Good morning!
Grains mostly weaker overnight... Corn, soybeans and wheat traded higher at points overnight but have adopted a mostly weaker tone this morning. As of 6:30 a.m. CT, corn futures are trading 4 to 5 cents lower, soybeans are 2 to 9 cents lower, SRW wheat is 2 to 4 cents lower, HRW wheat is steady to 2 cents lower and HRS wheat is narrowly mixed. The U.S. dollar index is around 150 points higher and front-month crude oil futures are about 50 cents lower.
Cordonnier addresses potential lost acreage due to flooding... Crop consultant Dr. Michael Cordonnier says there might be a half million to one million corn acres lost due to the excessively wet conditions and flooding in the northwestern Corn Belt. Those acres will be counted as planted but reflected in a lower harvested acreage percentage, which he believes will be 90.3% to 90.7% this year, down from an average of 91.3%. He says planting soybeans in late June or early July in the northwestern Corn Belt would be “a risky proposition,” as they would flower while the crop is in early development, “resulting in short-stature soybeans with a low yield potential.” For now, Cordonnier left his corn and soybean production forecasts at 14.62 billion bu. and 4.46 billion bu., respectively.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of June 23:
- Corn: 69% good/excellent (72% last week); 97% emerged (96% five-year average); 4% silking (3% average).
- Soybeans: 67% good/excellent (70% last week); 97% planted (95% average); 90% emerged (87% average); 8% blooming (6% average).
- Spring wheat: 71% good/excellent (76% last week); 18% headed (18% average).
- Cotton: 56% good/excellent (54% last week); 94% planted (96% average); 30% squaring (28% average); 8% setting bolls (5% average).
- Winter wheat: 52% good/excellent (49% last week); 97% headed (95% average); 40% harvested (25% average).
Weaker La Niña forecast ‘good news’ for Argentina’s crops outlook... Forecasts for a more moderate La Niña in coming months is good news for Argentina’s crops, which will now likely receive more rain than previously expected, the Rosario Grains Exchange said. It noted, “This is good news for rainfall in Argentina during the (Southern Hemisphere’s) spring and summer period.”
Thailand approves subsidy for rice farmers... Thailand’s cabinet approved a subsidy of 30 billion baht ($820,000) for rice farmers to buy fertilizer, which is expected to help 4.68 million rice farms. Thailand, the world’s second-largest exporter of the grain after India, earlier said rice exports could reach 8 MMT this year.
Premier Li issues warning, defends China’s policies... Chinese Premier Li Qiang warned of global negative consequences if nations decouple economically, arguing such actions could lead to a “destructive spiral” of fierce competition diminishing overall benefits. Speaking at the World Economic Forum in Dalian, Li also defended China’s industrial policy against claims of overcapacity and cheap goods dumping, highlighting the country’s advancements in science and technology. Li’s comments come after the EU announced tariffs on Chinese-made electric vehicle (EV) imports and after the U.S. unveiled steep tariff hikes on an array of Chinese imports, including EV batteries, in May. Despite challenges such as a prolonged property slump, weak consumer confidence, and rising local government debt, Li expressed optimism about China’s economic prospects, reiterating confidence in achieving a 5% growth target for the year. He mentioned that a combination of fiscal policy and financial measures would be employed to boost the economy.
Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of May. The five-year average is a 30.4-million-lb. decline in beef stocks and a 30.7-million-lb. drop in pork stocks during the month.
Denmark to tax livestock producers for GHG emissions... Denmark is set to implement a carbon tax on livestock producers to meet its 2030 target of reducing greenhouse gas (GHG) emissions by 70% from 1990 levels. The tax will be 300 Danish crowns ($43.16) per metric ton of carbon dioxide in 2030, increasing to 750 crowns by 2035. Farmers can receive a 60% income tax deduction, effectively reducing the tax to 120 crowns per metric ton initially, rising to 300 crowns by 2035. Subsidies will also be available to help farmers adjust their operations. This plan, proposed in February and agreed upon by farmers, industry, labor unions and environmentalists, awaits parliamentary approval but is expected to pass. Other countries have faced resistance to similar taxes from farmers, making it uncertain if they will follow Denmark’s lead.
Cash cattle fundamentals remain red-hot... The average cash cattle price was a record $194.84 last week, rising $2.29 from the previous week’s high. Over the past two weeks, the cash price has surged $5.92. Wholesale beef prices firmed 25 cents for Choice to $322.64 and $1.96 for Select to $305.07 on Monday. Given hefty packer purchases of cattle recently and next week’s shortened slaughter schedule, cash sources expect prices to be steady at best this week.
Cash hog fundamentals continue to weaken... The CME lean hog index is down another 42 cents to $89.90 as of June 21, marking six of the last seven days with a decline and the lowest level since April 10. July lean hog futures finished Monday a nickel above today’s cash quote while the August contract held a $3.175 discount. The pork cutout fell $1.20 on Monday to $97.83, pressured by sharp declines in butts and loins.
Overnight demand news... South Korea purchased 135,000 MT of corn expected to be sourced from South America and 65,000 MT of optional origin feed wheat. Egypt canceled a tender to buy 25,000 MT of soyoil, instead purchasing that amount from the domestic market, and tendered to buy an unspecified amount of wheat from multiple sources.
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
- 8:00 a.m. Food Price Outlook — ERS
- 2:00 p.m. Cold Storage — NASS