Good morning!
Followthrough buying in grains overnight... Corn, soybean and wheat futures built on Thursday’s strong gains during overnight trade amid heightened crop concerns. As of 6:30 a.m. CT, corn futures are trading 9 to 12 cents higher, soybeans are 19 to 23 cents higher and wheat futures are mostly 5 to 8 cents higher. Front-month crude oil futures and the U.S. dollar index are both near unchanged.
Juneteenth holiday schedule... Grain and livestock markets will trade normal hours today. Markets and government offices are closed Monday, June 19, for the federal Juneteenth holiday. As a result, there will be no Pro Farmer market updates on Monday. Grain markets will reopen with the overnight session at 7:00 p.m. CT on Monday. Livestock markets will resume trade at 8:30 a.m. CT on Tuesday, June 20.
Russian lawmaker: ‘Impossible’ to extend grain deal under current conditions... It is “impossible” to extend the Black Sea grain deal under current circumstances, the speaker of Russia’s upper house of parliament, Valentina Matviyenko said, Interfax news agency reported. Matiyenko said “the limits of our patience... have been exhausted,” reiterating comments made earlier this week by President Vladimir Putin and other senior Russian officials. However, she also said it would be important to avoid exacerbating a food crisis for poorer countries. While Russian officials continue to bemoan the grain deal, a Kremlin official told Interfax an early withdrawal was unlikely.
French wheat crop ratings decline again... The condition of France’s wheat crop declined for the third week in a row amid dry conditions in northern growing areas. The ag ministry estimated 85% of the crop as good/excellent, down three points on the week but well above last year’s 65% rating at this time.
China to boost rural spending... China will direct more financial resources toward key areas and weak links in the rural economy, the People’s Bank of China (PBOC) said. PBOC outlined almost 30 measures aimed at backing a stronger agricultural sector, including financing major grain producers to expand their capacity and upgrade their equipment and technology. Financial institutions should also issue medium- and long-term loans to support key areas such as upgrading agricultural facilities and supporting the seed industry, as well as ensuring the production and supply of grain.
Major banks cut China GDP forecasts... Four major Western banks cut their 2023 gross domestic product (GDP) growth forecasts for China after weak May economic data. UBS (5.2% from 5.7%), Standard Chartered (5.4% from 5.8%), Bank of America (5.7% from 6.3%) and JPMorgan (5.5% from 5.9%) all lowered their economic outlooks for China this year.
Fed faces heightened challenge from contrasting monetary policy approaches... The central banks of the world’s three largest economic blocs had sharply contrasting approaches this past week, leading to increased confusion about the global economy and potentially making it harder for the Federal Reserve to control inflation. The euro zone raised rates, the Fed held them steady and China cut rates. Wall Street Journal’s James Mackintosh suggests the conflicting moves are due to economies increasingly operating under local rhythms, which affects currency values and weakens the U.S. dollar, further challenging the Fed’s efforts.
Summers sees ‘disturbing’ signs Fed Driven by internal politics... In an interview with Bloomberg Television, former U.S. Treasury Secretary Lawrence Summers expressed confusion over the Federal Reserve’s actions during its meeting this week. While the Fed decided not to raise interest rates on Wednesday, it added two rate hikes to its outlook for the rest of the year and boosted its growth forecast, which Summer finds inconsistent. Fed Chair Jerome Powell stated the central bank would benefit from more data before making any changes. The policy decision was unanimous, although some panel members were open to discussing a rate increase in June. Summers suggested that the meeting was influenced more by internal political dynamics than an accurate assessment of the economy. While Summers believes the Fed needs to maintain a posture of “moving towards restraint,” he doesn’t think the precise timing is critical. He commended the strong U.S. economic indicators, such as the robust consumer sector, strong employment data, and mixed but generally strong wage indicators. However, he also noted that clear evidence of an inflation slowdown has not yet emerged.
Euro zone inflation slows to 6.1% rise, in line with preliminary data... Eurostat confirmed its earlier estimates that consumer in the euro zone was 6.1% higher than year-ago in May, down from a 7.0% jump the previous month. The main contributor to consumer inflation was the cost of food, alcohol and tobacco, which added 2.54 points to the final figure. The second biggest contributor was the rising prices of services, adding 2.15 points, with industrial goods adding another 1.51 points.
Blinken visiting China this weekend... U.S. Secretary of State Antony Blinken will visit China this weekend to try to repair deteriorating ties between Washington and Beijing and maintain open lines of communication. The China visit, the first by a senior U.S. official since President Joe Biden took office, follows lower-level engagements and ongoing hostilities. While there, Blinken will discuss the importance of responsibly managing the U.S./China relationship, address bilateral issues of concern, and explore potential cooperation on global challenges. Senior U.S. officials do not expect significant breakthroughs, but aim to restore a sense of calm and normalcy to high-level contacts. The trip takes place amid escalating concerns about trade, industrial espionage, human rights and more. Following his meetings in Beijing, Blinken will travel to London for a Ukraine reconstruction conference.
Still waiting on active cash cattle trade... Cash cattle trade so far this week occurred at lower prices, though not enough traded for a true test. Packers are trying to buy cattle at lower prices after the recent string of record highs, but feedlots aren’t showing much interest in moving cattle at these levels. The average cash price will likely be lower this week, but movement is also expected to be light.
Pork cutout tops $90... The pork cutout value firmed another $1.16 on Thursday to $90.89, signaling an increase in retailer demand given hefty wholesale beef prices. The CME lean hog index also continues to strengthen, rising another 62 cents to $86.87 (as of June 14). After Thursday’s losses, the premium July hogs hold to today’s cash quote stood at $5.055.
Overnight demand news... Exporters reported no tenders or sales.
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
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Potato Stocks — NASS
- 2:30 p.m. Commitments of Traders — CFTC