Good morning!
Beans pull back, corn and wheat firmer this morning... Soybean futures pulled back from Monday’s strong gains during overnight trade, while the corn and wheat markets have firmed after earlier trading lower. As of 6:30 a.m. CT, corn futures are trading around 3 cents higher, soybeans are 2 to 6 cents lower and wheat futures are 1 to 3 cents higher. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is more than 300 points higher.
More U.S. purchases of EU wheat... The U.S. has recently purchased five cargoes of wheat from Poland and two from Germany – all around 30,000 MT – for shipment between May and August, Reuters reported, citing European trade sources. The purchases reportedly consisted of milling wheat with 12.5% to 13% protein.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of May 21.
- Corn: 81% planted (75% average); 52% emerged (45% average).
- Soybeans: 66% planted (52% average); 36% emerged (24% average).
- Cotton: 45% planted (50% average).
- Spring wheat: 64% planted (73% average); 32% emerged (40% average).
- Winter wheat: 31% good/excellent (29% last week); 61% headed (61% five-year average).
Consultant lower Argentine soybean crop peg... Crop Consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate 1 MMT to 22 MMT, noting yields are poor and acreage abandonment is estimated at around 2 million hectares. He kept his Argentine corn crop estimate at 35 MMT, saying corn has withstood the adverse weather better than soybeans. Cordonnier maintained his Brazilian crop estimates at 155 MMT for soybeans and 125 MMT for corn.
Debt-limit update... House Speaker Kevin McCarthy (R-Calif.) said he and President Joe Biden had a productive talk last night but haven’t yet reached a deal on the debt ceiling. McCarthy expects to talk daily with the president until a deal is done, though no additional meetings are scheduled at the White House. McCarthy said lifting the debt limit for a short period was not on the table among Republicans because it would prolong the debate rather than resolve it. He also discounted the suggested use of the 14th Amendment as a fallback plan. Treasury Secretary Janet Yellen warned it’s now “highly likely” her department will run out of sufficient cash in early June.
U.S. begins major trade mission to Indonesia to counter China... Indonesia will host one of its largest American trade delegations yet as the U.S. seeks to counterbalance China’s fast-growing presence in Southeast Asia’s largest economy. About 100 senior executives from over 30 U.S. companies are set to visit Jakarta this week for discussions on investment opportunities in Indonesia and the wider region. The U.S./ASEAN Business Council, which is organizing this event, stated this is its largest such gathering. The executives are interested in opportunities related to the new capital city, digital economy, tourism, manufacturing, healthcare and energy transition.
Euro zone private sector growth eases... The HCOB Euro zone Composite purchasing managers index fell to a three-month low of 53.3 in May from 54.1 in April, and below forecasts of 53.7. Still, the reading pointed to a fifth straight month of expansion in private sector activity, indicating robust but uneven economic growth. The services sector continued to show a strong performance while manufacturing activity contracted the most in three years.
IMF gives U.K. an economic upgrade... The International Monetary Fund (IMF) now says Britain is unlikely to fall into economic recession this year, revising earlier predictions that its economy would shrink by 0.3%. IMF now expects the United Kingdom’s GDP to grow by 0.4%. The fund said that resilient demand had bolstered Britain’s ailing economy, but warned that the outlook for growth “remains subdued” and that inflation is still “stubbornly high.”
Rise in CFAP 2 payments as other aid holds basically steady... Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) increased to $19.48 billion as of May 21, up from $19.44 billion. There were increases in original CFAP 2 payments at $14.55 billion ($14.53 billion) and top-up payments at $4.93 billion ($4.91 billion prior). But payments under CFAP 1 remained basically steady. Emergency Relief Program (ERP) Phase 2 payments continue to slowly increase, moving to $656,325 from $508,169 with 344 payments being made. ERP Phase 1 payments held essentially steady.
Brazil declares animal health emergency amid HPAI cases... Brazil on Monday declared a state of animal health emergency for 180 days in response to the country’s first ever cases of the highly pathogenic avian influenza (HPAI) in wild birds. The ag ministry created an emergency operations center to coordinate, plan and evaluate “national actions related to avian influenza.” Brazil, the world’s largest chicken meat exporter with $9.7 billion in sales last year, has so far confirmed eight cases of the H5N1 strain of HPAI in wild birds since May 15.
South Korea resumes imports of German pork... South Korea is resuming imports of German pork after suspending them for more than two years following the discovery of African swine fever (ASF) in the country, the German ag ministry said. South Korea has adopted a regionalization concept, under which only pork imports from the region affected by the disease are restricted, the ministry said. Three German slaughterhouses and meatpackers have been authorized to immediately resume exports to South Korea. South Korea was Germany’s second-largest non-EU pork market after China prior to the ASF outbreak.
Extended cash standoff likely... Last week’s average cash cattle price of $175.15 rose $1.02 from the previous week. Next week is a shortened slaughter schedule due to Memorial Day, so packers won’t need as many cattle. Plus, they’ll have a fresh supply of contract cattle available with the flip of the calendar to June next week. As a result, packers will try to get cash cattle bought at lower prices. But feedlots aren’t likely to be willing sellers at lower prices. An extended cash standoff is likely.
June hogs now have less-than-average seasonal strength built in... The CME lean hog index is up another 44 cents to $79.57 (as of May 19). After Monday’s losses, the premium in June hog futures was down to $2.255 to today’s cash quote, more than $1.00 below the 10-year average rise from now until June 16 when the contract will be cash-settled.
Overnight demand news... Philippines purchased 40,000 MT of feed wheat from unspecified origins.
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
- No reports scheduled.