Good morning!
Price pressure overnight... Corn and soybean futures pulled back overnight from strong gains earlier this week. Wheat also traded lower. As of 6:30 a.m. CT, corn futures are trading 5 to 8 cents lower, soybeans are 10 to 13 cents lower, SRW wheat futures are 17 to 19 cents lower, HRW wheat is 12 to 14 cents lower and spring wheat is 9 to 12 cents lower. Front-month U.S. crude oil futures are just below unchanged and the U.S. dollar index is around 135 points lower this morning.
No agreement to export Ukrainian grain... The Kremlin said on Thursday no agreement had been reached with Turkey on exporting Ukrainian grain shipments across the Black Sea, though talks on that front continued. Turkey has been pushing for an agreement between Russia and Ukraine on a plan to resume grain exports from Ukrainian ports, though prospects for a deal appear dim with both sides blaming the other for the stoppage. “The United Nations’ and Turkey’s mediation efforts are significant steps,” Italian Prime Minister Mario Draghi said in a speech at an OECD ministerial meeting in Paris. “We have to offer President [Volodymyr] Zelenskyy the assurances he needs that the ports will not be attacked,” he added.
China soybean imports surge... China imported 9.7 MMT of soybeans in May, up 29.7% from the previous month and 0.6% above year-ago, as some cargoes delayed at ports by Covid restrictions were unloaded. Through the first five months of this year, China imported 38.0 MMT of soybeans, down 0.4% from the same period last year.
China’s trade data strengthens as Covid restrictions eased... China’s exports jumped 16.9% from year-ago in May, the strongest increase since January as factory production resumed and logistics issues eased following a relaxation of Covid-19 control measures in Shanghai and Beijing. China’s imports rose 4.1% last month, the first year-over-year increase in three months. That pushed China’s trade surplus to $78.8 billion, up from $51.1 billion in April. China’s trade surplus with the U.S. increased to $36.1 billion in May. Through the first five months of the year, China’s cumulative trade surplus stood at $290.5 billion, including a surplus of $153 billion with the United States.
Parts of Shanghai locked down again... Minhang district, home to 2 million people, was the latest to be quarantined as China’s biggest city continues to battle Covid-19. Meanwhile, many temporary testing stations — which must be within a 15-minute walk for Shanghainese — are being made permanent. Last week, China’s government declared victory against the virus in Shanghai following a costly two-month lockdown.
Firm cuts EU wheat export forecast... Strategie Grains cut its EU wheat export forecasts for 2021-22 and 2022-23, citing slowed demand amid higher prices. The firm cut its 2021-22 EU wheat export estimate by 1.9 MMT to 28 MMT. The export outlook for 2022-23 was lowered 500,000 MT to 30.3 MMT.
France cuts wheat export outlook... France’s ag ministry reduced the country’s 2021-22 export forecast outside the EU by 150,000 MT from last month to 9.1 MMT, as high price curbed demand. It kept is wheat export forecast within the 27-country bloc at 8 MMT. The ag ministry did not provide a forecast for the upcoming 2022-23 marketing year.
Exchange lowers Argentine wheat crop forecast... Argentina’s 2022-23 wheat crop will likely come in at 18.5 MMT, down from 19 MMT previously estimated, the Rosario Grain Exchange forecast, citing reduced planting by farmers due to dry weather. The exchange cut its forecast for planted area to 6.2 million hectares, the lowest in 12 years, down from its previous forecast of 6.35 million hectares.
Weekly Export Sales Report out this morning... For the week ended June 2, traders expect:
| 2021-22 expectations (in MT) | 2021-22 last week | 2022-23 expectations (in MT) | 2022-23 last week |
Corn | 125,000-500,000 | 185,760 | 50,000-600,000 | 48,748 |
Wheat | NA | NA | 250,000-500,000 | 363,542 |
Soybeans | 100,000-500,000 | 111,557 | 200,000-700,000 | 284,000 |
Soymeal | 150,000-300,000 | 188,912 | 0-20,000 | 120 |
Soyoil | 0-25,000 | 4,172 | 0-10,000 | 0 |
Administration looking at China tariffs amid inflation fight... Treasury Secretary Janet Yellen said the Biden administration is considering ways to reconfigure tariffs on imports from China as a means of helping to ease inflation that’s at a 40-year high. Yellen, speaking at a House Ways and Means Committee hearing on Wednesday, said she expected the administration to have additional information on its plans in the coming weeks, although there is no firm timeline. She told lawmakers that while some of the tariffs are important to protect U.S. national security, the cost of certain duties on China ended up being paid by Americans. When the tariffs were enacted prior to the pandemic, annual inflation was trending near 2%.
China’s meat imports remain sluggish... China’s meat imports in May were virtually unchanged from the previous month at 590,000 MT, though that was down 24.7% from last year. China doesn’t provide a breakdown of meat imports by category in its preliminary data, though the sharp year-over-year reduction was due to reduced pork imports. Through the first five months this year, China imported 2.85 MMT of meat, down 34.2% from the same period last year.
Cash cattle prices firm... Cash cattle trade started around $136 in the Southern Plains and $141 in Nebraska on Wednesday, up about $1 from last week in both locations. Given the firmer initial cash trade, most feedlots held out for even higher prices. Feedlots are current, which gives them some additional negotiating power this week.
Hog traders remain cautious... Wednesday’s losses virtually wiped out premiums in June and July lean hog futures and extended the discount the August contract holds to the cash index. While the cash index is down 32 cents today (as of June 7), it has been trending solidly higher since mid-May. Given the lack of premium in summer-month hogs, traders must sense the price strength is nearing an end.
Overnight demand news... Japan purchased 146,990 MT of wheat in its weekly tender, including 88,483 U.S. and 58,507 MT Canadian.
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