Good morning!
Active followthrough selling in soybeans overnight... Soybean futures faced heavy pressure overnight after Friday’s sharp losses. Corn and wheat traded mildly lower overnight. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 15 to 24 cents lower, SRW wheat is mostly 4 cents lower, HRW wheat is fractionally lower and HRS wheat is 2 to 3 cents lower. The U.S. dollar index is nearly 200 points higher and front-month crude oil futures are 45 cents lower.
Generally favorable weather outlook for U.S. crops... Most areas of the Corn Belt are expected to receive rains this week, while there is no excessive heat in the forecast, as a ridge of high pressure will stay to the west. Northern and eastern areas of the Corn Belt will be wettest as rains move over the western heat dome. The Southern Plains will be hot, though some rains are likely. The Delta will be dry over the next 10 days, while the Southeast will see frequent rains.
India set to decide soon on sugar selling price, ethanol use... India will make a decision on sugar industry calls for a hike in the minimum selling price (MSP) in the coming days, a senior government official said, adding that ethanol policies would be set before the start of the next season. The sugar-processing industry has been demanding an increase in the minimum selling price, saying the government has raised the mandatory procurement price of sugarcane in recent years while the MSP has remained unchanged since 2019. India restricted the use of sugar in ethanol production during the 2023-24 marketing year that ends on Sept. 30 and also prohibited exports to keep a lid on domestic prices.
The week ahead in Washington... The House is out until Sept. 9, leaving just three weeks to avert a shutdown. The Senate is working this week, but history signals it could be a short session ahead of them leaving for the summer recess. On Thursday, the voting process to officially name Vice President Kamala Harris as the Democratic Party’s presidential nominee is expected to begin. Voting will be conducted by electronic ballots sent to convention delegates, and party officials have said their goal is to nominate presidential and vice-presidential candidates by Aug. 7. The Congressional Budget Office (CBO) score on the House Ag bill is expected to be released late this week. The economic focus will be Wednesday’s conclusion of the Fed’s monetary policy meeting. While interest rates will remain unchanged, some believe the Fed will convey plans to start easing monetary policy in September. Jobs data for July will be released on Friday.
Biden to propose overhaul of SCOTUS... President Joe Biden is set to propose a significant overhaul of the Supreme Court today, including the implementation of term limits for justices. However, the feasibility of these reforms faces a substantial challenge in the form of the Republican-controlled House.
China’s industrial profits strengthen in June... Profits earned by China’s industrial firms increased 3.6% annually in June, much faster than a 0.7% rise in May. Industrial profits rose 3.5% from year-ago to 3,511.03 billion yuan in the first six months of 2024. The latest figures came amid a fragile economic recovery in the face of sluggish domestic demand, deflation risks and a persistent property weakness. Profits by state-owned enterprises added 0.3% after falling 2.4% in the first five months of the year while those in private sector increased 6.8%.
China’s bond yields continue to drop, testing PBOC’s tolerance... China’s Yields on sovereign debt fell on Monday, with the rate on 30-year bonds dipping below 2.4% for the first time in nearly two decades and the benchmark 10-year sliding to a record low. The declines have sent yields way below levels where traders once suspected the People’s Bank of China (PBOC) would intervene by borrowing and selling bonds to reverse the moves.
Citi cuts China’s 2024 GDP growth forecast... Investment bank Citi revised down its forecast on China’s 2024 economic growth to 4.8% from 5% previously, after China’s growth missed analyst estimates in the second quarter. Data suggests that economic activity momentum softened further in July, Citi said in a note, adding it expects more property support from this week’s Politburo meeting.
China’s hog slaughter eases slightly in first half... China slaughtered 160.35 million head of hogs in the first half of the year, down 0.7% from the same period last year. China’s sow herd stood at 40.38 million head at the end of June, down 6.0% from last year.
Wholesale beef prices firm, though movement slows... Wholesale beef prices firmed $1.31 for Choice to $313.77 and $2.35 for Select to $297.26 on Friday, though movement slowed to 101 loads. The slowdown in movement amid the higher prices suggests retailers may become more selective buyers after recent strong purchases.
Cash hog index continues to strengthen... The CME lean hog index is up another 46 cents to $91.85 as of July 25, extending the string of gains to 10 days. During that span, the cash index has risen $3.47 and is just 44 cents below the mid-May peak. The pork cutout dropped 78 cents on Friday to $105.17.
Weekend demand news... Taiwan tendered to buy 65,000 MT of corn from the U.S., Brazil, Argentina or South Africa. Tunisia tendered to buy 125,000 MT of soft milling wheat and 50,000 MT of durum – all optional origin.
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. Livestock and Meat Domestic Data — ERS
· 2:00 p.m. Egg Products — NASS
· 3:00 p.m. Crop Progress — NASS