Good morning!
Wheat paces mostly weaker overnight price action... Wheat futures faced active followthrough selling overnight, while corn and soybeans favored the downside in two-sided trade. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are narrowly mixed, SRW wheat futures are 7 to 8 cents lower, HRW wheat is mostly a nickel lower and HRS wheat is 2 to 3 cents lower. The U.S. dollar index is down more than 200 points and front-month crude oil futures are trading just above unchanged.
Reuters: Little to no ethanol will qualify for SAF credits... Little to no ethanol will qualify for U.S. sustainable aviation fuel (SAF) credits under a new pilot program by President Joe Biden’s administration, which toughened climate requirements, according to Reuters. A Reuters review of data from USDA suggests almost no U.S. corn farmers use no-till, plant cover crops and use high efficiency fertilizer at the same time, as required by the new guidelines. Nationally, continuous no-till is used on about 33% of cropland acres, efficient fertilizer application on about 26% and cover crops on about 6%, according to a 2022 USDA report. There was no breakdown by crop or for corn destined for ethanol production facilities. Officials at five ag and biofuel trade groups told Reuters few, if any, ethanol makers will be able to meet the standard. The pilot program covers ethanol produced in 2023 and 2024 and will be replaced by a new program in 2025 that biofuel groups hope will be less restrictive.
EU agrees to hike tariffs on Russian grain imports from July... The European Union agreed to hike tariffs on imports of Russian grain to curb the Kremlin’s revenues and prevent those shipments from destabilizing the region’s farm sector. The tariffs, which also apply to Belarusian grain, will be in place from July 1, EU trade chief Valdis Dombrovskis said.
China exporting unusual amounts of soymeal... China is sending record quantities of soymeal abroad, as a shrinking number of pigs and weak demand for pork force processors to export their surplus animal feed. Bloomberg says cash-strapped Chinese consumers aren’t spending like they used to, and farmers have reduced their hog herds because prices are too low, limiting demand for feed. That’s dropped domestic soymeal prices to near three-year lows. China’s soymeal exports climbed to almost 600,000 MT in the first four months of 2024, which is nearly five times the level of the previous year.
Sharp drop in Ukrainian grain exports expected in 2024-25... Ukraine’s grain exports are forecast to fall to around 38 MMT to 40 MMT in 2024-25 compared with around 50 MMT in the current marketing year, acting Ag Minister Taras Vysotskiy told Reuters. The expected sharp decline in exports is due to smaller production.
Weekly export sales data pushed back to Friday... Due to Monday’s holiday, export sales data for the week ended May 23 will be released Friday morning.
Chinese developer in advanced talks with banks for significant loan... China Vanke Co., the Chinese state-backed developer that’s become the latest flashpoint in the nation’s property crisis, is in advanced talks with major banks for a loan of about 50 billion yuan ($6.9 billion), people familiar with the matter told Bloomberg. If signed, it would be the largest loan in Asia Pacific, excluding Japan, since 2022. China’s second largest developer, once considered a sound player in the sector, particularly given the state backing, has been raising funds to calm investors’ concern over its liquidity strains.
Euro zone economic sentiment hits four-month high... The economic sentiment indicator in the euro zone rose to 96 points in May, the highest in four months. Sentiment improved among service providers as their assessments of past and expected demand strengthened, while their assessment of the past business situation was unchanged. Morale also improved a bit for industrials, due to better assessments of the current level of overall order books while production expectations deteriorated significantly. Meanwhile, consumers were less pessimistic while confidence among retailers was stable and worsened a bit for constructors.
U.S. nears deal to fund Moderna’s H5N1 vaccine trial... The U.S. government is nearing an agreement to fund a late-stage trial of Moderna’s mRNA H5N1 vaccine, the Financial Times reported, as the outbreak spreads. Federal funding from the Biomedical Advanced Research and Development Authority (BARDA) could come as soon as next month and would include a promise to procure doses if late-stage trials are successful, the report said, citing people close to the discussions. As we previously reported, the U.S., Canada and Europe have been in active talks with CSL Seqirus and GSK to acquire or manufacture H5N1 vaccines, which could be used to protect at-risk poultry and dairy workers, veterinarians and lab technicians. The U.S. government is also in “active conversations” with mRNA vaccine makers Pfizer and Moderna on a potential H5N1 vaccine for humans.
APHIS reports H5N1 in mammals, wild birds... USDA’s Animal and Plant Health Inspection Service (APHIS) reported 15 new H5N1 virus detections in mammals across six states, with sample dates from mid-April to mid-May. This includes outbreaks in dairy cattle counties. Mammal detections were noted in New Mexico, Michigan, Montana and South Dakota in domestic cats (eight detections), red fox and a raccoon. A reassortant between the Eurasian and North American wild bird lineages was found in all cat samples and one red fox sample. Wild bird detections were noted in East Coast states including New Hampshire, Maine, Rhode Island and Virginia. All were Eurasian H5N1.
China lifts ban on more Aussie beef exporters, allows some Russian beef imports... China lifted bans on imports from five major Australian beef processing facilities, the Australian government said. China has removed restrictions for eight Australian beef plants, while two are still banned from making shipments. China was Australia’s second biggest beef export market last year, receiving 240,000 MT worth around $1.6 billion, according to Australian trade data. China will also allow imports of Russian beef from cattle under 30 months of age, while permitting shipments of by-products including frozen beef tendons and hoofs, stomach and cartilage.
Cash cattle hopes soften... Feedlots remain focused on trying to secure higher cash cattle prices for a sixth consecutive week. But the pattern has been for a brief (three to five week) period of price pressure after the cash market has posted previous record highs. Any active followthrough to Wednesday’s sharp losses in futures would add another hurdle to feedlots’ hopes of higher cash prices. Most cash sources expect weaker cash trade to eventually surface.
Cash hog fundamentals weaken... The CME lean hog index is down another 47 cents to $90.79 as of May 28, marking the seventh straight daily decline. During that span, the cash index has dropped $1.50. That pork cutout fell $1.66 on Wednesday as most cuts that posted gains the previous day declined, led by a $4.08 drop in bellies and a $3.95 loss in loins.
Overnight demand news... Taiwan purchased 96,850 MT of U.S. milling wheat. Thailand purchased 60,000 MT of optional origin feed wheat. South Korea tendered to buy up to 132,000 MT of optional origin feed wheat, excluding Brazil, Argentina, Denmark, China, India, Pakistan, Russia and Ukraine.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Agricultural Exchange Rate Data Set — ERS