Good morning!
No overnight trade... There was no overnight grain trade due to Tuesday’s federal holiday. Grain and livestock markets will resume trade at 8:30 a.m. CT.
More rain chances... There will be multiple rain chances across the central U.S. into mid-July. World Weather Inc. says rains will be sufficient to support crops across the Central Plains and lower Midwest over the next 10 days, while amounts will be limited for the Northern Plains and upper Midwest.
Consultant leaves corn, bean yields unchanged... Weekend rainfall and forecasts for more rains into mid-July will ease some of the immediate moisture concerns. As a result, crop consultant Dr. Michael Cordonnier left his corn and soybean yield forecasts at 175 bu. and 50.5 bu. per acre, respectively. He adopted USDA’s acreage estimates from the June 30 Acreage Report. Cordonnier now forecasts production at 15.10 billion bu. for corn and 4.17 billion bu. for soybeans.
Corn CCI rating inches higher but still well below year-ago and average... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 1.8 points to 339.6, though that was still 24.5 points (6.7%) under year-ago. The soybean crop dropped another 1.1 points to 328.5, which was 26.4 points (7.4%) below last year at this time. The spring wheat crop fell another 4.8 points to 333.5, which was 34.9 points (9.5%) lower than last year on this date. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of July 2.
- Corn: 8% silking (9% average); 51% good/excellent (50% last week).
- Soybeans: 24% blooming (20% average); 4% setting pods (2% average); 50% good/excellent (51% last week).
- Cotton: 42% squaring (42% average); 11% setting bolls (11% average); 48% good/excellent (49% last week).
- Spring wheat: 51% headed (46% average); 48% good/excellent (50% last week).
- Winter wheat: 37% harvested (46% average).
Mexico expects bigger corn crop... Mexico’s ag ministry expects the country to produce 28.5 MMT of corn this year, which would be up more than 2 MMT from last year. The country’s output is expected to consist of 24.9 MMT of white corn and 3.61 MMT of yellow corn. The ministry attributed the increase to its free fertilizer program for small-scale farmers.
Russia: No decision yet on grain deal but no ground for extending... Russia said it has not made a final decision about whether to extend the Black Sea grain deal, which is due to expire on July 17. While there is still time for the West and United Nations to fulfill Russia’s demands for removing obstacles to its grain and fertilizer exports, a Kremlin spokesperson said “there are no particular grounds for extending this deal.” The Financial Times reported on Monday the European Union was considering a proposal for the Russian Agricultural Bank (Rosselkhozbank) to set up a subsidiary to reconnect to the global financial network, as an incentive for Moscow to extend the deal. Russian Foreign Ministry spokeswoman Maria Zakharova rejected that idea on Tuesday, saying there was no substitute for restoring Rosselkhozbank’s full access to SWIFT. Top UN trade official Rebeca Grynspan says she may visit Moscow prior to July 17.
A new U.S./China trade war?... Beijing announced export controls on gallium and germanium — two obscure minerals key to the production of semiconductors on Monday. And now the Biden administration is set to restrict Chinese companies’ access to U.S. cloud-computing services that use AI chips. Gallium and germanium both feature on the U.S. government’s list of minerals “critical to the U.S. economy and national security.” Chinese state-run newspaper the Global Times said it shows “China will not be passively squeezed out of the global semiconductor supply chain.” A former Chinese vice commerce minister described it as a “well-thought-out heavy punch.” Chinese President Xi Jinping urged countries to avoid decoupling and cutting international supply chains, just a day after announcing the export controls. Treasury Secretary Janet Yellen’s visit to China Thursday is another sign that both sides want progress.
China state lenders again cut dollar deposit rates... China’s major state banks cut rates for the nation’s $453 billion corporate U.S. dollar deposits for the second time in a matter of weeks, as authorities intensify measures to shore up the struggling yuan. Interest rates offered by the “Big Five” state-owned lenders on most dollar deposits are now capped at 2.8%, down from 4.3% previously, while at least four other banks removed the spread they previously offered over the U.S. Secured Overnight Financing Rate for corporate clients.
Goldman downgrades Chinese banks... Goldman Sachs downgraded three of China’s top banks on Wednesday, deepening worries with the banking sector and the country’s weakening economy. The firm downgraded Agricultural Bank of China from “Neutral” to “Sell,” and cut both Industrial and Commercial Bank of China and Industrial Bank from “Buy” to “Sell.”
Euro zone PPI declines... The euro zone producer price index (PPI) declined 1.5% annually during May. This marked the first drop in producer prices since December 2020. One of the key factors driving this drop was a considerable decrease in energy costs, which fell 13.3%, along with a 1.5% drop in the cost of intermediate goods. Without counting energy, producer price inflation slowed to 3.4% year-on-year in May, a decline from the 5.1% rise noted in April.
ERP 2 payments nearing $2 million.... Payments for Phase 2 of the Emergency Relief Program (ERP) reached $1.853 million as of July 2, with a total of 961 recipients receiving these payments. Furthermore, USDA has decided to extend the signup period for this phase of the program. Originally scheduled to end on June 2, the signup date has been moved to July 14, giving more time for potential recipients to enroll.
China to shuffle pork reserves... China plans to sell 28,750 MT of frozen pork stocks from state reserves on July 7. It plans to buy a similar amount of pork for state stockpiles.
Packers may have to pay up for cattle this week... Packers have fresh contract supplies available but are thought to be short-bought on cattle coming out of the holiday following a couple weeks of light purchases. With only three days to wrap up cattle negotiations, packers’ level of activity today should signal whether cash prices will weaken again or break the three-week slide.
Cash hog fundamentals continue to strengthen... The CME lean hog index continues to strengthen seasonally, firming to $94.31 as of June 30. The pork cutout value jumped $5.55 on Monday to $108.00. Rising cash fundamentals are supporting lean hog futures as summer-month contracts continue to trade at discounts to the cash index.
Holiday demand news... Algeria purchased between 200,000 and 250,000 MT of durum wheat expected to be sourced mostly from Mexico. Thailand purchased 60,000 MT of feed wheat expected to be sourced from Romania or Bulgaria. South Korea passed on a tender to buy up to 69,000 MT of optional origin corn. Taiwan tendered to buy 56,000 MT of U.S. milling wheat. Japan is seeking 115,717 MT of milling wheat in its weekly tender and tendered to buy 60,000 MT of feed wheat and 20,000 MT of feed barley. Tunisia tendered to buy 100,000 MT of soft milling wheat and 100,000 MT of durum wheat.
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
- No reports scheduled.