First Thing Today | June 27, 2023

Despite sharper-than-expected declines in corn and soybean crop condition ratings, those markets traded sharply lower overnight amid forecasts for improved rain chances. Wheat also traded sharply lower overnight.

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Pro Farmer’s First Thing Today
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Grains sharply lower overnight... Despite sharper-than-expected declines in corn and soybean crop condition ratings, those markets traded sharply lower overnight amid forecasts for improved rain chances across the Corn Belt. Wheat also traded sharply lower overnight. As of 6:30 a.m. CT, corn futures are trading 9 to 20 cents lower, soybeans are 22 to 38 cents lower, SRW wheat is 25 to 28 cents lower, HRW wheat is 17 to 19 cents lower and HRS wheat is mostly 12 cents lower. Front-month crude oil futures are around $1.25 lower and the U.S. dollar index is down about 150 points.

Consultant cuts corn, soybean yield forecasts... Crop consultant Dr. Michael Cordonnier cut his corn yield forecast by 2 bu. to 175 bu. per acre and his soybean yield projection by 0.5 bu. to 50.5 bu. per acre amid falling crop conditions and drought impacts. He now estimates production at 14.61 billion bu. for corn and 4.39 billion bu. for soybeans.

Corn, soybean CCI ratings post another big decline... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 8.7 points to 337.8, while the soybean crop fell 10.4 points to 329.5. Declines in corn and soybean ratings were driven by Illinois, Iowa, Indiana, Minnesota and Missouri. The CCI ratings are now 31.7 points below year-ago for corn and 31.1 points below for soybeans – both 8.6% below year-ago at this time. The spring wheat CCI rating dropped 2.5 points to 338.3 and stood 22.2 points (6.1%) below last year at this time. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of June 25.

  • Corn: 4% silking (4% average); 50% good/excellent (55% last week).
  • Soybeans: 96% emerged (89% average); 10% blooming (9% average); 51% good/excellent (54% last week).
  • Cotton: 95% planted (98% average); 28% squaring (31% average); 5% setting bolls (7% average); 49% good/excellent (47% last week).
  • Spring wheat: 31% headed (25% average); 50% good/excellent (51% last week).
  • Winter wheat: 97% headed (97% average); 24% harvested (33% average).

Morocco subsidizes wheat imports... Morocco will provide subsidies for the import of up to 2.5 MMT of milling wheat from Russia, Ukraine, France, Germany, Argentina and the U.S. between July 1 and Sept. 30. The scheme will pay importers the difference each month between the cost of imported wheat and a benchmark import price of 270 dirhams per quintal ($271.60 per ton).

China to sell state-owned cotton reserves... China is planning to release cotton from state stockpiles to boost supplies, people familiar with the matter told Bloomberg News. Though specific details haven’t been released, the sources said the official announcement of the sales could come as soon as this week and volumes will likely be as much as a few hundred thousand metric tons.

Farm bill round table in Kentucky today... Senate Majority Leader Mitch McConnell (R-Ky.) and Senator John Boozman (R-Ark.) are holding a farm bill roundtable today in Kentucky, signaling McConnell’s increased interest in passing the legislation. As the most powerful Republican in the Senate, McConnell’s focus on the farm bill suggests the GOP is prioritizing this package, which is expected to cost around $1.5 trillion. With the debt ceiling already raised, Congress has two more substantial bills to pass — the farm bill and annual appropriations.

Klobuchar, Smith say biofuels commitment will continue in farm bill... Sens. Amy Klobuchar and Tina Smith, both Minnesota Democrats who support allowing the year-round sale of ethanol blends above 10%, said the commitment to biofuels as a climate solution will continue in this year’s farm bill. Smith said another priority of hers is the $18.5 billion for climate-smart agriculture, and “not seeing any of those advances get whittled away” in the farm bill. Republicans have pressed to use funds for a variety of other uses, and Chair Debbie Stabenow (D-Mich.) last week opened the possibility of using those funds in the farm bill baseline — as long as they remain targeted at climate solutions.

China will take steps to boost demand, economic growth... Chinese Premier Li Qiang said China will take steps to boost demand, invigorate markets and promote development, while accelerating the green transition and opening “high level” parts of its economy to the rest of the world. However, Li didn’t provide any specific details, leaving markets wondering about the stimulus measures. Li said the country is on track to achieve its 5% growth target. He anticipates an acceleration in economic growth during the second quarter compared to the previous three months.

U.K. sees U.S. energy subsidies distorting metals market... The United States’ clean-energy law (IRA) — and the massive subsidies it offers — risk distorting the global market for a group of key metals needed to make batteries, solar panels and electrical wiring, U.K. Business Minister Nusrat Ghani said. “The IRA has been a huge challenge,” Ghani said yesterday at the London Indaba mining conference. “The lure of the U.S. is huge. It distorts the market.”

ERP Phase 2 payments increase... Emergency Relief Program (ERP) Phase 2 payments increased again, with a total of $1.50 million now having been distributed to 788 producers. USDA has extended the signup deadline for ERP Phase 2 effort to July 14, allowing more time for registrations.

Cash cattle expected to trade lower again this week... Cash cattle averaged $182.57 last week, down $2.35 from the previous week and the second straight decline after record prices. While showlist numbers are down this week and packers are expecting to run a large Saturday kill ahead of next week’s holiday-shortened schedule, packer demand for cash cattle is likely to be limited. Packers will have fresh contract supplies available after returning from the July 4 holiday and purchased cattle for “with time” the past two weeks that will be delivered in early July.

July hogs return to premium to rising cash index... After rising $2.125 on Monday, July lean hog futures held a $1.29 premium to the cash index, which is up another 71 cents to $92.11 (as of June 23). While the cash index continues to rise seasonally, traders will likely be cautious with how much premium they are willing to build into the soon-to-expire front-month contract.

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

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