Good morning!
Followthrough selling in grains overnight... Soybeans, wheat and new-crop corn futures faced followthrough selling overnight, while July corn futures pivoted around unchanged. As of 6:30 a.m. CT, corn futures are mixed with July 2 cents higher and December 10 cents lower, soybeans are 10 to 18 cents lower and wheat futures are 7 to 10 cents lower. Front-month crude oil futures are near unchanged and the U.S. dollar index is around 150 points higher.
Odds of Russia exiting Black Sea grain deal remain high... The probability of Russia’s withdrawal from the Black Sea grain deal in July remains high, although talks continue, Russian RIA news agency reported. Russian officials have repeatedly said Moscow would end the deal after the current extension expires on July 17 if its demands aren’t met.
Canadian acreage report out this morning... Statistics Canada is expected to report Canadian all wheat plantings at 26.5 million acres, which would be down slightly from spring planting intentions of 27.0 million acres. Canola seedings are expected to come in at 21.8 million acres, up slightly from spring intentions of 21.6 million acres.
Ukraine’s wheat crop could be ‘significantly higher’ than expected... Ukraine’s 2023 wheat production may far exceed official expectations of 17 MMT. Grain traders union UGA said “expected yields are quite high” after surveying farmers. UGA said based on the ag ministry’s planted acreage figures, this year’s crop could reach 23.5 MMT to 24 MMT. UkrAgroConsult raised its total grain production forecast by 900,000 MT to 46.4 MMT due to expected bigger wheat and corn crops.
Farm bill wish list grows... A bipartisan group of lawmakers, spearheaded by Sen. Tammy Baldwin (D-Wis.) and Susan Collins (R-Maine), along with Rep. Chellie Pingree (D-Maine), is urging the Senate and House Agriculture Committee leaders to tackle the issue of Per- and Polyfluorinated Substances (PFAS) water contamination in the upcoming farm bill. This information came to light through a letter sent on Tuesday. The group is advocating for the inclusion of two specific bills in the broader agricultural legislation. These are the Healthy H2O Act and the Relief for Farmers Hit With PFAS Act. These bills push for the provision of grants for water testing and treatment technology, as well as other financial aid to rural communities and farmers impacted by PFAS.
China’s industrial profits plunge... China’s industrial profits fell 12.6% from year-ago in May. For the first five months of this year, profits tumbled 18.8% to 2,668.89 billion yuan ($368.44), amid weak demand and margin pressures as the economic recovery stalled. Profits shrunk in both state-owned firms (-17.7%) and the private sector (-21.3%).
Markets watching Fed stress test, economic commentary... The Federal Reserve is scheduled to publish the results of its annual stress test of large banks, the first of its kind following a string of bank failures in the spring. Fed Chair Jerome Powell, European Central Bank President Christine Lagarde, Bank of Japan Governor Kazuo Ueda and Bank of England Governor Andrew Bailey are scheduled to speak at the ECB Forum on Central Banking. Meanwhile, President Joe Biden will give a “major” economic address in Chicago around “Bidenomics” — the president’s vision for “growing the economy from the middle out and the bottom up, not the top-down.”
‘New China 2.0 Competition Bill’... The bill is being presented as a potential instrument to enact a bilateral plan that includes a carbon border adjustment mechanism. The goal of this mechanism would be to tax imports from China and other countries that don’t adhere to stringent environmental standards, as is done in the United States. This move would aim to level the playing field by effectively penalizing countries for lax environmental regulations. The proposal is being spearheaded by Sen. Chris Coons (D-Del.), who is chair of the Appropriations State and Foreign Operations subcommittee, one of the groups involved in the bill’s creation. Another key figure in the process is Sen. Kevin Cramer (R-N.C.). Earlier this month, they proposed a separate bill designed to establish the foundations for more comprehensive, bipartisan carbon tax legislation. This implies a broader approach to tackling environmental concerns, transcending party lines for the common goal of mitigating climate change.
Lithium shortage a hurdle for EVs... An increased transition towards electric vehicles (EVs) could potentially face a significant hurdle due to a shortage of lithium, a vital ingredient for the development of rechargeable batteries. This issue is expected to hit the global lithium market towards the end of this decade due to the widened adoption of EVs. Benchmark Mineral Intelligence, a source for information on the mineral industry, has stated that $51 billion or more will be necessary in investments to fulfill the anticipated demand for rechargeable batteries. If these investments are not made in time, there could be a serious slowdown in the growth of the EV market.
Brazil reports first farm-level HPAI case... Brazil’s ag ministry reported the first case of highly pathogenic avian influenza (HPAI) in farm-raised birds in the municipality of Serra, Espirito Santo. The Brazilian Association of Animal Protein said because it is a backyard outbreak and not from a commercial flock, this does not change Brazil’s status as free of the disease before the World Organization for Animal Health.
Wholesale beef prices continue to fall... Choice boxed beef prices fell another $3.81 on Tuesday, while Select dropped $1.24. Wholesale prices have been on a steady decline since peaking two weeks ago but Choice boxes are still more than $60.00 above year-ago at this time and at record levels for the date. The strong product market has kept packer margins solidly in the black, which along with the tight supply situation, limits downside risk for the cash cattle market.
Pork cutout tops $100... The pork cutout value firmed 61 cents to $100.16 on Tuesday, the first time in triple digits since last October. The strengthening pork product market has been supported by seasonally declining supplies, but retailers also appear to be gearing up for more pork features after the Fourth of July holiday.
Overnight demand news... Thailand rejected all offers in its tender to buy 55,000 MT of feed 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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Egg Products — NASS