Good morning!
Grains mostly weaker overnight... Corn, soybeans and the winter wheat markets mildly favored the downside overnight. As of 6:30 a.m. CT, corn futures are trading a penny lower, soybeans are mostly 3 cents lower, SRW wheat is a penny lower, HRW wheat is 4 to 5 cents lower and HRS wheat is 1 to 2 cents higher. The U.S. dollar index is around 160 points higher and front-month crude oil futures are about 65 cents higher this morning.
HRW CCI rating inches up, SRW crop declines... USDA rated the winter wheat crop 48% “good” to “excellent,” down one percentage point from the previous week. The amount of crop rated “poor” to “very poor” increased one point to 19%. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 0.3 point, despite 0.8-point declines in Kansas and Colorado. The SRW crop dropped 8.0 points, led by a 3.3-point drop 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 26:
- Winter wheat: 48% good/excellent (49% last week); 77% headed (69% five-year average).
- Corn: 83% planted (82% average); 58% emerged (58% average).
- Soybeans: 68% planted (63% average); 39% emerged (36% average).
- Spring wheat: 88% planted (81% average); 61% emerged (52% average).
- Cotton: 59% planted (57% average); 4% squaring (5% average); 60% good/excellent (48% last year).
India set to import wheat after six years... India is poised to begin wheat imports after a six-year gap, sources told Reuters, as the approaching end of general elections removes a key hurdle. New Delhi is expected to abandon a 40% tax on wheat imports this year, officials and other sources told Reuters, paving the way for private traders and flour millers to buy foreign wheat. A government source also said, “The removal of the import duty will help us ensure that our own reserves don’t fall below a psychological benchmark of 10 million tons.”
Ukraine grain exports surge in May... Ukraine’s ag ministry says its grain exports will reach 5 MMT this month, up from around 3 MMT in May 2023. Through 11 months, Ukraine’s 2023-24 grain exports stand at 46.4 MMT, up 1.5 MMT (3.3%) from the same period last year, including 26.2 MMT of corn, 17.2 MMT of wheat and 2.4 MMT of barley.
IMF raises China’s GDP forecasts... The International Monetary Fund (IMF) raised both its 2024 and 2025 GDP forecasts for China by 0.4 percentage points to 5.0% and 4.5%, respectively, after a “strong” first quarter and new measures by Beijing to shore up the economy. However, deflationary pressures continue to loom over China’s economy and a protracted property crisis remains a major drag on growth. Longer term, IMF warned that growth in China would slow to 3.3% by 2029 due to an aging population and slower expansion in productivity.
China’s state banks continue to support falling yuan... China’s major state-owned banks acquired U.S. dollars in the offshore foreign exchange market before selling them in the spot market to stabilize the Chinese currency in recent sessions, people with knowledge of the matter told Reuters. The state bank actions came as the Chinese yuan fell to a six-month low against the dollar. The state banks’ tactics in the offshore market differed slightly from what they have done over the past few months, when they tightened offshore yuan liquidity to raise the cost of shorting the yuan, four sources said.
Canada non-committal on Chinese EV tariffs... Canadian Finance Minister Chrystia Freeland is non-committal about matching U.S. tariffs on Chinese electric vehicles (EVs) but promised a review to protect Canadian industry from Chinese oversupply. However, Freeland highlighted China’s state-directed economic policy causing overcapacity in sectors like steel and aluminum. Canada already employs measures, including tariffs, to address these issues. G7 finance officials recently discussed responses to China’s industrial strategy in Italy, focusing on the expansion of state-owned companies affecting global mining investments.
H5N1 found in alpacas in Idaho... USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed the H5N1 virus in alpacas at an Idaho farm. This is the first time the virus has been found in alpacas, which belong to the camelid family. The virus was previously identified in a poultry flock on the same farm. Genetic sequencing revealed that the virus strain infecting the alpacas is the same B3.13 H5N1 genotype found in dairy cows and the infected poultry at the farm. the Michigan Department of Agriculture reported another H5N1 outbreak in a dairy herd in Clinton County, marking the third outbreak in that county and the 22nd in the state. Additionally, H5N1 was detected in two dead feral cats in Curry County, New Mexico, not directly linked to any known farm outbreaks.
Cattle futures remain well below cash market... Cash cattle averaged a record $190.09 last week, eclipsing the previous high posted in March. While cattle futures posted moderate gains on Tuesday, the June contract finished $5.54 below last week’s average cash price, signaling traders anticipate the cash market will weaken notably over the next month.
Cash hogs slump, pork cutout jumps... The CME lean hog index is down another 37 cents to $91.26 as of May 24, the sixth straight daily decline. After Tuesday’s drop, the premium in June lean hog futures tightened to $2.54. The pork cutout value firmed $4.26 on Tuesday to $103.40, as all cuts except butts strengthened, including a $9.37 jump in primal bellies and a $7.45 rise in hams.
Overnight demand news... South Korea purchased 66,000 MT of corn expected to be sourced from South America or South Africa. Jordan tendered to buy 120,000 MT of optional origin 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
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Outlook for U.S. Agricultural Trade: May 2024 — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Egg Products — NASS