Good morning!
Beans firmer, corn and wheat lower overnight... Price action was relatively quiet overnight as traders await USDA’s crop reports later this morning. As of 6:30 a.m. CT, corn futures are trading mostly 3 cents lower, soybeans are 2 to 5 cents higher, SRW wheat is steady to fractionally lower, HRW wheat is 8 to 9 cents lower and HRS wheat is 8 to 11 cents lower. Front-month crude oil futures are modestly firmer and the U.S. dollar index is up more than 100 points.
Bigger ending stocks expected in June WASDE Report... USDA will likely raise its forecasts for old- and new-crop ending stocks for both corn and soybeans in the World Agricultural Supply and Demand Estimates (WASDE) Report at 11 a.m. CT. We expect cuts to old-crop use, which will push up carryover and likely trickle down through the 2023-24 balance sheets. Changes to the new-crop wheat balance sheet will be largely driven by any adjustment to USDA’s winter wheat crop estimate, which is expected to increase slightly from last month.
Russia: Pipeline talks will impact Black Sea grain deal talks... Russian Deputy Foreign Minister Mikhail Galuzin said a blast that damaged an ammonia pipeline between Russia and Ukraine would be taken into account during talks on the Black Sea grain deal, RIA news agency reported. Russia has repeatedly said resuming ammonia flows through the pipeline is one of the stipulations for it remaining in the deal. Russia’s ambassador to Turkey was separately quoted on Friday as saying there were no grounds to extend the deal, but that Moscow was continuing consultations with the United Nations.
Russia again lowers wheat export tax... Russia’s wheat export tax for June 14-20 will be 2,629.6 rubles ($31.87) per metric ton based on an indicative price of $255.70. That’s down from a rate of 2,856.3 rubles per metric ton the previous week, the eighth straight weekly decline and the lowest level since the week of Oct. 12-18 of last year.
China keeps balance sheets mostly unchanged... China’s ag ministry made few changes to its supply/demand balance sheets this month, including no adjustments to its corn, soybean and cotton production or import forecasts. The ministry expects soybean and corn imports in 2023-24 to decline slightly from this year, while cotton imports are expected to remain steady.
French wheat crop slips amid moisture stress... The condition of French soft wheat declined for the second week in a row amid recent dry weather. France’s ag ministry rated 88% of the country’s soft wheat crop as good/excellent, down three points from last week and five points below two weeks ago. But crop conditions remain above average and much higher than last year’s drought-hurt crop.
China’s factory price deflation accelerates... China’s producer price index (PPI) fell for an eighth consecutive month in May, down 4.6% annually – the fastest decline since February 2016 as sluggish demand weighed on a slowing manufacturing sector. The consumer price index (CPI) rose 0.2% from year-ago last month, up from a 0.1% increase in April. Food price inflation slowed to 1.0% annual growth from 2.4% the previous month.
Wholesale beef prices still surging... Choice beef prices firmed another $3.54 on Thursday, while Select rose $2.54. We can’t rule out a challenge of the 2021 peaks, though a test of the Covid-driven spike of 2020 likely isn’t in the cards. This testifies to the tightness of the current situation, with consumer demand being encouraged by retail prices below the highs of the past two years. We expect retailers to start raising beef prices soon, which could exaggerate the usual summer doldrums for beef demand.
Cash hog fundamentals continue gradual climb... The CME lean hog index is up another 76 cents to $83.80 (as of June 7), extending the nearly seven-week seasonal climb to the highest level since late November. The pork cutout value remains in a general uptrend during the same period but has struggled to find sustained retailer buying in the mid- to upper-$80.00 range.
Overnight demand news... Tunisia canceled a tender to buy 100,000 MT of optional origin soft 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. WASDE — WAOB
- 11:00 a.m. Crop Production — NASS
- 11:15 a.m. Cotton: World Markets and Trade — FAS
- 11:15 a.m. Grains: World Markets and Trade — FAS
- 11:15 a.m. Oilseeds: World Markets and Trade — FAS
- 11:15 a.m. World Agricultural Production — FAS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC