Good morning!
Wheat firmer, corn and beans weaker overnight... Wheat futures rebounded amid corrective buying overnight, while the corn and soybean markets pulled back from gains earlier this week. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 5 to 6 cents lower, winter wheat markets are 1 to 3 cents higher and spring wheat is mostly 7 cents higher. The U.S. dollar index is modestly firmer, while front-month crude oil futures are mildly weaker.
HRS tour forecasts record North Dakota yield... Scouts on the annual Wheat Quality Council HRS tour found an average yield of 54.5 bu. per acre after sampling fields across North Dakota the past three days. That’s the highest yield since tour records began in 1992. The yield was well above last year’s tour average of 47.4 bu. per acre and the five-year average (excluding 2020) of 42 bu. per acre.
French wheat crop ratings drop again, harvest lags... France’s ag ministry rated the country’s soft wheat crop as 50% good or excellent as of July 22, down two percentage points from the previous week and the lowest since 2016. Wheat harvest reached 41%, well behind average.
Obamas endorse Harris for president... Thursday’s endorsement of Vice President Kamala Harris by former President Barack Obama and Michelle Obama marks a significant moment in the Democratic presidential campaign. Obama’s regular contact with Harris, offering advice on campaign logistics, underscores the strong backing she has from the party’s influential members. Meanwhile, prominent Democratic donors and leaders in Arizona are urging Harris to choose Sen. Mark Kelly as her running mate. Polls indicate Kelly and Pennsylvania Governor Josh Shapiro are favorites among Democratic voters and donors. North Carolina Governor Roy Cooper and Kentucky Governor Andy Beshear are also being considered, offering Harris potential running mates with experience winning in red states.
China expands its EV factories in EU to skirt tariffs... China’s electric vehicle (EV) makers are expanding in Europe to blunt the impact of tariffs meant to weaken their price advantage over the region’s ailing legacy manufacturers, Bloomberg reported. With the EU hiking duties on Chinese EVs to as much as 48%, China’s new generation of green car manufacturers is teaming up with local industry so their cars are considered homegrown. Without these measures, Chinese EVs could become thousands of euros more expensive for consumers, or else unprofitable. The arrival of China’s EV makers is a risk for European auto giants, which have little choice but to strike partnerships and make space for their upstart rivals as they face shuttering some of their own sites to adjust to faltering global sales growth.
China’s 10-Year yield hits record low, testing PBOC’s patience... China’s benchmark government bond yield fell to a record low, testing policymakers’ resolve to stem the move. The yield on the 10-year sovereign note fell to 2.17% on Friday, below the 2.18% hit on July 1. Recent interest rate cuts by the People’s Bank of China (PBOC) to boost a flailing economy have undermined its efforts to guide longer-dated bond yields higher. The central bank sees excessively low yields as endangering financial stability and weighing on the yuan. A Bloomberg survey had suggested 2.25% was a red line for PBOC for the benchmark 10-year note.
China’s rate cuts sequence hints at reduced role for MLF... PBOC surprised markets this week by first cutting several key rates including loan prime rate (LPR) and reverse repo rate on Monday. It then conducted an unscheduled medium-term lending facility (MLF) lending operation on Thursday, at steeply lower rates. The series of moves show PBOC’s monetary framework has changed, Reuters reported, with the short-term repo rate becoming the primary signal and a diminished role for MLF. That would be a departure from the past as MLF rate changes have historically been a precursor to LPR and deposit rate changes. The central bank also introduced a new cash management tool earlier this month in the form of temporary bond repurchase (repo) agreements and reverse repos. PBOC is moving away from targeting money supply and towards the price of money. That means controlling short-term repo rates rather than the MLF, as the latter is used more to bridge funding shortfalls at banks.
Euro zone consumer inflation expectations stabilize... The European Central Bank’s Consumer Expectations Survey showed inflation is expected to average 2.8% over the next 12 months, stable from May after a steady fall from 3.3% in January. Inflation three years ahead was seen at 2.3%, also unchanged from the previous month.
More human cases of H5N1 in Colorado poultry workers... The Colorado Department of Public Health and Environment on Thursday announced three additional human cases of H5N1 virus among poultry farm workers. The three new cases involved poultry farm workers who were killing infected chickens at a Weld County egg farm.
Study: H5N1 spreads from birds to cows and other mammals... A recent study published in Nature provides evidence of H5N1 spreading from birds to dairy cattle and subsequently from cattle to other mammals, including cats and a raccoon, across several U.S. states. This marks one of the first documented instances of efficient and sustained mammalian-to-mammalian transmission of this highly pathogenic virus, according to Diego Diel, associate professor of virology at Cornell University. Whole genome sequencing of the virus did not show mutations enhancing its transmissibility in humans, though the occurrence of mammal-to-mammal transmission is concerning as it may adapt further. The study involved extensive genomic sequencing and epidemiological modeling, revealing cow-to-cow transmission and spread to other mammals, likely through environmental contamination or direct consumption of raw milk from infected cows. The research was conducted by a team from Cornell University and Texas A&M Veterinary Medical Diagnostic Laboratory.
Cash cattle strengthen... After light trade at steady prices earlier in the week, cash cattle activity picked up as prices firmed around $2.00 in the Southern Plains on Thursday. Bids remained scarce in the northern market, where supplies are tighter, though solidly firmer prices are now expected there.
String of cash hog gains extends... The CME lean hog index is up another 62 cents to $91.39 as of July 24, the highest since June 13. That’s the ninth straight day of gains in which the index has risen $3.01. The pork cutout value firmed $1.19 to $105.95 on Thursday, the highest since Aug. 18, 2023.
Overnight demand news... Exporters reported no tenders or sales.
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
· 2:00 p.m. Farm Production Expenditures — NASS
· 2:00 p.m. Peanut Prices — NASS
· 2:00 p.m. Peanut Stocks and Processing — NASS
· 2:30 p.m. Commitments of Traders — CFTC