Good morning!
Grains mostly firmer to start the week... Relatively quiet two-sided price action was seen in the grain and soy markets during overnight trade, though futures are firming early this morning. As of 6:30 a.m. CT, corn and soybean futures are fractionally to 2 cents higher and SRW wheat futures are around a penny higher, while HRW and HRS wheat are 4 to 7 cents higher. Front-month crude oil futures are around $1.50 higher and the U.S. dollar index is nearly 300 points higher.
Mostly dry, but moderating temps this week... World Weather Inc. says dry weather will continue in the eastern Midwest this week, though moderating temps will help conserve soil moisture. There are chances for periodic showers across the Plains and western Corn Belt this week. Better rain chances across the Corn Belt could develop around mid-month.
Russia: Black Sea grain inspections resume but ‘no prospects’ for another renewal... TASS news agency quoted Russia’s foreign ministry as saying that it was continuing consultations with the United Nations over the Black Sea grain deal, and that ship inspections had resumed. However, the ministry said it saw no prospects for extending the Black Sea grain export deal, which currently runs through mid-July.
OPEC+ announces no changes to planned oil production cuts, Saudi cuts... OPEC+ announced no changes to planned oil production cuts for this year. The group also decided to limit combined oil production to 40.463 million barrels per day (bpd) throughout 2024. Previously, OPEC+ agreed to decrease production by 2 million bpd in October, and some members announced further voluntary reductions of over 1.6 million barrels per day in April. Saudi Arabia declared an additional voluntary one-month cut of 1 million bpd starting in July, which could be extended. This brings Saudi Arabia’s total voluntary reductions to 1.5 million bpd over the period, limiting its production to 9 million barrels. The alliance also agreed to review its baselines for 2025.
China allocates wheat aid... China will allocate 200 million yuan ($28.11 million) to help central Henan province contend with wheat harvest losses caused by heavy rain, the finance ministry said. The funds, on top of 200 million yuan already issued by the provincial government, were granted after recent heavy rains and flooding led to severe wheat quality issues.
Ukraine winter grain yields could suffer if hot, dry conditions persist... Most of Ukraine’s winter grain crops are in good condition but yields could fall by 20% if current dry and hot weather persists, APK-Inform consultancy quoted agricultural scientists as saying. “In general, weather conditions for most of the spring period were sufficiently favorable for growth and development of winter cereal crops,” Ukraine’s national academy of agricultural science said in a report. “However, in case of continuation of dry weather in the period of grain filling, especially on the background of high air temperatures... the share of lost yields can be from 15% to 20%,” it said, giving no exact production forecast.
The week ahead in Washington... The debt-limit/budget reform package was signed into law Saturday. Congress will now turn to lingering business, including farm bill hearings in both the House and Senate. It will be relatively quiet on the economic front as Fed officials are in a blackout period ahead of the June 13-14 Federal Open Market Committee meeting. USDA will update its U.S. and global balance sheets for both 2022-23 and 2023-24, along with its second U.S. winter wheat crop estimate on Friday.
U.S. firms raise corruption concerns in legal battle over Ukraine grain deal... The Wall Street Journal reports a dispute over missing grain assets has pitted American investors against a Ukrainian firm and comes amid longstanding questions about Kyiv’s commitment to battling corruption. U.S. firms say their efforts to recover $130 million in assets have been hampered by parts of the Ukrainian government. The Ukrainian company involved alleges the American firms are using the continuing war as pretext for taking over their grain-trading business.
Euro zone PPI falls for seventh straight month... Euro zone producer prices fell for a seventh consecutive month in April, almost entirely due to declining energy prices. Euro zone factory gate prices fell 3.2% on a monthly basis but were still 1.0% higher than last year. Without energy, producer prices were 5.1% higher than a year earlier.
Eggs going on sale just months after their prices hit records... Industry officials and farmers say egg supplies have bounced back after the deadliest avian influenza outbreak in U.S. history helped push prices above $4 a dozen in January. Now, after shoppers have cut back on eggs, tested substitutes and in some cases raised their own chickens, some supermarket chains are discounting eggs for the first time in more than a year, the Wall Street Journal reports.
Bullish cash cattle hopes... Cattle traders start the week with bullish hopes for cash cattle trade after packers aggressively raised bids last week. While traders will have to wait until later this today for the official average cash cattle price for last week, it will be a new record high. Despite strong gains in futures last week, they well below the cash market.
Cash hog index picks up steam... The CME lean hog index is 89 cents higher to $80.52 (as of June 1). That’s the strongest daily gain in a while, but traders are anticipating even more cash strength. June lean hog futures finished last Friday $6.205 above today’s cash quote.
Weekend demand news... Saudi Arabia purchased 624,000 MT of optional origin wheat, with much of it likely to be sourced from the Black Sea region, especially Russia. Indonesia plans to import 1.53 MMT of soybeans and 1.34 MMT of corn by the end of this year.
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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. CE: Poultry — NASS
- 2:00 p.m. Dairy Products — NASS
- 3:00 p.m. Crop Progress — NASS