Good morning!
Grains rebound overnight... Corn, soybeans and wheat posted mild corrective gains overnight, recouping a small portion of Thursday’s sharp losses. As of 6:30 a.m. CT, corn futures are trading 2 cents higher, soybeans are 3 to 8 cents higher, winter wheat futures are 1 to 4 cents higher and spring wheat is 3 to 5 cents higher. The U.S. dollar index is around 200 points higher and front-month crude oil futures are trading just below unchanged.
Vilsack: Farm-state lawmakers ‘have to get realistic’ to get a new farm bill... USDA Secretary Tom Vilsack told us on AgriTalk, “I don’t think we’re close to getting a farm bill done until the folks who are negotiating the farm bill are realistic about what’s doable within a constrained resource environment.” He noted GOP farm bill proposals “essentially require a significant amount of additional funding.” He said, “I think there’s an opportunity to creatively use the CCC (Commodity Credit Corporation) in a way that actually does provide some additional resources or capacity. But I don’t think it’s anywhere near $53 billion.” Regarding climate-smart programs as the next revenue stream for farmers, Vilsack said: “We’re beginning to see products that are actually generating value added.” He noted the 45Z tax credit, “which is really the significant tax credit for individual and bundled activities on the climate smart side that will allow us to qualify ethanol that’s produced from those crops to benefit from sustainable aviation fuel. That’s a new opportunity.” Click here to see more.
Weekly Export Sales Report out this morning... For the week ended June 13, traders expect:
| 2023-24 expectations (in MT) | 2023-24 last week | 2024-25 expectations (in MT) | 2024-25 last week |
Corn | 700,000-1,200,000 | 1,056,111 | 0-200,000 | 69,463 |
Wheat | NA | NA | 200,000-500,000 | 223,900 |
Soybeans | 375,000-850,000 | 377,098 | 0-200,000 | 3,020 |
Soymeal | 150,000-400,000 | 143,270 | 0-50,000 | 27,064 |
Soyoil | 0-15,000 | 14,626 | 0-10,000 | 3,200 |
Brazil authorized to export UCO to U.S.... Used cooking oil (UCO), which is crucial for producing biodiesel and sustainable aviation fuel (SAF), is expected to play a significant role in the aviation industry’s efforts to reach net-zero emissions by 2050. Currently, SAF makes up only 0.2% of jet fuel use, but it is projected to account for 64% of the industry’s net-zero actions by 2050. The U.S. has recognized international certification for Brazil’s compliance with specific sanitary and technical standards, and the Brazilian government will provide certification on the traceability, identity and origin of UCO. This authorization adds another source of UCO to the U.S. market, where imports have increased significantly to support biofuel production. The surge in UCO shipments from China has led some in the U.S. to advocate for limits on these imports. But there are reports out of China that the country is putting more emphasis on SAF production domestically, which could decrease its exports of UCO.
Russia to adjust grain export duties on July 1... Adjusted duties on Russian grain exports will take effect as of July 1, 2024, Interfax news reported. Russian Ag Minister Oksana Luth proposed raising base prices for calculating export duties for wheat, barley and corn by 1,000 rubles ($11.27) per metric ton.
China says EU friction could trigger ‘trade war’... The European Union may trigger a ‘trade war’ if it continues to escalate tensions, China’s commerce ministry said, accusing the bloc of foul play during its anti-subsidy probe into Chinese electric vehicles. “The European side continues to escalate trade frictions and could trigger a ‘trade war,’” a statement attributed to the commerce ministry’s spokesperson said. “The responsibility lies entirely with the European side. In its countervailing duties investigation, the European side intimidated and coerced Chinese enterprises, threatened to apply punitive high tariff rates, and demanded overly broad information,” it added.
French wheat crop ratings unchanged... France’s ag ministry rated the country’s soft wheat crop as 62% good or excellent as of June 17, unchanged from the previous week. That remained the lowest rating for the date since 2020.
China’s FDI plunges at record rate... Foreign direct investment (FDI) into China fell for an 11th straight month in April to 58.5 billion yuan, the lowest monthly value since November. During the first four months of this year, FDI plunged 27.1% from year-ago to 360.2 billion yuan, a record decline.
Euro zone business growth slows sharply... The HCOB euro zone preliminary composite purchasing managers index compiled by S&P Global sank to 50.8 this month from May’s 52.2 reading. Growth in services was enough to offset the deeper contraction for manufacturing, with that reading falling to a six-month low.
HPAI detected in Iowa turkey flock... The Iowa Department of Agriculture and USDA’s Animal and Plant Health Inspection Service (APHIS) have detected a case of highly pathogenic avian influenza (HPAI) in a commercial turkey flock in Sac County, Iowa. This is Iowa’s third detection of HPAI in poultry this year.
Cattle on Feed Report out this afternoon... Analysts expect this afternoon’s USDA Cattle on Feed Report to show the large feedlot (1,000-plus head) inventory under year-ago levels for a second straight month. Based on a Reuters poll, USDA is expected to report the June 1 feedlot inventory down 1.0% from last year, while May placements are seen declining 1.5% and marketings inching up 0.5%.
China seeks to stabilize beef cattle production amid declining prices... China’s ag ministry published new regulations to stabilize the production of beef cattle as the industry faces declining prices and heavy losses. The ministry said it will instruct farms to adjust breeding reasonably, eliminate old and low-yielding cattle as appropriate, optimize herd structure and improve production efficiency. Main beef cattle producing areas should actively seek support from financial institutions, it said. The ministry also called for measures to increase the supply of forage and reduce costs. Local areas should raise grass planting in cultivated land and as well using beaches, abandoned land and saline-alkali land. To strengthen disease prevention, the ministry said it would support large-scale farms to increase biosafety measures and build disease-free communities.
Slow developing cash cattle trade... Despite higher bids in the northern market, cash cattle trade has been slow to develop this week, as feedlots are seeking even higher prices. Barring something bearish today, cash sources expect trade to eventually be seen at higher prices, though active movement may not come until after this afternoon’s Cattle on Feed Report.
Cash hog index drops, pork cutout firms... The CME lean hog index is down 17 cents to $90.55, marking declines in four of the last five days. After Thursday’s sharp decline, July lean hog futures held a 60-cent premium to today’s cash quote. The pork cutout value ended a three-day skid, rising 18 cents on Thursday amid strong gains in bellies ($10.04) and ribs ($5.68).
Overnight demand news... Taiwan purchased 104,150 MT of U.S. milling wheat. South Korea purchased 66,000 MT of corn expected to be sourced from South America or South Africa.
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
- 8:00 a.m. Food Expenditure Series — ERS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Milk Production — NASS
- 2:00 p.m. Peanut Prices — NASS