Good morning!
Soybeans firm overnight, buying limited in corn and wheat... Soybeans posted corrective gains during the overnight session, while corn and wheat remained near their recent lows. As of 6:30 a.m. CT, corn futures are trading fractionally higher, soybeans are mostly 9 cents higher and wheat futures are fractionally to 2 cents lower. The U.S. dollar index is nearly 500 points lower and front-month crude oil futures are around $2.50 higher.
Fed comments will be in focus this afternoon... The Fed will conclude its two-day monetary policy meeting by keeping interest rates unchanged. Particular attention will be on the post-meeting comments and Chair Jerome Powell’s press conference to see if there are any strong indications of when the Fed will start cutting interest rates, which many believe will be in September.
Lawmakers tell Yellen to limit biofuel tax credit to domestic producers... A letter from a dozen Senators, including Democrats and Republicans, urged Treasury Secretary Janet Yellen to ensure that only domestic ingredients can receive biofuels tax credits. The bipartisan push underscores the mounting pressure on the Biden administration to halt the flood of foreign used cooking oil that lawmakers say threatens American farmers and the intention of President Joe Biden’s landmark climate law. “Allowing U.S. tax credits to fund the importation and use of foreign feedstocks to produce biofuels would put U.S. agriculture at the back of the line, while foreign agricultural producers are subsidized by U.S. taxpayers,” the letter stated. The senators are calling on Yellen to issue final guidelines for the Clean Fuel Production Credit, known as 45Z, under the Inflation Reduction Act before Jan. 1, when the tax incentive is set to take force. The lawmakers contend guidance for the current sustainable aviation fuel tax credit known as 40B, which expires at the end of this year, is flawed because no domestically produced ethanol can meet its requirements.
UGA cuts Ukraine’s 2024 grain and oilseeds crop forecast... Ukrainian grain traders union UGA cut Ukraine’s 2024 combined grain and oilseeds crop forecast by 2.8 MMT to 71.8 MMT due to a heatwave across the country. UGA said production could include 23.4 MMT of corn, 19.8 MMT of wheat, 4.95 MMT of barley, 12.8 MMT of sunseeds, 4.8 MMT of soybeans and 4.3 MMT of rapeseed.
Strong start to 2024-25 for Ukraine’s grain exports... Ukraine exported 3.4 MMT of grains during July, up sharply from 2.2 MMT during the month last year, based on ag ministry data. The volume included 1.44 MMT of wheat, 1.51 MMT of corn and 477,000 MT of barley.
Rains boost Aussie wheat production prospects... Rains across much of Australia this month have improved wheat production prospects, with private crop forecasters now calling for the crop to be as big as 30 MMT. In 2023-24, Australia produced 26 MMT of wheat. While production prospects have improved, demand from China is expected to weaken significantly.
Sinograin to increase domestic wheat storage... China’s state grains stockpiler Sinograin said it will continue to increase domestic wheat storage in the country’s main producing areas in 2024. It will also work with local governments to provide services for farmers to sell grain.
China to issue sliding tariff rate cotton import quotas to non-state firms... China will issue 200,000 MT in sliding tariff rate cotton import quotas to non-state firms to meet the needs of the domestic textile industry, state planner National Development and Reform Commission said. The announcement didn’t specify when the import quota will be issued. China issued 750,000 MT of such quotas in 2023.
China’s manufacturing sector extends slump in July... China’s official manufacturing purchasing managers index slumped to a five-month low of 49.4 in July, the third straight month of contraction in factory activity and the lowest reading since February. Factories continued to grapple with weak demand and low prices.
BOJ lifts rates, unveils plan to reduce bond buying regime... The Bank of Japan (BOJ) raised interest rates to 0.25%, the highest since 2008. That’s the largest increase in rates since a 25-basis point hike in February 2007. BOJ also announced a quantitative tightening plan that would halve monthly bond buying to 3 trillion yen ($19.6 billion) as of January-March 2026. The measure would diminish BOJ’s $3.9 trillion balance sheet by up to 8%, the central bank said, a sign it was stepping back from a controversial era of bond buying that began in 2013.
Euro zone consumer inflation unexpectedly increases... Annual consumer inflation in the euro zone increased 2.6% in July, up from a 2.5% rise the previous month and counter to the 0.1-point decline economists expected. Core inflation, excluding energy, food, alcohol and tobacco, held at 2.9% – also above expectations.
Expected slow start to cash cattle negotiations... After packers raised cash cattle bids and purchased a relatively large amount of cattle last week, expectations were this week’s trade would be pushed deep into the week. That’s indeed the case, as bids and asking prices haven’t surfaced. With showlists higher in Kansas, Nebraska and Colorado, most cash sources expect steady/weaker cash prices.
Cash hog index marks new seasonal top... The CME lean hog index is up another 30 cents to $92.59 as of July 29, eclipsing the mid-May high. Instead of what appeared at the time to be an earlier-than-normal seasonal peak, the cash index will now post a later-than-typical top. August lean hog futures finished Tuesday at a $1.39 discount to the cash index, suggesting traders sense a seasonal top will be posted soon.
Overnight demand news... Taiwan purchased 65,000 MT of Brazilian 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
· 9:30 a.m. Weekly Ethanol Production — EIA
· 1:00 p.m. FOMC Meeting Concludes — Fed
· 2:00 p.m. Agricultural Prices — NASS
· 2:00 p.m. Broiler Hatchery — NASS