Good morning!
Grains weaker overnight... Corn, soybeans and SRW wheat pulled back from yesterday’s gains during overnight trade, while HRW and HRS wheat extended their losses. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents lower, soybeans are 7 cents lower, winter wheat markets are 5 to 6 cents lower and spring wheat is 3 cents lower. The U.S. dollar index is around 350 points higher and front-month crude oil futures are trading just above unchanged.
Brazilian beef tallow a growing competitor to domestic soyoil for biofuels production... U.S. purchases of Brazilian beef tallow climbed 377% versus year-ago in the first four months of 2024, accounting for nearly all of the 40% increase in overall tallow imports during that period. U.S. biofuels makers are turning to cheaper overseas waste fat and used cooking oil (UCO) to produce biofuels. “As long as the rules are the way they are these biofuel companies are going to use whatever is cheapest,” John Baize, an independent analyst who also advises the U.S. Soybean Export Council, told Bloomberg. A bigger federal tax credit will also start next year, with tallow and used cooking oil generally more lucrative feedstocks than U.S.-based soyoil.
ASA raises concerns over California locomotive regulation... The American Soybean Association (ASA) expressed concerns about the California In-Use Locomotive Regulation. The regulation, issued by the California Air Resources Board (CARB), mandates a shift to zero-carbon rail propulsion technologies by 2035, phasing out non-electric locomotives. ASA emphasizes the need to address the regulation’s potential adverse effects on the agricultural industry through sustainable transportation practices and biofuel innovation. ASA noted the financial and operational impacts on freight rail carriers and their customers, including soybean farmers, due to potential increased transportation costs and operational inefficiencies. ASA underscored the importance of biomass-based diesel in reducing carbon emissions and noted the ongoing transition of Class I railroads to biodiesel and renewable diesel blends.
Ukraine raises grain production forecast... Ukraine’s ag ministry raised the country’s grain production forecast to 56 MMT, including 28.5 MMT of corn, 21 MMT of wheat and 5 MMT of barley, up 3.6 MMT from its prior outlook. The ministry forecasts oilseed production at 22 MMT, including 13 MMT of sunflower seeds, 4 MMT of rapeseed and a record 5 MMT of soybeans. The ministry expects Ukraine to export 43 MMT of grain in 2024-25, including 25 MMT of corn and 15 MMT of wheat, and 17 MMT of oilseeds and oilseed products.
French wheat ratings hold... France’s ag ministry rated the country’s soft wheat crop as 62% good or excellent as of June 10, unchanged from the previous week and the lowest for the date since 2020. Winter barley conditions increased two points to 65% good/excellent. In the first production forecast for this year, the ag ministry projected the winter barley crop would fall nearly 11% from year-ago.
New Iowa fertilizer plant opens... The $15 million, 75,000-square-foot fertilizer facility, owned by Landus Cooperative, aims to lower costs for local farmers, reduce greenhouse gas emissions, and support local businesses. The facility’s construction was partially funded by a $5 million grant from USDA, as part of a federal initiative to expand domestic fertilizer production. Besides producing fertilizer, the facility will create adjuvants and soil products and store millions of bushels of corn, other grains and soybeans. It also features a green ammonia production section in partnership with TalusAg, which helps reduce the facility’s carbon footprint without requiring operational changes from farmers.
Japan keeps rates steady, plans to start trimming balance sheet... The Bank of Japan (BOJ) kept its short-term policy rate target in a range of 0% to -0.1%. BOJ said it would start trimming its 6 trillion yen ($38 billion) monthly bond-buying program, though detailed plans of the balance sheet unwinding won’t be announced until next month. This marks a critical step in unwinding its ultra-loose monetary policy and tapering its expanded balance sheet. BOJ Governor Kazuo Ueda also said he would not rule out raising interest rates in July as weakness in the yen pushes up import costs.
G7 vows action against ‘unfair’ Chinese business practices... Leaders of the Group of Seven (G7) wealthy democracies vowed to “continue to take actions to protect our businesses from unfair practices, to level the playing field and remedy ongoing harm,” by China, according to a draft summit statement. They also called on China “to refrain from adopting export control measures, particularly on critical minerals.”
China’s new bank loans rise less than expected in May... Chinese banks issued 950 billion yuan ($130.93 billion) in new yuan loans last month, up from 730 billion yuan in April but far below expectations and 1.36 trillion in May 2023. For the first five months of the year, new loans totaled 11.14 trillion yuan. Outstanding yuan loans in China rose 9.3% from a year earlier in May, the lowest on record. Total social financing, a broad measure of credit and liquidity, rose to 2.070 trillion yuan.
Chinese firms seek anti-dumping probe of EU pork imports... Chinese firms have formally applied for an anti-dumping probe into pork imports from the European Union, the state-backed Global Times reported. It was unclear which pork products would be targeted and the report did not name any companies, citing a “business insider” as the source of its information. The probe follows Brussels slapping tariffs of up to 38.1% on Chinese electric vehicles (EVs). China imported $6 billion worth of pork in 2023, including offal, with the EU accounting for more than half.
Cash cattle trade higher... Cash cattle trade developed Thursday in the Southern Plains at $1.00 to $2.00 higher prices than last week. Some feedlots in the Southern Plains and most in the northern market continued to pass on those bids in hopes of even stronger prices.
Pork cutout falls again... The pork cutout dropped another $1.99 on Thursday to $97.02 amid heavy pressure on all cuts but hams and picnics. More concerning is a slowdown in pork movement the past two days despite heavy price pressure.
Overnight demand news... Egypt purchased 22,500 MT of vegoils from an unspecified 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
- 11:00 a.m. Cotton and Wool Outlook: June 2024 — ERS
- 11:00 a.m. Oil Crops Outlook: June 2024 — ERS
- 2:00 p.m. Feed Outlook: June 2024 — ERS
- 2:00 p.m. Rice Outlook: June 2024 — ERS
- 2:00 p.m. Wheat Outlook: June 2024 — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Turkey Hatchery — NASS
- 2:30 p.m. Commitments of Traders — CFTC