Good morning!
Varied tone in quiet overnight grain trade... Corn, soybeans and wheat held in tight ranges during the overnight session that saw two-sided trade. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are unchanged to 2 cents higher, SRW wheat is mostly a penny higher, HRW wheat is 1 to 5 cents lower and HRS wheat is steady to fractionally lower. The U.S. dollar index is down more than 150 points and front-month crude oil futures are around 30 cents higher.
Weekly Export Sales Report out this morning... For the week ended June 20, traders expect:
| 2023-24 expectations (in MT) | 2023-24 last week | 2024-25 expectations (in MT) | 2024-25 last week |
Corn | 400,000-1,100,000 | 511,432 | 0-200,000 | 93,640 |
Wheat | NA | NA | 200,000-600,000 | 589,695 |
Soybeans | 300,000-600,000 | 556,453 | 0-200,000 | 83,975 |
Soymeal | 150,000-250,000 | 178,814 | 0-50,000 | 32,752 |
Soyoil | 0-16,000 | 20,862 | 0-10,000 | (393) |
Canadian acreage data out this morning... Statistics Canada will release Canadian planted acreage estimates at 7:30 a.m. CT. Analysts polled by Reuters expect all-wheat plantings to come in at 26.943 million acres, down from March intentions of 27.045 million acres and 27.028 million acres in 2023. Canola seedings are expected to be 21.520 million acres, up from March intentions of 21.394 million acres but down from 22.082 million acres last year.
Does a new farm bill have to be budget neutral?... A projection of spending under status quo policy (i.e. current law) becomes the farm bill baseline. And, if spending on the new proposal matches the baseline, then it is said to be “budget neutral.” Of note: Congress can just choose to spend what it wants. It doesn’t have to be budget neutral, but spending over the baseline simply opens it up to budget points of order. However, few things go through the normal process these days where that sort of thing matters. Much just ends up in a supplemental where spending is simply a matter of what they get broad agreement on. Farm bill prediction from a veteran analyst: “For what it’s worth, I think the best (only) chance of a farm bill this year is in a broad supplemental where spending on Title 1 won’t matter… and where SNAP is left alone.”
China seeking ‘mutually acceptable solution’ with EU on EVs... China hopes negotiations will lead to a “mutually acceptable solution” with the European Union on preliminary tariffs on Chinese electric vehicles (EV) scheduled to take effect on July 4, its commerce ministry said. Beijing wants the EU to scrap plans to impose the curbs, Chinese state media reports, but Brussels has made clear it expects China to come to technical talks taking place this week with a road map for “addressing the injurious subsidization” of its EV industry if there is to be a negotiated outcome. The ministry also said it had received and was reviewing materials submitted on behalf of China’s electronic products industry concerning an EU trade barrier investigation.
China’s industrial profits growth slows sharply... Profits earned by China’s industrial firms rose 0.7% from year-ago in May, much slower than the 4.0% rise in April. Industrial profits expanded 3.4% to 2,754.38 billion yuan in the first five months of 2024, down from a 4.3% rise during the first four months this year. Profits in state-owned firms fell further (-2.4% vs. -2.8% in Jan.-April) despite rising profits in the private sector (7.6% vs. 6.4%).
China to hold key reform meeting midmonth... Chinese President Xi Jinping will convene senior officials from July 15 to 18 for a delayed conclave of the Communist Party’s Central Committee that’s expected to set long-term policy on a wide range of economic and political issues. China aims to build into a “high-level socialist market economy” by 2035, Xinhua news reported following a meeting of the 24-member Politburo. The Politburo meeting emphasized the party’s leadership should be at the center of any reform, and called for the proper handling of relationships between economy and society, government and market, development and security, according to Xinhua.
EU to reimpose ‘emergency brake’ tariffs on Ukrainian sugar, eggs... The EU is set to reimpose tariffs on Ukrainian sugar and egg imports from Friday, using the “emergency brake” mechanism, the Financial Times reported citing two people familiar with the matter. Tariffs of 89 euros ($95.14) per metric ton on eggs and sugar will be introduced starting on Friday, similar to the tariff that was reintroduced on Ukrainian oats last week that will last until June 2025.
Euro zone economic sentiment deteriorates in June... The economic sentiment indicator in the euro zone edged down to 95.9 in June from an upwardly revised 96.1 for May. There was a broad-based sentiment worsening among companies, namely service providers. Morale also weakened a bit for industrials. Consumer confidence rose 0.3 point to -14.0 in June, the highest since June 2022. Consumers’ expectations about the general economic situation in their country and about their household’s financial situation remained broadly unchanged, though inflation expectations rose to a four-month high.
USDA to announce H5N1 aid for dairy farmers... USDA will soon announce financial aid for dairy farmers affected by the H5N1 virus through the Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish (ELAP) program. The aid will cover 28 days of milk loss per cow over a 134-day period, based on the monthly all-milk price and expected milk production per cow. Of the 28 days, 21 will be covered at full loss and seven at 50% loss. Eligibility requires a positive test from a federally approved lab and milk production during the period. Details will be shared in public briefings with impacted states on Thursday and Friday.
Slightly bigger hog herd expected... Analysts expect USDA’s Hogs & Pigs Report this afternoon to show the U.S. hog herd increased 0.8% from year-ago as of June 1 to 74.139 million head. Market hog inventories are expected to be up 1.2%, while the breeding herd is anticipated to be down 2.7%. Analysts expect USDA to report a 0.9% bigger spring pig crop as increased litter size likely offset slightly fewer farrowings. Looking forward, analysts expect farmers to farrow 1.4% and 1.0% fewer sows during summer and fall, respectively. As always, USDA’s revisions to past data will be key.
Cash cattle expectations building... Cash cattle trade has been slow to develop, with packers trying to buy cattle at lower prices after two weeks of record values and feedlots holding out for higher bids. Wednesday’s surge in cattle futures triggered speculation of higher cash cattle trade again this week, though that price action was mostly due to the big discount structure and technical trade.
Cash hog index, pork cutout slides pause... The CME lean hog index is up 7 cents to $89.92 as of June 25, while the pork cutout value firmed 21 cents to $95.52, potentially signaling a halt to the recent price declines. For futures to build on Wednesday’s strong corrective gains, additional strength will be needed in the cash index and wholesale pork values.
Overnight demand news... Saudi Arabia tendered to buy 595,000 MT of optional origin milling wheat. Jordan tendered to buy 120,000 MT of optional origin milling wheat.
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. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Hogs and Pigs — NASS