Good morning!
No overnight grain trade... Grain and livestock markets resume trading at 8:30 a.m. CT and will have regular closes. Aside from this report, we will only publish “After the Bell,” briefly highlighting today’s price action.
Favorable weather for Corn Belt... Periodic rainfall and mild to seasonal temperatures are expected across the Corn Belt over the next week. Timely rains are forecast for the Delta and Southeast. While some northern areas of the Corn Belt will remain excessively wet, overall conditions are likely to be favorable for the corn crop as pollination starts. Forecasts signal the Plains and western Corn Belt will trend drier during the second half of July, though moisture stress is not expected.
Export sales data for the week ended June 27...
· Corn: Net sales of 357,200 MT for 2023-24, down 34% from the previous week and 57% below the four-week average. Net sales of 311,500 MT for 2024-25. Traders expected sales of 500,000 to 900,000 MT for 2023-24 and 0 to 400,000 MT for 2024-25.
· Soybeans: Net sales of 228,400 MT for 2023-24, down 19% from the previous week and 32% below the four-week average. Net sales of 150,300 MT for 2024-25. Traders expected sales of 200,000 to 600,000 MT for 2023-24 and 50,000 to 150,000 MT for 2024-25.
· Wheat: Net sales of 805,300 metric tons (MT) for 2024-25. Traders expected sales of 350,000 to 700,000 MT.
· Beef: Net sales of 15,500 MT for 2024, down 8% from the previous week but up 6% from the four-week average.
· Pork: Net sales of 59,100 MT for 2024, marketing-year high. Sales rose 51% from the previous week and were 96% above the four-week average.
Ag trade posts record deficit in May... The U.S. exported $13.74 billion of agricultural goods in May against imports of $18.01 billion, resulting in a deficit of $4.27 billion, the largest monthly deficit on record. During the first eight months of fiscal year (FY) 2024, U.S. ag exports stood at $122.35 billion, while imports totaled $137.57 billion for a deficit of $15.22 billion. USDA forecasts ag exports at $170.5 billion and imports at $202.5 billion for FY 2024, which would imply a record deficit of $32.0 billion.
Jobs growth slows but stronger than expected... The U.S. economy added 206,000 jobs in June, slightly below the revised 218,000 figure for May but above expectations of 190,000. unemployment unexpectedly climbed to 4.1%. Average hourly earnings increased 3.9% over the past year. The jobs report indicates a resilient but gradually slowing labor market. The Federal Reserve will likely take a cautious approach, closely monitoring upcoming economic data before easing monetary policy, though traders priced in slightly greater odds of an interest rate cut in September following the jobs report.
French wheat conditions decline... France’s ag ministry rated the country’s wheat crop as 58% good or excellent as of July 1, down two percentage points from the previous week and the lowest for the date since 2020. Crop institute Arvalis and grain industry group Intercereales forecast France’s wheat yield at 6.4 MT per hectare, down 13% from last year and 11% below the 10-year average. They forecast an average protein level of 11.6%, about equal to last year.
China warns prolonged heatwave may damage rice, cotton crops... China’s weather bureau warned a prolonged heatwave forecast in the country’s eastern, central and southern regions may hurt production of rice and cotton. The China Meteorological Administration (CMA) said it expected temperatures in most areas across the country to be relatively high over the next few months, signaling a second consecutive summer of extreme heat. Summer temperatures in regions including Zhejiang, Jiangxi, Hunan, Fujian, Guangdong, Guangxi, Gansu and Ningxia are expected to be 1 to 2 degrees Celsius (1.8 to 3.6 degrees Fahrenheit) above normal, CMA said.
China allocates funds to support agricultural production, disaster relief... Beijing allocated 546 million yuan ($76.57 million) to support agricultural production and disaster relief in parts of the country, the finance ministry announced. Some 447 million yuan will be spent on flood relief in the agricultural sector in regions such as Heilongjiang, Anhui, Fujian, Hunan and Guangdong, with funds used for crop replanting, the repair of damaged facilities and floodwater drainage. A total of 99 million yuan will go to Inner Mongolia and various other regions to support drought relief in agricultural production, particularly to protect seedlings, maintain soil moisture and facilitate the purchase and transport of forage and feed.
Provisional EU tariffs on Chinese EV imports... Provisional EU tariffs on Chinese electric vehicles kicked in today. SAIC Motor Corp. will face a 37.6% tariff in addition to the existing 10% rate, while Geely and BYD Co. will face additional tariffs of 19.9% and 17.4%, respectively. China’s state-backed Global Times urged the EU to “show sincerity” in technical talks on the issue. Beijing has repeatedly called on the EU to cancel its tariffs, expressing a willingness to negotiate. China does not want to be embroiled in another tariff war – with U.S. tariffs on its goods continuing – but said it would take all steps to protect Chinese firms.
PBOC readies multibillion-yuan pool of bonds to sell... The People’s Bank of China (PBOC) said it has hundreds of billions of yuan worth of medium- and long-term bonds at its disposal to borrow, after signing agreements with several major financial institutions. The central bank said it would borrow the bonds on an open-ended unsecured basis and sell them depending on market conditions. China’s sovereign bonds have surged this year on the back of the country’s gloomy economic outlook and expectations for interest rate cuts. However, PBOC has been pushing back against the rally, warning investors of the potential for losses should the market reverse. The central bank sees excessively low yields as endangering financial stability and weighing on the yuan.
FAO food price index unchanged in June... The UN Food and Agriculture Organization global food price index was the same in June as the revised reading for May, the prices for vegoils, sugar and dairy products balanced out a decrease in cereal grains, while the meat index was near steady. The June index declined 2.0% from last year. Compared to year-ago, prices declined 1.8% for meat, 9.0% for cereal grains and 21.6% for sugar, while dairy prices rose 6.6% and vegoils increased 13.8%.
Still awaiting active cash cattle trade... Packers’ inquiry into buying cattle picked up Wednesday, but bids remained well below feedlots’ asking prices. The limited cash trade that took place wasn’t enough for a true market test. After three weeks of strong trade, it’s possible this week’s activity will be light.
Cash hog index firms, pork slips... The CME lean hog index is up 14 cents for a second day in a row to $89.45 as of July 2. The pork cutout value dropped 69 cents on Wednesday to $93.63.
Holiday demand news... Japan purchased 129,660 MT of milling wheat, including 59,670 MT U.S., 34,600 MT Canadian and 35,390 MT Australian. Tunisia purchased 100,000 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
· 7:30 a.m. Weekly Export Sales — FAS
· 7:30 a.m. Employment Situation — BLS
· 11:00 a.m. Livestock and Meat International Trade Data — ERS
· 2:00 p.m. Peanut Prices — NASS