultant Dr. Michael Cordonnier kept his U.S. corn and soybean yield estimates at 177 bu. and 51.5 bu. per acre, respectively. But after one week with a neutral bias, he switched back to a neutral-to-lower bias, calling forecasts for the remainder of July and August “problematic.”
Russia, Turkey and Iran hold summit in Tehran... Russian President Vladimir Putin holds summit talks in Tehran with the Iranian and Turkish presidents today about the Syrian conflict — but the Russian president’s war in Ukraine will be the main focus. The struggle to unblock grain exports from Ukraine’s Black Sea ports that were upended by Putin’s invasion will dominate discussions with his Turkish counterpart Recep Tayyip Erdogan, who’s pushing to broker an agreement. Erdogan hopes to create a safe naval corridor for grain exports through the Black Sea. In Tehran the Turkish president hopes to persuade Putin to agree to a deal.
Russia to start stockpiling grain in August... The Russian government plans to buy around 1 MMT of grain from Russian producers for state grain reserves, starting in August. Russia’s grain intervention fund will be increased to 3 MMT in coming years, the ag ministry said.
USAID announces food/nutrition/development aid for countries in Horn of Africa; aid for Ukraine... The U.S. Agency for International Development (USAID) announced Monday it was providing nearly $1.3 billion in aid and support for Ethiopia, Kenya and Somalia — part of the Horn of Africa — where unprecedented drought means more than 18 million need humanitarian assistance. USAID will provide additional humanitarian and development assistance, including a $1.18 billion increase in humanitarian aid. USAID will provide emergency food, including sorghum, yellow split peas and vegetable oils where local markets are not open and provide cash to families to buy food staples from local markets. USAID will also provide community-level screening aimed at early detection of acute malnutrition in children and will provide a specialized peanut-based nutritional supplement to such children via mobile outreach clinics, and also provide Super Cereal Plus, a corn-soy blend food supplement, for use at home. Funding for veterinary services, animal fodder and supplements to keep livestock alive and healthy is part of the package and the agency will conduct disease outbreak investigations and water sanitation help and water deliveries. A portion of the funding for the effort comes via the Ukraine aid package approved earlier this year. Meanwhile, USAID also announced more than $169 million in aid for Ukraine for additional emergency food and cash assistance, safe drinking water, logistical support and more. The U.S. has provided more than $1.4 billion in humanitarian aid to Ukraine, according to USAID.
EU to ease Russian sanctions to allow food trade... The European Union will amend its sanctions on Moscow on Wednesday by allowing the unfreezing of some funds of top Russian banks that may be required to ease bottlenecks in the global trade of food and fertilizers, a draft document showed. Under the changed regulation, which is expected to be adopted by EU envoys on Wednesday, EU nations will be able to unfreeze previously blocked economic resources owned by top Russian lenders VTB, Sovcombank, Novikombank, Otkritie FC Bank, VEB, Promsvyazbank and Bank Rossiya, the document said. Separately, under new sanctions to be adopted on Wednesday, Sberbank, Russia’s largest bank, will also become subject to the freezing of its assets, with the exception of resources needed for food trade, an EU official told Reuters. The draft document said money could be released “after having determined that such funds or economic resources are necessary for the purchase, import or transport of agricultural and food products, including wheat and fertilizers.”
Quarles: Fed should have hiked rates before taper finished... The Federal Reserve should have started hiking interest rates before it was done tapering its bond purchases to avoid falling behind on the fight against inflation, Randal Quarles, the Fed’s former vice chair for supervision, said. Policymakers were focused on unwinding the central bank’s asset purchases in a predictable manner to avoid disrupting markets, Quarles said during an interview published Monday.
Senate Democrats continue to urge Biden to declare ‘climate emergency’... President Joe Biden is considering declaring a national climate emergency as soon as this week, the Washington Post (WaPo) reports, citing three unidentified people familiar with the matter. Such a move could give Biden broad executive authority to redirect funds for clean energy projects, restrict offshore drilling or curtail the movement of fossil fuels. Bloomberg reports that some environmentalists say they expect the Interior Department to take drastic measures to cut fossil fuel development once Sen. Joe Manchin’s (D-W.Va.) vote is no longer a concern and after voters, possibly swayed by federal oil leasing’s effects on gasoline prices, have already cast ballots. Any new executive action on climate could face a significant court challenge, which could affect the future of environmental regulations. Last month, the Supreme Court cut back the federal government’s powers to regulate power plants’ carbon emissions.
Consultant raises Argentine corn crop estimate... Corn yields have been increasing as harvest has progressed in Argentina and later-planted corn wasn’t as impacted as much by dry weather earlier in the season. As a result, Cordonnier raised his Argentine corn crop estimate by 1 MMT to 50 MMT.
Selective retailer beef buys... Wholesale beef prices firmed $1.64 for Choice and 87 cents for Select on Monday, but packers moved only 67 loads of product at those prices. The slowed movement at the higher prices suggests retailers have their upcoming beef needs mostly covered and are likely to just do some fill-in buying, which means retailers will be selective buyers.
Pork cutout weakens... The pork cutout value was unable to hold its morning gains and finished 22 cents lower on Monday. However, movement improved to 309.2 loads, signaling there’s still strong retailer buyer interest, especially when prices decline – even slightly. That should limit near-term price pressure on wholesale pork prices. Meanwhile, the CME lean hog index continues to climb, rising another 74 cents to $114.89.
Overnight demand news... Egypt’s state buyer cut the acceptable protein level for U.S. SRW and soft white wheat in its tender that closes today to 10.5% as a way of generating more offers for U.S. supplies.
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
- 8:00 a.m. Food Expenditure Series — ERS
- 10:00 a.m. Fruit and Tree Nuts Data — ERS
- 10:00 a.m. Vegetables and Pulses Data — ERS