Good morning!
Grains mostly firmer this morning... Two-sided trade was seen in grain markets overnight, but prices have turned firmer with the exception of SRW wheat. As of 6:30 a.m. CT, corn futures are trading mostly 4 to 5 cents higher, soybeans are 2 to 6 cents higher, SRW wheat is 7 to 8 cents lower, HRW wheat is 5 to 6 cents higher and HRW wheat is mostly 4 to 5 cents higher. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is around 400 points lower.
Export sales data pushed back to Friday... Due to Tuesday’s government holiday, export sales data for the week ended June 29 will be released Friday morning.
Romania’s Constanta port ‘suffocating’ in grain... Romania’s port at Constanta is expected to set volume records for grain exports this year as a heavy flow of Ukrainian grain moves through with the Black Sea grain deal hanging in the balance. “Exporters are already no longer signing contracts with Constanta delivery for July-August, there is no more room, a lot of grain is expected to arrive,” Cezar Gheorghe of Romanian grain market consultancy AGRIColumn told Reuters. Constanta’s storage capacity could also be strained by domestic supplies after harvest, along with the flow of Ukrainian grain.
French wheat yield expected to be above average despite late dryness... France’s wheat yield expected to be 5% above the 10-year average at 7.5 MT per hectare, crop institute Arvalis and grain industry group Intercereales forecast. The groups expect production to be about 35.8 MMT, which would be up 2.1 MMT from last year, based on their yield forecast and the ag ministry’s acreage estimate. Protein is expected to be 11.4%, in line with the 10-year average.
European Commission releases proposal on gene-edited crops... The European Commission introduced a proposal that takes steps towards relaxing regulations for certain gene-edited crops. This measure is part of an agricultural and food sector sustainability package, including rules for newly defined “New Genomic Techniques” (NGTs). These techniques involve advanced tech that allows for faster and more precise gene-editing in plants, with the potential to produce crop varieties resistant to drought and pests. The Commission claimed the current GMO rules are not suited for the range of products potentially derived from gene editing. Thus, the new proposal categorizes NGTs into two groups. Category 1 includes gene-edited products with genetic changes comparable to changes that could occur naturally or be created through standard breeding methods. These products would avoid extensive GMO risk assessments and would not be labeled as GMOs. Category 2 includes products with more elaborate genetic changes, which would still be assessed under current GMO regulations. Notably, the final proposal does not group herbicide tolerant NGT plants under Category 2, a change from the leaked plan draft. The proposal will be further debated by the European Parliament and the Council of Ministers. While production agriculture entities advocate for the plan, environmental groups express concern and argue for rigorous testing requirements for all NGTs, like those in place for GMOs.
Yellen kicks off meetings in China... Treasury Secretary Janet Yellen arrived in Beijing on Thursday, beginning a four-day visit expected to focus on increasing ties between the world’s two largest economies. However, both sides have indicated they are skeptical the visit will ease tensions between the two countries. Yellen will emphasize the need to work with Beijing on climate change, pandemic preparedness and debt distress, a senior U.S. Treasury official said. She will also tell her Chinese counterparts that Washington is not seeking to decouple the two economies, while reserving the right to protect human rights and U.S. national security interests through targeted actions.
Tai meets with North American trade officials in Mexico today and Friday... Talks today and Friday between U.S. Trade Representative Katherine Tai, Canadian Trade Minister Mary Ng and Mexican Economy Minister Raquel Buenrostro in Cancun, Mexico, will allow them to assess the state of the U.S.-Mexico-Canada Agreement (USMCA) and discuss a series of disputes. Issues include U.S. and Canadian concerns about Mexican energy and biotech policies, U.S. concerns on Canadian dairy barriers and Canadian objections to U.S. softwood lumber duties. Another issue is auto rules of origin regulations. Canada and Mexico previously contested the Trump administration’s approach to implementing these rules, arguing the U.S. interpretation was more burdensome than originally negotiated. Even though they won the case in December 2022, the Biden administration has yet to modify the approach, inviting possible retaliation from Canada and Mexico. USTR officials said that while the issues on biotechnology, dairy and energy may come up during the discussions, the dispute settlement process was the “primary” venue for such discussions. “While there are areas of disagreement, of course, some of which may come up in these bilateral meetings, they do not outweigh the productive nature of our trade relationship,” an official said. The official said those items are not “walled off” from being discussed, the primary format on those topics is the consultations that are ongoing.
PBOC pledges yuan support... China’s currency has weakened too fast for its central bank. The People’s Bank of China (PBOC) has pledged to “resolutely guard against the risk of sharp fluctuations in the exchange rate,” according to minutes of its second-quarter policy meeting.
House hearing on ESG next week... The House Financial Services Committee will inspect standards of environmental, social, and governance (ESG) investing in an upcoming hearing on July 12. This comes following the Republican ESG Working Group’s publication of an interim report last month, outlining lawmakers’ top concerns and major issues relating to the impact of ESG policies on capital markets. The report suggests the administration may be using financial regulatory bodies to push its ESG-related policy priorities onto private businesses. Furthermore, lawmakers in the report stressed the importance of maintaining corporate boardrooms free from partisan politics to ensure that political agendas do not overrun effective financial management. This hearing will further explore these concerns and the broader implications of ESG investing.
Quiet on the cash cattle front... Despite the shortened week, packers failed to establish initial cash cattle bids on Wednesday. Cash sources are split on whether prices will drop again or break the three-week string of losses. If there’s active followthrough selling from Wednesday’s sharp losses in cattle futures, it could convince feedlots to sell hedged cattle at lower prices despite tight supplies.
August hogs now premium to cash hog index... Summer-month lean hog futures surged more than $3.00 on Wednesday amid strengthening techincals and the steadily rising cash hog index. August hogs extended Tuesday’s breakout above the neckline of the inverted head-and-shoulders formation that projects to an eventual test of the contract high. That pushed the contract to a $2.77 premium to the CME lean hog index, which is up another 37 cents to $94.68 (as of July 3).
Overnight demand news... Japan purchased 115,717 MT of wheat in its weekly tender, including 58,897 MT U.S. and 56,820 MT Canadian. Taiwan purchased 56,000 MT of U.S. milling wheat. South Korea passed on a tender to buy up to 70,000 MT of optional origin 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
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Dairy Products — NASS