Good morning!
Two-sided trade in grains overnight... Corn, soybeans and wheat traded on both sides of unchanged during the overnight session. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents lower, soybeans are 1 to 3 cents lower, SRW wheat is mostly a nickel lower, HRW wheat is 1 to 2 cents higher and HRS wheat is mostly 8 cents higher. Front-month crude oil futures and the U.S. dollar index are both trading near unchanged this morning.
Russia continues to attack Ukrainian ports... Russia attacked Odesa and Mykolaiv on Thursday in a third straight night of air strikes on southern Ukrainian port cities. Moscow issued a new threat against Ukraine-bound vessels, prompting the White House to warn Russia may expand its targeting of Ukrainian grain facilities to include attacks against civilian ships in the Black Sea.
Ukraine hopes to continue grain shipments via Romania... Ukraine is hoping to resume exports without Russia’s participation and was setting up an alternative route via Romania. But no ships have sailed from Ukrainian ports since Russia pulled out of the Black Sea grain deal on Monday and insurers have had doubts about whether they will be able to underwrite policies for trade in a war zone. Ukrainian Foreign Minister Dmytro Kuleba called for the Black Sea grain deal to be restored, noting “land corridors cannot export the full amount of cereals available for export.”
Asian buyers seek alternatives to Ukraine grains... Asian millers, which have booked more than 1 MMT of Ukrainian and Russian wheat for shipment in coming months, will seek alternatives as attacks on Ukrainian ports after the Black Sea grain deal ended create supply risks. A Singapore-based trader at an international trading company told Reuters Asian millers likely will look to Europe, Romania, Bulgaria and Australia to fill their needs.
Weekly Export Sales Report out this morning... For the week ended July 13, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | 200,000-500,000 | 468,432 | 50,000-500,000 | 470,807 |
Wheat | NA | NA | 200,000-500,000 | 395,713 |
Soybeans | 0-300,000 | 80,587 | 150,000-700,000 | 209,162 |
Soymeal | 25,000-250,000 | 54,540 | 100,000-250,000 | 118,134 |
Soyoil | 0-10,000 | 1,179 | 0-10,000 | 0 |
Canadian port strike update... The International Longshore and Warehouse Union Canada (ILWU Canada), which had sent its members back to the picket lines on July 18 after the rejection of a previously proposed agreement, removed their notice for a strike slated for this Saturday. The decision was made following a meeting with Prime Minister Justin Trudeau, who urged both disputing parties to seek all avenues towards resolving their differences. In addition, he commanded his ministers and senior officials to adopt any possible measures to ensure the stability of supply chains and safeguard Canadian jobs and the economy. Notably, the strike initiated by IWLU Canada on Tuesday was declared illegal due to the union’s failure to provide the mandatory 72 hours’ notice. The current challenge lies in both parties managing to agree on a deal that is acceptable to both union members and port operators.
EPA details reasons for rejecting 26 small refinery exemptions... EPA found that all refineries faced equivalent costs when obtaining Renewable Identification Numbers (RINs), which serve as proof of complying with the RFS, irrespective of whether they procure them by blending renewable fuels or buying them on the open market. The market price for fuels rises to accommodate the RIN cost, much like it would due to higher crude prices. The end effect is that these obligated parties can recoup their expenditure on RINs through the market price of the fuel they produce. This process is universal, and EPA clarified there is no disproportionate cost for any party, including small refineries, as the costs are recovered in the market price. Under the Clean Air Act, those affected by this decision have the right to request a judicial review with the U.S. Court of Appeals for the District of Columbia Circuit within 60 days of the notice’s Federal Register publication. Several of the small refiners involved have declared their intention to lodge such petitions.
China keeps benchmark interest rates unchanged... The People’s Bank of China kept the one-year loan prime rate (LPR), which is the medium-term lending facility used for corporate and household loans, at 3.55%. The five-year LPR, a reference for mortgages, was kept at 4.2%.
Biggest winners in U.S. climate law: Foreign companies... The 2022 climate law in the U.S., aimed at supporting the clean-energy sector, appears to be facilitating significant gains for foreign companies — predominantly those from South Korea, Japan and China, the Wall Street Journal (WSJ) reports. The legislation, known as the Inflation Reduction Act, has resulted in around $110 billion being invested in U.S. clean-energy projects since its implementation a year ago, according to analysis by WSJ. Over 60% of these investments involve foreign firms. The 20 biggest investments feature 15 foreign enterprises, with most of these funds directed towards battery factory projects. Impact: These overseas businesses stand to benefit from billions of dollars in tax credits.
USDA announces grassland CRP acceptance... USDA announced acceptance of about 2.7 million acres from a total of 4.63 million acres offered under the grassland Conservation Reserve Program (CRP) signup. The acres approved will enter contracts starting from Oct. 1, with the national average rental for the ground being $18.02 per acre. Under CRP signup 205, the highest possible score was 195, and USDA stated that offers with a score of 77 or higher were generally accepted. USDA plans to start informing applicants from July 26 about the acceptance or rejection of their offers.
Wholesale beef prices showing no signs of a seasonal low yet... Choice boxed beef prices fell another $1.09 on Wednesday, while Select dropped 65 cents. Seasonally, a low in wholesale beef prices should come soon and the slowing of slaughter runs by packers to manage tight market-ready supplies should only help that process. But wholesale prices have yet to signal a low has been posted.
Cash hog index continues to climb... The CME lean hog index is up another 78 cents to $103.30 (as of July 18). Even after strong gains on Wednesday, the August contract still finished $5.375 below today’s cash quote. Unless the cash market tops and starts to show notable declines, downside risk in the lead contract is limited and upside potential is open.
Overnight demand news... Japan purchased 106,366 MT of wheat, including 48,061 MT U.S., 34,042 MT Canadian and 23,263 MT Australian. Iran passed on a tender to purchase up to 180,000 MT of corn.
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
- 8:00 a.m. Food Expenditure Series — ERS
- 2:00 p.m. U.S. Bioenergy Statistics — ERS
- 2:00 p.m. Livestock Slaughter — NASS
- 2:00 p.m. Milk Production — NASS