Good morning!
Wheat strengthens amid Russia uncertainty... Wheat futures posted strong gains overnight amid global supply concerns given the political instability in Russia. Soybeans have firmed this morning while corn is mixed. As of 6:30 a.m. CT, corn futures are trading 2 cents lower to 2 cents higher, soybeans are 4 to 8 cents higher, winter wheat futures are 16 to 19 cents higher and spring wheat is 11 to 13 cents higher. Front-month crude oil futures are modestly firmer and the U.S. dollar index is around 150 points lower this morning.
Weekend rains help some areas, others remain dry... Substantial rain fell across portions of the Dakotas into northern Minnesota during the weekend, while lighter rain fell from southern South Dakota and northern Nebraska into northern Iowa and northern Illinois. But a big portion of the Midwest missed the rains and dryness expanded to the southwest because of warm to hot temperatures. World Weather Inc. says conditions will be mostly dry until late this week when there will be another chance for rains across some areas of the Corn Belt. The forecaster notes the Gulf of Mexico will open as a moisture source for the central U.S. during the weekend and a more normal pattern occurs next week as the Bermuda high finally gets in its normal position.
Russia avoids crisis... Russia pulled back from the brink of a crisis after a deal was reached to end an insurrection by thousands of Wagner fighters who were advancing toward Moscow. The abrupt about-face followed a rare, remarkable challenge to the Kremlin that threatened to plunge the country into chaos and destabilize its already stumbling war efforts in Ukraine. U.S. and European allies are closely monitoring the situation. Western officials are making it clear they do not intend to take sides in the matter and are avoiding military coordination on events in Russia. They are concerned about the political instability’s potential effects on the region, particularly if Putin were to lose power. There are now questions about the possible outcomes for Ukraine and Europe based on the outcome of this situation. China expressed support for Russia and President Vladimir Putin after an insurrection attempt.
UN warns of impacts if Black Sea grain deal ends... An end to the Black Sea grains deal would hit the Horn of Africa hard, aid officials said on Monday, warning that another hike in food prices would add to hunger in the region. “A non-renewal of the Black Sea initiative would absolutely hit Eastern Africa very, very hard,” Dominique Ferretti, World Food Program Senior Emergency Officer, told a Geneva briefing. “There’s a number of countries that depend on Ukraine’s wheat and without it we would see significantly higher food prices.”
The week ahead in Washington... Congress is out two weeks for the July Fourth holiday. President Joe Biden today will launch the Investing in America roadshow with a big infrastructure funding announcement at the White House. The economic focus will be on the Federal Reserve’s Bank Stress Test results and data on Wednesday and Friday’s personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge. Key agricultural data comes Friday with USDA’s Acreage and Grain Stocks Reports.
Vilsack taps more CCC funds... USDA Secretary Tom Vilsack tapped another $2.7 billion from the Commodity Credit Corporation (CCC) towards several initiatives. This includes using nearly $1.3 billion for states to purchase food to be distributed in school feeding programs, almost $1 billion for states to order commodities from USDA vendors for emergency food providers and $400 million to support domestic fertilizer production. USDA has already provided close to $3.8 billion for school meal efforts since December 2021, and this emergency food initiative is in addition to the almost $1 billion provided in September 2022. Regarding the fertilizer initiative, the funding will be distributed through grants as part of the Fertilizer Product Expansion Program (FPEP). Although $500 million had already been allocated for FPEP, USDA reported it received applications for $3 billion in funding during the first two application periods. USDA has granted $30 million in the first FPEP round and is now seeking comments on 66 potential projects for the second round of applications.
Firm cuts China’s GDP forecast... S&P Global cut its forecast for economic growth in China this year, calling for Beijing to intensify stimulus efforts to boost economic activity. S&P Global now expects China’s economy to grow 5.2% in 2023, down from an earlier estimate of 5.5%. “China’s key downside growth risk is that its recovery loses more steam amid weak confidence among consumers and in the housing market,” S&P said.
Indonesia plans to hike biodiesel mandate in coming years... Indonesia plans to raise its mandatory palm oil-based biodiesel blending to 40% in the next few years, but for now will keep it unchanged at 35%, the country’s energy minister said. The country raised mandatory biodiesel blending from 30% to 35% in February, however, it has not been fully implemented in some areas. The ministry is pushing for the B35 mandate to be fully implemented by Aug. 1.
Feedlot supplies continue to tighten... Friday’s Cattle on Feed Report showed all three categories above expectations, especially placements during May. But this marked the 10th straight month of year-over-year declines in feedlot inventories. While the placements suggest second-half supplies won’t be as tight as once expected, feedlot numbers will continue to decline relative to year-ago.
Cash hog index picking up steam... The CME lean hog index is up another 94 cents to $91.41 (as of June 22), the highest since early November of last year. July lean hog futures finished last Friday 13.5 cents below today’s cash index quote, while August hogs held a $1.735 discount. That suggests traders sense the cash market is nearing its seasonal top despite recent daily gains being some of the strongest during the price rally.
Weekend 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
- 2:00 p.m. Peanut Stocks and Processing — NASS
- 2:00 p.m. Poultry Slaughter — NASS
- 3:00 p.m. Crop Progress — NASS