Good morning!
Grains under pressure to start the week... Soybeans and wheat posted sharp losses during the overnight session, while corn followed to the downside. As of 6:30 a.m. CT, corn futures are trading mostly 3 cents lower, soybeans are 9 to 12 cents lower, winter wheat markets are 12 to 15 cents lower and spring wheat is 8 to 10 cents lower. The U.S. dollar index is trading just below unchanged and front-month crude oil futures are modestly firmer.
Wet in northern areas, dry elsewhere this week... The eastern Midwest, central and northern Delta and interior parts of the Southeast are forecast to be hot and dry this week. Wet weather and cooler temps are expected across the Northern Plains and upper Midwest. Nebraska and Kansas are forecast to receive some rains, while the Southern Plains is expected to be dry. Globally, western CIS crop areas will be plenty wet during the next 10 days to two weeks except in Russia’s Southern Region, eastern Ukraine and western Kazakhstan where conditions will be hot and mostly dry.
NOPA crush expected to rebound... The National Oilseed Processors Association (NOPA) is expected to report its members crushed 178.4 million bu. of soybeans in May, which would be up 5.3% from April and 0.2% from last year’s record for the month. Soyoil stocks at the end of May are expected to total 1.775 billion lbs., which would be down 3.1% from April and 5.2% below year-ago.
California’s water abundance fails to reach farms amid regulatory restrictions... California is experiencing an abundance of water following record-breaking rains that ended years of drought, but farmers in Central Valley, a crucial hub for fruit, vegetable, and agricultural exports, are set to receive only 40% of their federal water allocation this year. The Wall Street Journal reports this situation highlights the flaws in California’s extensive water-delivery system. U.S. and state regulators are restricting water access to protect endangered fish species like the migrating smelt and steelhead, forcing farmers to reduce crop plantings despite being surrounded by water. This regulatory decision has sparked significant controversy and threatens to disrupt the region just as it was beginning to recover.
Pakistan experiencing record levels of rice exports... Pakistan is capitalizing on trade restrictions imposed last year by India, the world’s largest exporter of rice. Pakistan, now the fourth-largest exporter, saw its rice exports surge nearly 60% from year-ago to almost 5.6 MMT in the 11 months up to May. The value of these exports rose to $3.6 billion from $2 billion in the previous year. Pakistan is expected to have another strong harvest this year, although farmers might face lower prices if India relaxes or ends its export restrictions following its elections.
The week ahead in Washington... It will be a relatively quiet week in Washington. The House is out this week for a week-long recess. The Senate is in session, but due to the Juneteenth holiday Wednesday, the chamber may only be in session Monday and Tuesday. The focus for agriculture will be this afternoon’s update on crop progress and conditions, along with Friday’s Cattle on Feed Report.
China keeps key lending rate unchanged... The People’s Bank of China (PBOC) kept the rate on 182 billion yuan ($25.08 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50%. With CNY 237 billion worth of MLF loans set to expire this month, the central bank drained a net CNY 55 billion of cash from the banking system. PBOC also injected 4 billion yuan through seven-day reverse repurchase operations and kept the seven-day interest rate steady at 1.8%.
China’s property woes worsen as new home prices fall at fastest clip in nearly 10 years... China’s new home prices in 70 cities decreased by 3.9% from year-ago in May, the biggest decline since June 2015. This was the 11th consecutive monthly decline, despite China unveiling a broad real estate rescue package last month. Prices dropped in 68 out of the 70 cities surveyed by the government.
China’s industrial production slows, retail sales expand... China’s industrial production rose 5.6% annually in May, easing from 6.7% growth the previous month. Output slowed for manufacturing and utilities, while activity accelerated for mining. China’s retail sales grew 3.7% from year-ago in May, accelerating from a 15-month low of 2.3% the previous month. This marked the 16th consecutive month of growth in retail trade and the sharpest since February.
China opens anti-dumping probe into EU pork... China has opened an anti-dumping investigation into imported pork and by-products from the European Union in response to tariffs on its electric vehicles. The products under scrutiny include fresh, cold and frozen pork, pork offal, pig fat without lean meat, and pig intestines, bladders and stomachs. The investigation will cover import activities from Jan. 1 to Dec. 31 of the previous year, with an industrial damage evaluation period spanning from Jan. 1, 2020, to Dec. 31, 2023. The commerce ministry said that the investigation should be completed by June 17, 2025, but could be extended another six months if required. European pork producers should be able to keep exporting to China tariff-free while the investigation is underway, pending a decision and a tariff announcement by Beijing.
Cattle cash fundamentals strengthen... Cash cattle prices firmed last week, as strengthening wholesale beef prices supported packer margins. Wholesale beef firmed $1.58 for Choice to $319.89 and $4.56 for Select to $303.81 on Friday, though movement slowed to 101 loads. Retailers should have the bulk of their features purchased for the Fourth of July, so traders will closely monitor beef movement for signs of a short-term top.
Cash hog index slips, pork cutout rebounds... The CME lean hog index is down 14 cents to $91.44 as of June 13, keeping prices in a tight range in the low $90.00 area for the past two months. After falling below the $100.000 level for a couple days, the pork cutout value jumped $4.33 on Friday to $101.35. Pork cutout has traded in a $3.00 band on either side of $100.00 for two-plus months.
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
- 10:00 a.m. Export Inspections — AMS
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
- 2:00 p.m. Potato Stocks — NASS
- 3:00 p.m. Crop Progress — NASS