Good morning!
Followthrough buying in corn, soybeans and winter wheat... The corn, soybean and winter wheat markets built on Tuesday’s strong gains overnight, while spring wheat firmed after small losses yesterday. As of 6:30 a.m. CT, corn futures are trading fractionally to 6 cents higher, soybeans are 6 to 12 cents higher and wheat futures are 9 to 16 cents higher. Front-month U.S. crude oil futures are around $1 higher and the U.S. dollar index is modestly lower this morning.
Mester warns of longer-term inflation... There is risk U.S. businesses and households could see price pressures persisting for a long time and central bankers must act resolutely to bring inflation down, Cleveland Federal Reserve President Loretta Mester said on Wednesday. “The fact that the salient prices of gasoline and food remain elevated suggests that there is some risk that longer-term inflation expectations of households and businesses will continue to rise,” Mester told the European Central Bank’s annual forum in Sintra, Portugal. “Central banks will need to be resolute and intentional in taking actions to bring inflation down,” she said. Earlier on Wednesday, Mester told CNBC that if economic conditions remain the same, she will push for a 75-basis-point interest rate rise at the Fed’s next policy meeting on July 26-27.
U.S. records smallest trade deficit of the year... U.S. exports rose to a record of $176.6 billion in May and imports were little changed at $280.9 billion, leaving the narrowest merchandise trade deficit of the year and adding a tailwind to economic growth in the second quarter. Exports were boosted by gains in industrial supplies such as petroleum products, as well as increases in the value of shipments of consumer goods and motor vehicles. More complete May trade figures that include the balance on services will be released on July 7.
PBOC promises stepped-up prudent monetary policy... China’s central bank said on Wednesday it will step up the implementation of prudent monetary policy and keep liquidity reasonably ample, as part of its efforts to strengthen support for the real economy amid slowing economic growth. The People’s Bank of China (PBOC) also plans to support the housing market, increase flexibility of the yuan exchange rate while keeping the currency relatively unchanged, boost consumer confidence and look to keep consumer prices stable. Global economic pressure, high inflation, persistent geopolitical conflicts and domestic Covid outbreaks have pressured the Chinese economy, PBOC said in a statement, following the conclusion of the quarterly meeting of its monetary policy committee.
Xi defends Covid strategy... Chinese president Xi Jinping said the ruling Communist Party’s strategy to tackle the Covid-19 pandemic was “correct and effective” and should be firmly adhered to, the official Xinhua news agency reported. China would have suffered “unimaginable consequences” had it adopted a strategy of “lying flat,” Xinhua quoted Xi as saying. The strict Covid policies slowed China’s economy, but Xi said Beijing would accept some temporary impact on economic development rather than let people’s lives and health be harmed.
NATO poised to welcome two new members... Bids by Sweden and Finland to join the security alliance took a big step forward when Turkey gave them its blessing. By adding the two Nordic countries to its club, NATO would more than double the length of its border with Russia, the global power it was formed to counteract. In response to Russia’s invasion of Ukraine, NATO has launched its biggest mobilization since the end of the Cold War.
Administration needs more data for GHG decisions... The Biden administration needs more data in its effort to cut greenhouse gas emissions from its buildings, vehicles and operations, various White House officials said. Data on emissions reductions, as well as hydrology and energy usage, is needed to both guide federal agencies’ policy choices and make the business case to future administrations that cutting carbon is good for government, the officials said, speaking at a Tuesday conference sponsored by the Business Council for Sustainable Energy.
House appropriators advanced Energy and Water spending bill... Members rejected a series of Republican amendments that serve as an outline of GOP priorities if they take control of the House next year. That includes rejected amendments to require the Energy Department to spur domestic oil and gas production amid rising energy prices; advance stalled water management projects in drought-stricken California; and block the department’s recent natural gas furnace efficiency standards.
July 4 cookouts will cost $10 more this year... The average cost of a summer cookout for 10 people is now $69.68, up $10 (17%) compared to last year, according to a new survey from the American Farm Bureau Federation. Driving up prices: Ongoing supply chain problems tied to the pandemic, the war in Ukraine and the broader jump in inflation. A spike in ground beef prices is the biggest contributor. The survey found that two pounds of ground beef now costs $11.12, a 36% jump from last year. Two-and-a-half pounds of homemade potato salad is up 19%, while hamburger buns are 16% pricier.
H&P Report to show further herd contraction... USDA’s Hogs & Pigs Report this afternoon is expected to show the U.S. hog herd continued to contract, with the average estimate for the June 1 inventory down 0.7% from year-ago. The breeding herd is expected to be down 1.1% and the market hog inventory down 0.7%. Analysts expect spring farrowings declined 1.4%, with summer and fall farrrowing intentions anticipated to be down fractionally from last year.
Malaysia to spend $84 million subsidizing chicken and egg prices... Malaysia has allocated 369.5 million ringgit ($84 million) to subsidize chicken and egg prices, the country’s ag ministry announced. New ceiling prices on the goods will come into effect on July 1. The government had earlier said it would lift ceiling prices on chicken and eggs from July after measures to control food inflation created market distortions.
Beef movement improves as prices drop... Wholesale beef prices posted sharp losses Tuesday, with Choice boxes down $1.54 and Select $1.93 lower. Retailers continue to be selective buyers, showing a willingness to increase buys when there’s price pressure but slowing purchases if prices rise. With the “beef holidays” coming to an end until Labor Day, retailers won’t likely change their selective approach through summer.
Hog traders have prove-it attitude... Summer-month lean hog futures extended their discounts to the cash index, signaling traders anticipate it will soon start to soften as market-ready supplies build during the second half of the year. But if the cash index, which is up another 27 cents today (as of June 27) continues to rise, nearby futures would be supported.
Overnight demand news... Taiwan purchased 40,000 MT of U.S. milling wheat and 55,000 MT of corn (likely to be sourced from South Africa). South Korea tendered to buy up to 140,000 MT of corn from the U.S., Black Sea region/eastern Europe, South America or South Africa. 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
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Egg Products — NASS
- 2:00 p.m. Hogs and Pigs — NASS