Good morning!
Light and choppy grain trade overnight... Corn, soybeans and wheat posted two-sided trade overnight as markets calmed from recent volatile price action. As of 6:30 a.m. CT, corn futures are trading a penny lower to 5 cents higher, soybeans are fractionally lower to a penny higher, winter wheat futures are a penny lower to fractionally higher and spring wheat is 1 to 3 cents higher. Front-month crude oil futures are modestly firmer and the U.S. dollar index is trading just below unchanged.
Weekly Export Sales Report out this morning... For the week ended June 22, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | (100,000)-500,000 | 35,988 | 0-200,000 | 47,149 |
Wheat | NA | NA | 50,000-400,000 | 109,664 |
Soybeans | 200,000-500,000 | 457,543 | 0-200,000 | 168,770 |
Soymeal | 50,000-300,000 | 135,336 | 0-100,000 | 11,054 |
Soyoil | 0-10,000 | 209 | 0-10,000 | 0 |
Banks pass Fed stress test... All of Wall Street’s largest banks, including JPMorgan, Morgan Stanley, Goldman Sachs and Wells Fargo, have passed the Federal Reserve’s annual stress test. This success demonstrates the banks’ resilience and ability to withstand a severe global recession and potential real estate market turmoil. This clearance opens the way for the banks to return billions of dollars to their investors. However, some of these institutions might delay the announcement of their payouts until there’s more clarity on new capital requirements.
Bleak fiscal picture... The Congressional Budget Office (CBO) released its Long-Term Budget Outlook, which shows debt rising to 181% of GDP by 2053. Although the long-term outlook has modestly improved due to the enactment of the Fiscal Responsibility Act, it remains unsustainable. Even under the latest projections, debt will eclipse its record level in just six years and reach nearly double the size of the economy in 30 years. This level of debt is largely due to the rapid growth of Social Security, Medicare and interest on the debt while revenue fails to keep pace. CBO estimates the deficit will total $1.5 trillion in fiscal year 2023. CBO also estimates the U.S. economy will grow this year – but only barely. CBO projects that the inflation-adjusted growth rate will be 0.3%. The economy will grow by 1.7% next year. CBO comments: “Such high and rising debt would slow economic growth, push up interest payments to foreign holders of U.S. debt, and pose significant risks to the fiscal and economic outlook; it could also cause lawmakers to feel more constrained in their policy choices.”
Ag trade issues to surface next week at USMCA confab... The annual U.S.-Mexico-Canada Agreement (USMCA) Free Trade Commission meeting next week in Mexico will witness key discussions between U.S. Trade Representative Katherine Tai and Canadian Trade Minister Mary Ng. The dairy disagreement and other bilateral matters will form the core of their conversation. Raquel Buenrostro, Mexican Economy Minister, and this year’s host will engage in both bilateral meetings with Tai and Ng and a trilateral meeting involving all three. The U.S. has several lingering ag trade issues, including a dairy policy skirmish with Canada and GMO corn trade with Mexico.
H&P Report out this afternoon... Analysts expect USDA’s Hogs & Pigs Report this afternoon to show the U.S. hog herd as of June 1 was fractionally smaller than year-ago. In fact, all of the categories except spring pigs per litter are expected to be down slightly from last year. Key in the report will be any revisions to past data and the weight breakdown of market hogs for an indication of hog slaughter during the second half of the year.
Vilsack to announce more funding for meat processing... USDA Secretary Tom Vilsack will announce $115 million will be distributed across 17 states in the form of 15 awards to augment meat and poultry processing capacity. This announcement will be made in Des Moines, Iowa. The National Institute of Food and Agriculture managed by USDA will also grant seven awards totaling $4.5 million to community and technical colleges for the training of meat processing workers. The industry has been facing labor supply issues. The funding will be allocated as follows: the Meat and Poultry Processing Expansion Program will distribute five awards totaling $38 million to support smaller, independent processing firms. The Meat and Poultry Intermediary Lending Program will dispense ten awards cumulating $77 million. The funding for the educational grants will be channeled through the Meat and Poultry Processing — Agricultural Workforce Training program.
Japan halts some Brazilian poultry imports... Japan suspended purchases of poultry from the Brazilian state of Espirito Santo after an outbreak of highly pathogenic avian influenza (HPAI) on a non-commercial farm. The Brazilian Association of Animal Protein said the decision “is not in line with the guidelines of the World Organization for Animal Health” and noted Japan doesn’t currently import poultry from Espirito Santo.
Cash cattle trade lower... Cash cattle trade got underway around $2 lower than last week’s levels in both the Southern Plains and the northern market. June live cattle futures finished Wednesday $2.945 below last week’s average cash price, suggesting the expiring contract could see some additional price strength. August cattle remained $8.695 below the cash market.
Cash hog index continues steady climb... The CME lean hog index is up another 44 cents to $92.96 (as of June 27). Since bottoming in the third week of April, the cash index has rallied $21.78. While daily price gains haven’t been overly strong, the seasonal climb has been steady. June lean hog futures finished Wednesday at a $1.315 premium to today’s cash quote; August hogs held a $1.86 discount.
Overnight demand news... South Korea purchased 68,000 MT of corn expected to be sourced from South America or South Africa.
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. Hogs and Pigs — NASS