Good morning!
Grains rebound overnight... Corn, soybeans and wheat recouped some of the losses from earlier this week during the overnight session. Soybeans and wheat are poised for strong gains this month, while corn firmed moderately. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 9 to 11 cents higher, SRW wheat is mostly 7 to 8 cents higher, HRW wheat is 10 to 11 cents higher and HRS wheat is 6 to 7 cents higher. The U.S. dollar index and front-month crude oil futures are both modestly lower.
Weekly Export Sales Report out this morning... For the week ended May 23, traders expect:
| 2023-24 expectations (in MT) | 2023-24 last week | 2024-25 expectations (in MT) | 2024-25 last week |
Corn | 600,000-1,000,000 | 911,151 | 0-400,000 | 304,952 |
Wheat | (100,000)-100,000 | 17,852 | 200,000-400,000 | 224,860 |
Soybeans | 200,000-400,000 | 279,402 | 0-150,000 | 65,500 |
Soymeal | 100,000-350,000 | 145,315 | 0-60,000 | 51,437 |
Soyoil | (5,000)-10,000 | (1,041) | 0-10,000 | 4,038 |
Russia keeps grain crop forecast unchanged despite frost damage... Russian Deputy Prime Minister Dmitry Patrushev said frosts earlier this month destroyed crops on around 1 million hectares, including 850,000 hectares of grains. Despite the damage, he maintained Russia’s 2024 grain production forecast of 132 MMT, including 85 MMT of wheat, though he said 2024-25 grain exports will likely fall to 60 MMT from 70 MMT in the current marketing year.
Russia to extend rice export ban... Patrushev said Russia will extend its export ban on rice, without providing specific details, but has no plans to lengthen the curb on durum shipments. He said Russia will increase baseline prices for export duties by 1,000 rubles ($11.07) for all types of grains.
France’s wheat crop rating decline... The condition of French soft wheat continued to deteriorate last week as wet weather persisted. France’s ag ministry rated 61% of the country’s soft wheat crop as good or excellent as of May 27, down two percentage points from the previous week. That’s the lowest rating for this date since 2020. The good/excellent rating for winter barley fell to 64% from 66% a week earlier. The durum wheat rating was unchanged at 64%.
Farmland growth moderates as credit conditions tighten... Growth in farm real estate values slowed significantly, with nonirrigated farmland values increasing by an average of 8% in the first quarter of 2024, nearly half the growth rate of the previous year, according to Federal Reserve Surveys of Agricultural Credit Conditions. This slowdown reflects declining agricultural commodity prices and softer sector conditions. Farmers’ demand for agricultural loans rose, while repayment rates declined, driven by deteriorating farm income. Renewal and extension activity on farm loans also saw a modest increase. Despite tightening financial conditions, farm household spending stayed strong and balance sheets appear capable of handling thinner profit margins in 2024. The robust spending, coupled with declining farm income, may further increase the sector’s credit needs if current trends persist.
Summit Carbon scores North Dakota court victory in carbon capture pipeline ruling... The North Dakota Supreme Court ruled in favor of Summit Carbon Solutions, allowing the company to access land for survey purposes without landowner permission. This decision supports a lower court ruling, affirming that survey access does not equate to an easement. Summit seeks property easements for a five-state carbon capture pipeline, securing over 80% of the North Dakota route through voluntary agreements. However, some landowners have resisted. The court ruled landowners could take legal action if Summit’s activities cause damage or unreasonable interference. The North Dakota Public Service Commission, which denied Summit’s permit last year, is reconsidering the application after allowing Summit to address its concerns.
China’s factory activity unexpectedly contracts in May... China’s official manufacturing purchasing managers index (PMI) dropped to 49.5 in May from 50.4 in April, falling back into contraction after two months of expansion. New orders and new export orders fell after growing in the prior two months, though output rose for the third successive month.
Euro zone inflation rises in May... Consumer inflation in the euro zone rose for the first time in five months to 2.6% annually, preliminary estimates showed. The core rate, excluding prices for energy, food, alcohol and tobacco, increased to 2.9% from 2.7% in April.
Japan facing ‘huge dilemma’ walking monetary policy tightrope... Japan spent a record 9.8 trillion yen ($62 billion) from late April to May to boost the yen, but the currency has resumed its decline toward 34-year lows. Despite interventions, analysts highlight the “huge dilemma” for the Bank of Japan (BOJ), which faces pressure to raise rates faster amid weak economic conditions. The finance ministry reported the spending mainly occurred from April 29 during the first yen-buying intervention since late 2022. The yen remains popular for the “carry trade,” where it is borrowed cheaply to fund investments in higher-yielding assets. Meanwhile, 10-year Japanese government bond yields hit 1.1%, the highest since July 2011, amid rising expectations BOJ will reduce government debt purchases at its June policy meeting.
Slow developing cash cattle trade... There has been only a smattering of cash cattle sales this week – not enough for a true price test. Feedlots continue to seek steady/firmer prices, while packers are hoping to get cattle bought at lower prices after five straight weeks of higher trade, including last week’s all-time high. Price action in cattle futures suggests traders sense the cash market has posted a seasonal top and will fade through summer.
Cash hog index halts recent slide... The CME lean hog index is up 21 cents to $91.00, ending a seven-day slide that took $1.50 off the market. The pork cutout value firmed 21 cents on Thursday to $101.95. The cutout has swung about $3.00 on either side of the $100.00 level for the past two months.
Overnight demand news... South Korea passed on a tender to buy up to 68,000 MT of corn from the U.S., South America or South Africa.
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
- 7:30 a.m. Weekly Export Sales — FAS
- 2:00 p.m. Agricultural Prices — NASS
- 2:00 p.m. Peanut Prices — NASS