Good morning!
Corn, beans extend price declines... Corn and soybean futures extended losses from the two previous days overnight. Wheat futures also weakened. As of 6:30 a.m. CT, corn futures are trading 7 to 10 cents lower, soybeans are 13 to 16 cents lower, winter wheat futures are mostly 1 to 2 cents lower and spring wheat is 2 to 7 cents lower. Front-month U.S. crude oil futures are down nearly $4 and the U.S. dollar index is near unchanged this morning.
Turkey says talks to resume Ukrainian grain exports going well... Talks between Turkey, Russia, Ukraine and the United Nations on resuming Ukrainian grain exports through the Black Sea are going well so far, Turkish Foreign Minister Mevlut Cavusoglu said today, adding he was hopeful about reaching a deal. Cavusoglu said he hoped to be able to announce “good news” on the talks in coming days, but added there were still minor issues being discussed between the parties.
Russia looking to increase access to food supplies... Western officials believe that Russia will likely begin another major offensive in Ukraine early next year, including a possible effort to advance on the blockaded strategic port city of Odesa, to seize the country’s southwestern coast and cut off Ukraine from the sea, Foreign Policy reported. If Russian forces were to take the port, current and former officials warn, it would represent a devastating blow to Ukraine’s war efforts and give Moscow a greater stranglehold over critical global food supplies that have dwindled since the war began.
Weekly Export Sales Report out this morning... For the week ended July 14, traders expect:
| 2021-22 expectations (in MT) | 2021-22 last week | 2022-23 expectations (in MT) | 2022-23 last week |
Corn | (100,000)-200,000 | 59,027 | 100,000-500,000 | 348,156 |
Wheat | NA | NA | 300,000-850,000 | 1,017,156 |
Soybeans | (200,000)-200,000 | (362,885) | 0-500,000 | 113,944 |
Soymeal | 0-300,000 | 8,236 | 0-150,000 | 145,894 |
Soyoil | 0-25,000 | 1,011 | 0-10,000 | 0 |
ECB rate decision looms... The European Central Bank (ECB) is widely expected to raise interest rates for the first time since 2011. But with reports of the ECB weighing a 50-basis-point rate increase rather than the 25-point rise flagged earlier, there is a greater degree of uncertainty. Plus, Mario Draghi resigned as prime minister on Thursday after his coalition partners refused to heed his call for unity, adding more uncertainty. The other question is what detail the ECB might provide on a planned tool to contain bond market stress. Italy’s turmoil amid the Draghi resignation makes that decision all the more urgent.
BOJ keeps rates unchanged despite higher inflation forecast... The Bank of Japan (BOJ) projected inflation would exceed its target this year in fresh forecasts issued on Thursday but maintained ultra-low interest rates and signaled its resolve to remain an outlier in a wave of global central banks’ policy tightening. BOJ Governor Haruhiko Kuroda said he had “absolutely no plan” to raise interest rates or hike an implicit 0.25% cap set for the bank’s 10-year bond yield target. “The economy is in the midst of recovering from the pandemic. Japan’s worsening terms of trade are also leading to an outflow of income,” Kuroda told a news conference. “As such, we must continue with our easy policy to ensure rising corporate profits lead to moderate wage and price growth,” he said.
Biden vows to use executive actions to fight climate risks... Calling climate change a “clear and present danger,” President Joe Biden on Wednesday announced executive actions to fight climate change even as his bigger clean energy legislative effort in Congress has stalled, though he stopped short of declaring a national climate emergency. Biden proposed 700,000 acres of offshore wind energy development in the Gulf of Mexico and support for wind projects off the Atlantic Coast and Florida’s Gulf Coast. The Gulf of Mexico proposal could power more than three million homes. Biden also unveiled $2.3 billion for the Federal Emergency Management Agency to help areas experiencing extreme weather.
Biden, Xi to hold talks soon... President Biden expects to speak to Chinese leader Xi Jinping in the next 10 days as the U.S. mulls lifting some tariffs on Chinese imports. But an official downplayed that, saying the talks would focus on bilateral, regional and global issues.
Biden seeks to boost farm, construction vehicle electrification... The Biden administration wants to spur the electrification of the transportation sector beyond traditional cars. The Energy Department plans today to announce it will spend $96 million to reduce emissions by pushing forward the technology and charging infrastructure needed to electrify tractors, construction equipment, planes, trains, boats and other off-road vehicles. The funding will also be focused on alternative fuels.
EPA’s RFS draws species protection suit... EPA’s renewable fuels rule will increase strain on land and wildlife protection, according to a petition filed Wednesday by the Center for Biological Diversity. The group claims the agency failed to fully consider how increased pesticide and fertilizer use to grow corn necessary for Renewable Fuels Standard (RFS) compliance would negatively impact the environment.
FAS updates Livestock Indemnity Program (LIP) payments... Prior to 2020, there was one weight class for non-adult beef cattle under 400 lbs. that provided a fair indemnity for younger calves lost to a natural disaster. LIP now has two weight classes for calves under 400 lbs., the lowest being under 250 pounds. The LIP payment rate is set at 75% of the fair market value, which puts the estimated average market price at $233. Previously, the rate for this program for calves under 250 lbs. was $175. As of July 18, the payment rates for beef have been updated to use the same price as the 251-to 399 lb. livestock. The rate is now set at $474.38 per head for the cattle weighing less than 250 pounds. LIP payments previously paid for the livestock types of beef, beefalo, buffalo/bison, and dairy under 250 lbs. and 250 to 399 lbs. will be recalculated to pay the updated amount once the updated amounts are loaded into the LIP software. If no update to the application was made, no further action is required.
Steady/weaker cash cattle trade... This week’s cash cattle trade has been light thus far, with another wide variance in prices ranging from $136 in the Southern Plains to $145 in the northern market. The bulk of this week’s trade has been at steady to $1 lower prices, suggesting the average will decline for a third straight week. With August live cattle futures trading well below the cash market, however, seller interest should be limited.
Cash hog index continues to firm... The CME lean hog index is up another 46 cents to $116.37 (as of July 19), the highest level since June 23 of last year. Traders have narrowed the discount August lean hog futures hold to the cash index to just under $1.50. While that’s less than the normal seasonal decline into mid-August, the lead contract should remain supported until the cash index shows signs of topping.
Overnight demand news... South Korea purchased 304,000 MT of corn from two separate tenders, with all of it expected to be sourced from South America and/or South Africa.
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
- 7:30 a.m. Extended Weather Forecasts — NOAA
- 2:00 p.m. Dairy: World Markets and Trade — FAS
- 2:00 p.m. Chickens and Eggs — NASS
- 2:00 p.m. Livestock Slaughter — NASS
- 2:00 p.m. Milk Production — NASS