Good morning!
Wheat mixed, corn and soybeans weaker this morning... Grain and soy futures pulled back from Monday’s strong gains overnight, though buyers are returning to wheat early this morning. As of 6:30 a.m. CT, corn futures are mostly 2 cents lower, soybeans are 5 to 8 cents lower and wheat futures are narrowly mixed. Front-month crude oil futures are $1.35 lower and the U.S. dollar index is trading just below unchanged.
HRW CCI rating improves, SRW declines... USDA rated the winter wheat crop 49% “good” to “excellent,” down one percentage point from the previous week. The amount of crop rated “poor” to “very poor” held at 18%, though there was a one-point improvement in the lowest category. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 2.7 points to 321.3 on a 3.2-point increase in top producer Kansas. The SRW CCI rating dropped 2.5 points to 383.8, led by a 2.5-point decline in top producer Illinois. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of May 19:
- Winter wheat: 49% good/excellent (50% last week); 69% headed (57% five-year average).
- Corn: 70% planted (71% average); 40% emerged (39% average).
- Soybeans: 52% planted (49% average); 26% emerged (21% average).
- Spring wheat: 79% planted (65% average); 43% emerged (33% average).
- Cotton: 44% planted (44% average).
IKAR further cuts Russian wheat production, export forecasts... IKAR cut its forecast for Russia’s wheat crop another 2.5 MMT to 83.5 MMT after a “more exact assessment of frost damage and dryness across the south.” Total grain production is now forecast at 132 MMT, down 3 MMT from its prior outlook. The ag consultancy lowered its 2024-25 Russian wheat export projection by 2 MMT to 45 MMT. Total grain exports are now forecast at 57 MMT, down 2.5 MMT.
Ukrainian crops avoid serious frost damage... Recent frosts in eastern, northern and central Ukraine didn’t cause significant damage to grain and oilseed crops, a state weather forecaster said. “There is some damage to early seedlings of corn and sunflower. But it’s all very localized. As of today, we have no information that crops have died,” said Tetiana Adamenko, head of the state forecaster’s agriculture department. “Wheat and other cereals are frost-tolerant crops and should be able to pass through minor frosts” she said. “For the plant to die, the temperature must fall below 9 degrees Celsius, which we have not had.” Adamenko noted the situation in Ukraine was much better than in Russia, where frost damaged significant crop areas.
Cordonnier leaves South American crop estimates unchanged... South American crop consultant Dr. Michael Cordonier left his Argentine crop estimates at 50 MMT for soybeans and 47 MMT for corn, though he has a lower bias toward both amid declining yields as harvest progresses. For Brazil, Cordonnier left his crop forecasts at 147 MMT for soybeans and 112 MMT for corn, with a neutral bias toward both.
China to offer nationwide crop insurance for staple grains... China will offer nationwide full-cost, planting income insurance policies for rice, wheat and corn. The policies are aimed at improving crop insurance protection, stabilizing farmers’ income, supporting the revitalization of rural areas and better safeguarding food security, according to a notice jointly released by the ministries of finance and agriculture and the State Administration of Financial Supervision.
Yellen calls for ‘strategic and united’ approach to China’s industrial overcapacity... Treasury Secretary Janet Yellen said the U.S. and Europe needed to respond to China’s industrial policies in a “strategic and united way” to keep their manufacturers viable. Yellen said China’s excess industrial capacity threatened both American and European firms as well as the industrial development of emerging market countries. Yellen’s comments come on the heels of President Joe Biden’s new tariffs on $18 billion of Chinese goods announced last week.
CFTC guidance coming on carbon credits... The Commodity Futures Trading Commission (CFTC) is set to issue final guidance on carbon credits within the next six months, potentially as early as September, according to Commissioner Christy Goldsmith. This guidance is essential for ensuring the integrity of carbon credits traded on regulated markets. Currently, most carbon credits are traded over the counter, but there is a push for more regulatory oversight to prevent “greenwashing.” CFTC released draft guidance in December and is now reviewing feedback. Companies are eagerly awaiting the final rule to establish clear standards and avoid issues with investors and regulators. Carbon markets have been struggling, with credit values declining significantly over the past two years.
Rep. Scott faces challenge in primary election... Top House Ag Committee Democrat, Rep. David Scott, faces a challenge in today’s Georgia primary election. If he doesn’t win more than 50% of the vote, he’ll have a June runoff. The most recent round of redistricting removed nearly all the rural areas from his new district, which now mainly encompasses Atlanta’s eastern exurbs.
Hefty hog, poultry losses due to flooding in southern Brazil... The Brazilian state of Rio Grande do Sul incurred extensive losses of livestock and poultry due to recent flooding. Hog farmers lost an estimated 12,600 head after floods submerged entire towns in the state, Valdecir Folador, head of a local hog producers lobby ACSURS, said. He noted some 30 farms were affected, including those of suppliers to BRF and JBS. ASGAV, a group representing local poultry processors and farmers, estimated 279,000 head of poultry destined for slaughter died, as well as 150,000 laying hens. Four meatpackers’ plants were halted, ASGAV said. Rio Grande do Sul accounts for 24.2% of overall Brazilian pork exports and for 16.2% of Brazil’s chicken exports, according to national industry lobby ABPA. The port of Rio Grande, also disrupted by floods and landslides that blocked roads and affected a rail link to its terminals, ships nearly 9% of Brazil’s overall pork exports and 6.3% of the country’s chicken exports, according to ABPA data.
Traders expecting short-term top in cash cattle... Cash cattle averaged $188.54 last week, up $2.60 from the previous week, the fourth consecutive weekly gain and the third highest on record. Previous runups to highs or near-record highs in the cash market have been followed by a brief period of weaker prices. Based on Monday’s modest 42.5-cent gain in June live cattle futures despite the big discount to the cash market suggests traders sense a short-term cash top is close.
Pork cutout firms, cash index slips... The pork cutout value firmed 92 cents on Monday, despite giving back some of the morning gains. Movement was strong to open the week at 327.0 loads. The CME lean hog index is down 7 cents to $92.22 as of May 17. With seasonally tightening market-ready supplies and packers margins in the black, any decline in the cash index should be minor and temporary.
Overnight demand news... Tunisia tendered to buy 100,000 MT of optional origin soft milling wheat. Egypt tendered to buy at least 50,000 MT of optional origin raw cane sugar.
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. Fruit and Tree Nuts Data — ERS
- 11:00 a.m. Vegetables and Pulses Data — ERS