Good morning!
Corn weaker, beans and wheat mixed overnight... Corn futures are extending losses early this morning, while beans and wheat are mixed. As of 6:30 a.m. CT, corn futures are trading 3 to 8 cents lower, soybeans are 3 cents lower to a penny higher, SRW wheat futures are steady to 2 cents higher, HRW wheat is fractionally to a penny lower and HRS wheat is narrowly mixed. Front-month crude oil futures are more than $1.00 higher and the U.S. dollar index is modestly weaker.
Senate clears debt-limit measure... The Senate late Thursday passed the bipartisan Fiscal Responsibility Act to suspend the nation’s borrowing limit until early 2025 and cap future spending, sending the legislation to President Joe Biden’s desk just days to go before a potential U.S. debt default. The Senate struck down all 11 amendments to the bill proposed by senators in 11 straight votes before the bill’s final passage. Besides the amendment votes, Republicans demanded Majority Leader Chuck Schumer (D-NY) commit to bringing up all 12 appropriations bills this year to avoid an across-the-board spending cut called for in the legislation. Schumer noted the debt ceiling bill will not constrain efforts to pass emergency aid packages for Ukraine and respond to national security threats such as China. It also doesn’t limit the Senate’s ability to appropriate emergency supply supplemental funds to respond to various national issues, such as disaster relief.
U.S. signs trade agreement with Taiwan; China reacts negatively... U.S. Trade Representative Katherine Tai signed the agreement under an initiative that started about a year ago, strengthening and deepening economic trade ties with Taiwan. It also pledges to facilitate bilateral trade and investment flows, improve the regulatory process, encourage cooperation of trade and customs enforcement and establishes a foundation to overcome trade challenges and advance new trade opportunities. China says the agreement violates the One-China principle and three China/U.S. joint communiques. Of note, the U.S./China Phase 1 deal is up for review under Section 301.
Weekly Export Sales Report out this morning... For the week ended May 25, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | (100,000)-400,000 | (75,153) | 0-300,000 | 52,099 |
Wheat | (100,000)-100,000 | (45,083) | 200,000-450,000 | 245,136 |
Soybeans | (100,000)-300,000 | 115,042 | 0-450,000 | 1,100 |
Soymeal | 175,000-500,000 | 341,272 | 0-125,000 | 50,625 |
Soyoil | 0-20,000 | 6,202 | 0-10,000 | 0 |
Slower jobs growth expected for May... Economists polled by Reuters expect the Labor Department to report non-farm payrolls expanded 190,000 in May, which would be down from a gain of 253,000 the previous month. But some estimates climbed after ADP reported private payrolls increased much more than anticipated. The unemployment rate is expected to increase to 3.5%.
Russia slashes wheat export tax... Russia’s wheat export tax for June 7-13 will be 2,856.3 rubles ($35.35) per metric ton based on an indicative price of $262.40. That’s down from a rate of 4,525.4 rubles per metric ton the previous week, the seventh straight weekly decline and the lowest level since the week of Dec. 7-13 of last year.
FAO food price index resumes downtrend... The UN Food and Agriculture Organization global food price index dropped 2.6% in May amid significant declines in prices of vegoils, cereal grains and dairy, which were partly offset by increases for sugar and meat. The index fell 21.4% from year-ago and was 22.1% below the all-time peak in March 2022. Compared to year-ago, prices declined 4.1% for meat, 17.7% for dairy, 25.2% for cereal grains, 48.2% for vegoils, while sugar prices firmed 30.9%.
Update on ERP... A USDA official told us FSA will use the same methodology for the Emergency Relief Program (ERP) for 2022 as it did in 2020 and 2021, which required producers to fill out an application and provide revenue information via Phase 2. The key change for 2022 is that Phase 1 and 2 will be rolled out simultaneously, rather than a staggered approach, to ensure more consistent determination of payment factors. Phase 2 payments for 2020 and 2021 are capped at $2,000. After July 14, USDA will determine demand for assistance and make payments applying the appropriate factor to ensure it does not exceed the funds. The USDA official said, “I think it is highly unlikely that we will be issuing the remaining 25% payment for Phase 1. We don’t have the authority to roll the money over to 2022. Funds for 2020/2021 expire December 31, 2023.”
Record air travel this summer to boost U.S. jet fuel demand... A record number of passengers are expected to fly on U.S. airlines this summer, bolstering jet fuel consumption and oil demand. U.S. airlines are expected to carry 257 million passengers from June through August, topping 2019 levels by around 1%, according to industry group Airlines for America.
Brazil Supreme Court upholds suspension of forest reduction for Ferrograo grain railway... Brazil’s Supreme Court maintained the suspension of a 2017 decree that had authorized the reduction in the size of the Jamanxim National Forest, where the federal government had planned for the Ferrograo railroad to pass. The decision restores the original boundaries of the Jamanxim area and the government would now be expected to seek formal congressional approval if it decides to move forward with the railroad project. The railway, which stretches almost 1,000 kilometer (621 miles) and is considered strategic to move soybeans and corn more efficiently to northern ports.
Sharply higher cash cattle trade... Cash cattle traded as much as $9 higher than week-ago on Thursday, with the strongest prices in the northern market. Thursday’s price action suggests this week’s average cash cattle price will easily top the all-time high of $180.44 posted in mid-April. June live cattle futures surged amid the soaring cash prices on Thursday but still ended $3.04 below last week’s average price – and much further behind this week’s eventual price.
Cash hogs end mini skid... The CME lean hog index is up 10 cents to $79.63 (as of May 31), ending a three-day skid. After strong gains this week, June hogs finished Thursday $4.12 above today’s cash quote. With just under two weeks until contract expiration, traders are signaling they expect the cash index to show increased price strength. July hogs finished yesterday $2.42 above the cash index, while the August contract held a modest 39.5-cent premium.
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
- 7:30 a.m. Weekly Export Sales — FAS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC