Good morning!
Corn higher, beans and wheat weaker overnight... Corn futures extended recent gains overnight, while soybeans and wheat eased after earlier attempts at the upside. As of 6:30 a.m. CT, corn futures are trading 2 cents higher, soybeans are 6 to 7 cents lower and wheat futures are mostly 1 to 2 cents lower. Front-month crude oil futures are around 25 cents lower and the U.S. dollar index is trading just below unchanged.
U.S. announces significant increase in tariffs on Chinese imports... President Joe Biden later today will officially announce the new tariffs on an additional $18 billion of Chinese imports, including electric vehicles (EVs), batteries and semiconductors. The tariffs target strategic sectors such as aluminum, steel, critical minerals, solar cells, port cranes and medical products. The new measures will double the tariff rate on Chinese semiconductors by 2025, quadruple the rate on EVs to 100% and triple tariffs on steel and aluminum imports. Tariff increases for steel and aluminum products, solar cells and a new duty on shipping cranes will kick in this year. Others will take effect in 2026. The delayed start of some of the tariff increases is to give U.S. industries time to adjust their supply chains.
NOPA urges higher tariffs on Chinese UCO... The National Oilseed Processors Association (NOPA) is advocating for higher tariffs on Chinese used cooking oil (UCO), which it claims undermines U.S. crops used for biofuels. NOPA seeks to raise the current 15.5% levy to match tariffs on other clean energy sources. This push comes amid speculation that imported UCO from China may be mixed with fresh vegetable oils, potentially distorting commodity values. Chinese exports of processed animal and vegetable fats and oils to the U.S. have surged, reaching $201 million in the first three months of this year, compared to $770 million for all of 2023. U.S. soybean processors are concerned that increased imports of used cooking oil are eroding their profits and jeopardizing plans to expand U.S. crushing capacity for biofuels. It is unclear if UCO will be included in the new tariff increases. UCO is not mentioned in the fact sheet nor is it addressed in an accompanying statement issued by the Office of the U.S. Trade Representative outlining the tariff increases.
HRW, SRW CCI ratings modestly improve... USDA rated the winter wheat crop 50% “good” to “excellent,” unchanged from the previous week, though there was a one-point increase in the top category. The “poor” to “very poor” rating increased two points to 18%. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 1.1 points to 318.6, despite a 1.6-point decline in top producer Kansas. The SRW crop rose 3.6 points to 386.3, led by a 1.7-point increase in top producer Illinois. Click here for details.
HRW wheat tour starts today... The Wheat Quality Council’s annual HRW tour through Kansas and remote areas of surrounding states kicks off this morning in Manhattan, Kansas. Scouts will sample fields today across central and far northwestern areas of Kansas enroute to Colby, including some areas of far southern Nebraska. Day 1 results will be released this evening.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of May 12:
- Winter wheat: 50% good/excellent (50% last week); 57% headed (44% five-year average).
- Corn: 49% planted (54% average); 23% emerged (21% average).
- Soybeans: 35% planted (34% average); 16% emerged (10% average).
- Spring wheat: 61% planted (48% average); 25% emerged (18% average).
- Cotton: 33% planted (31% average).
Russia losses roughly 500,000 acres to inclement weather... Russia has lost crops sown on roughly 500,000 hectares this year due to bad weather, the nominee for agriculture minister Oksana Lut told a session of the lower house of parliament on Tuesday. She said the crops would have to be replanted and that Russia has sufficient resources to do so.
Cordonnier cuts Argentine soybean crop estimate... South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate 1 MMT to 50 MMT due to disappointing yields in far northern and far southern production areas and the potential for frost impacts on some later developing soybeans. After the recent string of cuts to the Argentine corn crop due to losses from corn stunt disease, Cordonnier left his estimate at 47 MMT. He has a neutral to lower bias toward both crops in Argentina. For Brazil, Cordonnier left his estimates at 147 MMT for soybeans and 112 MMT for corn.
Panama Canal transits reach seven-month high... Oceangoing transits at the Panama Canal reached a seven-month high in April with 789 vessels, an increase of 42 from March but 289 fewer than April 2023, according to the Panama Canal Authority. This marks the highest monthly total since last October’s 1,003 vessels. April’s daily average was just under 27 transits, including about 15 cargo ships and 12 tankers. Improved water levels allowed the increase in traffic.
Japanese bond yields surge to decade highs... Japanese sovereign bond yields are surging to the highest levels in more than a decade amid signs the central bank is ready to reduce debt purchases to ease pressure on the ailing yen. The yield on 20-year sovereign debt rose to the highest level since 2013, while the 30-year yield reached its highest since at least 2011. The benchmark 10-year yield was just shy of 1%, a more than decade high.
Euro zone economic sentiment rises to 27-month high... The ZEW Indicator of Economic Sentiment for the euro zone rose 3.1 points to 47 in May, the fourth consecutive monthly increase and the highest since February 2022. The survey showed 52.2% of analysts expected an improvement in economic activity, 42.6% anticipated no changes and 5.2% feared deterioration.
Wholesale beef prices jump... Wholesale beef prices jumped $4.38 for Choice and $3.01 for Select on Monday. Just as importantly, packers moved a solid 113 loads at the sharply higher prices. That’s the first sign of a potential short-term low in the wholesale beef market, though additional price strength will be needed for confirmation.
Pork cutout back above $100... The pork cutout value firmed $2.67 on Monday to $102.44, led by a $8.72 jump in bellies though all cuts except picnics rose. Key will be whether packers can hold wholesale prices above the $100.00 level as moves above that mark proved to be brief in both mid- and late April.
Overnight demand news... Japan is seeking 121,516 MT of milling wheat via its weekly tender.
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. Cotton and Wool Outlook: May 2024 — ERS
- 11:00 a.m. Oil Crops Outlook: May 2024 — ERS
- 2:00 p.m. Feed Outlook: May 2024 — ERS
- 2:00 p.m. Rice Outlook: May 2024 — ERS
- 2:00 p.m. Wheat Outlook: May 2024 — ERS