Good morning!
Grains under pressure to open the week... Corn, soybeans and wheat posted moderate to sharp losses during the overnight session. As of 6:30 a.m. CT, corn futures are trading mostly a nickel lower, soybeans are 13 to 17 cents lower, SRW wheat is 7 to 8 cents lower, HRW wheat is 9 to 12 cents lower and HRS wheat is mostly 7 cents lower. The U.S. dollar index is modestly firmer, while front-month crude oil futures are around 75 cents lower.
Beryl makes landfall early this morning... Beryl built into a hurricane before making landfall along the Texas Gulf Coast between Houston and Galveston shortly before dawn. World Weather Inc. says the storm should move steadily to the north and eventually to the northeast after landfall spreading torrential rain, flooding and windy conditions through eastern Texas to southeastern Missouri and southern Illinois. Damage to agricultural areas is expected to be limited.
Heat builds, rains ease... After remnants from Beryl move up through the Mid-South and eastern Corn Belt early this week, a period of drier weather is expected across the central United States. Hot temps will move into the Plains and possibly the western Corn Belt by late this week and early next week.
The week ahead in Washington... Lawmakers return from last week’s recess with a focus on fiscal year 2025 appropriations. The White House is in defense mode with President Joe Biden defiant about remaining in the 2024 presidential race, despite a rising number of calls for him to withdraw. Fed Chair Jerome Powell will deliver two days of testimony before Congressional panels, starting on Tuesday with the Senate Committee on Banking and then the House Financial Services Committee on Wednesday. U.S. consumer inflation data will be released on Thursday, with producer prices slated for Friday. USDA’s updated balance sheets on Friday will reflect adjustments to old-crop demand forecasts based on June 1 stocks. There will be major changes on the new-crop balance sheets to reflect planted acreage figures. USDA’s first all-wheat crop estimate will include survey-based forecasts for other spring wheat and durum.
Another green bubble is deflating in biofuels... Bloomberg Opinion columnist Javier Blas said, “After the stock market debacle for wind companies in 2023, the biofuel sector is the next deflating green bubble. The industry is battling several problems: significant cost overruns and engineering shortcomings, and a glut of biofuels as rosy forecasts for demand never materialized. Oil consumption, instead, is rising. Biofuel margins have tumbled.” Blas says the rush to build biofuel plants, particularly in China, has created a wave of supply that has depressed prices elsewhere, hurting the profitability of projects. U.S. and European companies complain about unfair Chinese competition — another sign of the geopolitical green rivalry.
China takes more control over interest rates... The People’s Bank of China said it would start conducting temporary bond repurchase agreements or reverse repos to make open market operations more efficient and keep banking system liquidity ample. This effectively narrows the corridor within which short-term rates can fluctuate, with the seven-day reverse repo rate serving as a central guide, giving the central bank more leeway to manage cash conditions and interest rates amid strong demand for bonds.
Euro zone investor morale declines after eight months of increases... Investor morale in the euro zone deteriorated more than expected in July, ending eight consecutive months of increases, according to the Sentix index. The survey suggests investors are concerned about the French elections, German regional elections and uncertainty surrounding the U.S. presidential election in November. Views of the German economy, Europe’s largest, also deteriorated in July.
Beef, pork exports slow during May... The U.S. exported 258.9 million lbs. of beef during May, down 589,000 lbs. (0.2%) from April and 7.8 million lbs. (2.9%) less than last year. Pork exports totaled 584.7 million lbs., down 71.2 million lbs. (10.9%) from April and 35.0 million lbs. (5.7%) less than last year. According to the U.S. Meat Export Federation, the value of beef exports totaled $902.4 million in May, the highest since June 2023, while the value of May pork exports at $715.8 million fell 2%. Through the first five months of the year, beef exports totaled 1.251 billion lbs., down 64.5 million lbs. (4.9%) from the same period last year. Pork shipments through May reached 3.043 billion lbs., up 171.0 million lbs. (6.0%) versus the first five months of 2023.
China’s sow herd declines, slaughter builds... China’s sow herd totaled 39.96 million head at the end of May, according to the ag ministry, down 6.2% from last year. Hog slaughter during the first five months of the year rose 0.8% to 136.04 million head.
Wholesale beef prices continue to firm... Wholesale beef prices firmed 59 cents for Choice and 68 cents for Select on Friday, though movement slowed to 89 loads. Traders will focus on wholesale prices and movement as the post-Fourth timeframe is typically slower for beef demand.
Cash hog index drops, pork cutout firms... The CME lean hog index is down 25 cents to $89.20 as of July 4, ending two days of mild gains. The pork cutout value firmed $1.28 on Friday amid strength in all cuts except ribs, pausing its recent price slide.
Weekend demand news... Jordan tendered to buy 120,000 MT of optional origin milling wheat. Algeria tendered to buy a nominal 50,000 MT of optional origin soft milling 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
· 10:00 a.m. Export Inspections — AMS
· 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
· 3:00 p.m. Crop Progress — NASS