Good morning!
Grains higher to open the week... Corn, soybeans and wheat traded solidly higher during the overnight session to open the week. As of 6:30 a.m. CT, corn futures are trading 5 to 6 cents higher, soybeans are 13 to 20 cents higher, SRW wheat is 3 to 4 cents higher, HRW wheat is around a penny higher and HRS wheat is 7 to 8 cents higher. The U.S. dollar index is around 125 points lower and front-month crude oil futures are about 40 cents lower this morning.
Rain to favor western and northern Corn Belt... The western and northern Corn Belt will receive rains during the middle of the week with most other days being dry. The Delta, Tennessee River Basin and Southeast will be wet. The Southern Plains will receive some rainfall, while limited rains will be seen across the Central Plains. Temps will trend cooler than normal across the central U.S. this week, with more seasonal reading returning during the weekend and next week.
Witness to history as Biden exits presidential race... President Joe Biden announced on Sunday he will no longer seek the Democratic Party’s nomination. With Biden out of the race, the Democratic Party must officially name their nominee at the national convention in Chicago, beginning on Aug. 19. Biden has endorsed his running mate, Vice President Kamala Harris, for the nomination. However, other candidates could still challenge Harris for the nomination, potentially leading to a contested convention. Click here for more details.
The week ahead in Washington... Aside from the buzz around Biden’s decision, Congress returns with a focus on fiscal year 2025 appropriations, with House Rules and floor debate on several bills, including USDA funding. There will also be House floor action on the Water Resources Development Act (WRDA) and Hearings on the Secret Service and the glitches in protecting former President Donald Trump. The House Ag Committee will hold a hearing on financial conditions in the ag sector on Tuesday. The economic focus will be the first estimate of second quarter U.S. GDP on Thursday and Friday’s personal consumption expenditures price index, the Fed’s preferred inflation gauge. Key agricultural reports included Thursday’s Food Price Outlook and Cold Storage Report from USDA.
EU to impose duties on Chinese biodiesel... The European Union is set to impose anti-dumping duties on Chinese biodiesel imports following an investigation into complaints that unfairly priced renewable fuel from China is harming EU producers and workers. The provisional tariffs, ranging from 12.8% to 36.4%, will be implemented in four weeks. This decision comes in response to concerns that Chinese companies may be mixing fuels with cheaper ingredients and mislabeling them to benefit from the EU’s renewable energy incentives. Although the duties are expected to benefit EU producers, the immediate impact might be limited due to the region’s ample biodiesel supply. However, the European Biodiesel Board expressed concern that Chinese sustainable aviation fuel (SAF) was not included in the anti-dumping measures and plans to address this issue with regulators urgently. Similar concerns have arisen in the U.S., where business groups are urging the Biden administration to increase levies on Chinese used cooking oil used for low-carbon fuels.
Federal appeals panel upholds EPA’s biogas rule, rejects RNG coalition’s challenge... A federal appeals panel struck down a challenge by the Coalition for Renewable Natural Gas (RNG Coalition) to new standards set by EPA. The case centered around the EPA’s Biogas Regulatory Reform Rule, which the RNG Coalition contested through a petition for review. The U.S. Court of Appeals for the District of Columbia Circuit unanimously ruled against the coalition, finding that seven of their nine claims lacked merit, while the remaining two were deemed improper for consideration by the court. The RNG Coalition argued the new reform rule conflicted with Congress’s directive to promote renewable fuel in the transportation market and claimed it could potentially force biogas producers out of the biofuel market. The ruling could have significant implications for how biogas is regulated and accounted for in the renewable fuel sector.
PBOC unexpectedly cuts interest rates, adjusts policy to steepen yield curve... The People’s Bank of China (PBOC) cut the seven-day reverse repo rate to 1.7% from 1.8%, the first reduction in nearly a year. PBOC also cut the one-year loan prime rate (LPR) – the benchmark for most household loans – by 10 basis points to 3.35%, and the five-year LPR rate – a reference for property mortgages – by 10 points to 3.85%. Additionally, PBOC said it will lower the collateral requirement for medium-term lending facility loans starting this month, with the intent of permitting banks to hold fewer longer-term bonds. The monetary policy measures came after Beijing’s long-term economic blueprint for China failed to inspire investor confidence (see next item) and were tied to PBOC’s resolve to rein in a bubble in bonds and steepen the yield curve.
Beijing’s blueprint for China fails to inspire investors... President Xi Jinping announced extensive plans to improve the finances of China’s indebted local governments, as the Communist Party unveils its long-term economic blueprint. The new measures include shifting more revenue from the central government to local governments, such as by increasing their share of consumption tax. This marks the third significant taxation and fiscal reform in recent history, following the 1994 reforms that increased central revenue and the 2013 changes that allowed local governments to issue bonds. The resolution also emphasized national security, suggesting it has been prioritized over economic concerns. It includes plans to potentially expand Beijing’s surveillance infrastructure by establishing a national unified population management mechanism. On fiscal reforms, China pledged to increase general transfer payments, gradually allow localities to receive more consumption tax, optimize the division of shared taxes, expand the use of local government special bonds, and allow localities to manage more non-tax incomes. Xi’s emphasis is on high-quality development, focusing on the quality of economic growth over its pace, and his ambitions to move China up the value chain through technological innovation.
Cattle on Feed Report: Placements less than expected... USDA estimated the large feedlot (1,000-plus head) inventory at 11.304 million head as of July 1, up 61,000 head (0.5%) from year-ago, though 23,000 head less than the average pre-report estimate implied. June placements declined 6.8%, while marketings dropped 8.7% – both falling more than anticipated – especially placements. The data is relatively neutral, though the placements number may attract some buying in deferred live cattle futures.
Massachusetts clarifies Question 3 impacting ground pork... The Massachusetts Department of Agricultural Resources (MDAR) updated clarification on Question 3, which significantly impacts the treatment of ground pork. MDAR’s recent update to its FAQ reverses its previous stance that ground pork must comply with Question 3. This follows extensive negotiations and discussions led by the National Pork Producers Council, including a meeting in January with coalition partners. The updated FAQ now states that ground pork and comminuted pork (diced, chopped, or cut into smaller pieces) are not covered by Question 3, as they are not considered whole pork meat.
Two new human cases of H5N1 in Colorado... The U.S. Centers for Disease Control and Prevention on Friday confirmed two additional cases of H5N1 virus in Colorado poultry farm workers. The two new cases were in poultry workers with exposure to infected poultry during depopulation and disposal activities, the CDC said. Earlier last week, Colorado confirmed four human cases of H5N1 in dairy workers, with a fifth suspected case.
Wholesale beef prices continue to fall, but movement remains strong... Wholesale beef prices fell another $2.32 for Choice to $313.83 and 66 cents for Select to $298.80 on Friday, while movement totaled 131 loads. Recent weakness in wholesale beef prices has triggered stronger retailer demand as movement averaged 141.4 loads last week.
Cash hog index rises again... The CME lean hog index is up 44 cents to $89.71 as of July 18, the fifth consecutive daily gain and the highest level since June 26. August lean hog futures finished Friday at a $1.865 premium to today’s cash quote.
Weekend demand news... The Philippines tendered to buy up to 240,000 MT of optional origin corn. Indonesia tendered to buy 320,000 MT of 5% broken grade white rice from Vietnam, Thailand, Myanmar, Cambodia and Pakistan.
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. Export Inspections — AMS
· 2:00 p.m. U.S. Bioenergy Statistics — ERS
· 3:00 p.m. Crop Progress — NASS