Good morning!
Corrective gains in grains overnight... Corn, soybean and wheat futures firmed amid corrective buying during the overnight session as traders await USDA’s reports later this morning. As of 6:30 a.m. CT, corn futures are trading mostly 3 cents higher, soybeans are mostly 16 to 26 cents higher, SRW wheat futures are 4 to 5 cents higher, while HRW and HRS wheat are mostly 7 to 8 cents higher. Front-month crude oil futures and the U.S. dollar index are both trading just above unchanged.
Acreage, Grain Stocks Reports out later this morning... USDA will release its Acreage and Grain Stocks Reports at 11 a.m. CT – data that has a history of producing significant price moves. Analysts anticipate relatively modest changes in planted acres compared with March intentions. June 1 stocks are expected to total 4.255 billion bu. for corn, 812 million bu. for soybeans and 611 million bu. for wheat.
Independence Day schedule... Grain and livestock markets will be open on Monday, July 3 for a full trading session. Government offices will also be open on Monday. Pro Farmer will run an abbreviated report schedule: First Thing Today published around 8 a.m. CT; After the Bell with a short recap of the day’s price action out shortly after 1:30 p.m. CT; and Evening Report out in late afternoon. Markets and government offices will be closed Tuesday, July 4 for Independence Day.
Argentina expects big recovery in wheat production... Argentina’s 2023-24 wheat production is expected to rebound sharply amid improved weather from last year into the range of 18 MMT to 19 MMT, according to an initial forecast from the country’s ag ministry. Argentina’s 2022-23 wheat crop totaled only 12.6 MMT due to extensive drought. The ag ministry expects farmers to plant 6.1 million hectares to wheat. The Buenos Aires Grain Exchange cut its wheat plantings forecast to 6.0 million hectares due to a lack of rainfall in center-west areas.
Lavrov: West’s attitude two Black Sea grain deal ‘outrageous’... Russian Foreign Minister Sergei Lavrov described the West’s attitude to the Black Sea grain deal as “outrageous,” noting if leaders were worried about global food security, they would unblock Russian fertilizer supplies frozen at European ports. Lavrov reiterated that as it stands now, Russia sees no grounds to extend the deal beyond July 17.
French wheat crop ratings continue to decline... France’s ag ministry rated the country’s wheat crop 81% good/excellent, down two points from the previous week, despite rains over the past week. Wheat conditions have fallen steadily since late May amid hot and dry weather.
Legal motion to strike down WOTUS rule... Texas, Idaho and a group of industry entities have appealed to a federal judge to reject the Biden administration’s new definition of the Waters of the U.S. (WOTUS) rule. They believe the rule should be invalidated due to a May decision from the Supreme Court that weakened federal authority to safeguard wetlands — a ruling known as Sackett v. EPA. These appellants filed a motion for summary judgment on June 28, declaring all components of the Biden administration’s rule inconsistent with the Sackett decision. They assert that the rule is unsupported by the plain language of the Clean Water Act, can’t be constitutionally defended and contradicts Supreme Court precedent. Anticipating that this court ruling might stimulate more state-level lawsuits against EPA’s WOTUS rule, the Biden administration plans to amend the rule by Sept. 1.
China’s manufacturing PMI contracts for a third straight month... China’s official manufacturing purchasing managers index (PMI) rose to a reading of 49.0 in May, though that marked the third straight month of contraction in the factory sector. New orders, buying activity and export sales all extended declines, signaling China’s post-pandemic recovery lost steam.
China asks foreign banks about dollar deposit rates... China’s central bank has surveyed some foreign banks in the past week about the interest rates they offer to their clients for dollar deposits, people familiar with the matter told Reuters, as authorities step up efforts to slow the yuan’s depreciation. The central bank also guided one commercial lender to lower such rates, one of the sources said, as recent weakness in the Chinese currency prompts authorities to more closely scrutinize foreign exchange dealings. The move could potentially nudge companies, especially exporters, to convert more of their foreign exchange receipts into the yuan.
Euro zone inflation falls, but core prices tick up... Euro zone consumer inflation dropped to 5.5% in June from 6.1% the previous month, as prices continued to ease. But core inflation, which strips out food and energy costs, inched up to 5.4% annually. The European Central Bank is expected to continue to raise interest rates amid elevated inflation.
Slightly negative H&P Report... USDA estimated the U.S. hog herd up 0.1% from year-ago as of June 1, whereas traders expected a 0.7% decline. All categories except spring farrowings and summer/fall farrowing intentions came in higher than anticipated. That could weigh slightly on summer and fall/winter hog futures, though we doubt the selling will be too intense or sustained.
China’s sow herd declines... China’s sow herd declined 0.6% in May from the previous month to 42.58 million head, according to the country’s ag ministry. However, the sow herd was still 1.6% larger than May 2022. China’s hog slaughter in May jumped 11% from year-ago. China’s hog slaughter through the first five months of this year topped year-ago levels by 9.9%.
Northern cash cattle trade steady... Given tighter supplies in the northern market, packers raised cash cattle bids to steady-with-week-ago prices on Thursday. Combined with the $2 lower trade in the Southern Plains, this week’s average cash price will likely drop around $1 from last week. August live cattle futures still held a discount of around $8.00 to the cash market as of yesterday’s close.
Overnight demand news... South Korea purchased 134,000 MT of corn in two separate tenders – 65,000 MT of to be sourced from the U.S. or South America and 69,000 MT to be sourced from South America or South Africa – and 50,000 MT of U.S. 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
- 11:00 a.m. Acreage — NASS
- 11:00 a.m. Grain Stocks — NASS
- 11:00 a.m. Rice Stocks — NASS
- 2:00 p.m. Agricultural Prices — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC