Good morning!
Beans firmer, corn and wheat weaker to start the week... Soybeans are mildly firmer this morning after light, two-sided trade overnight, while corn and wheat are weaker. As of 6:30 a.m. CT, corn futures are trading a penny lower, soybeans are mostly around a penny higher and wheat futures are 4 to 6 cents lower. The U.S. dollar index is around 150 points higher and front-month crude oil futures are more than $1.00 lower this morning.
Cordonnier lowers U.S. yield, production forecasts... Crop consultant Dr. Michael Cordonnier cut his U.S. corn and soybean yield forecasts by 1 bu. and 0.5 bu., respectively, after last week’s extreme heat across the Corn Belt. He now estimates the corn yield at 182.5 bu. per acre with production at 15.09 billion bushels. For soybeans, Cordonnier estimates the yield at 53 bu. per acre and production at 4.57 billion bushels. He has a neutral to slightly lower bias toward both crops.
Stronger soy crush, corn ethanol usage figures expected for July... Analysts expect USDA to report soybean crush totaled 191.7 million bu. for July, according to a Bloomberg survey. That would be a record for the month and up 4.4% from June and 3.7% above year-ago. Corn-for-ethanol use is expected to total 462.8 million bu., which would be up 4.6% from June and 1.7% above July 2023.
Ukraine caps wheat exports... Ukraine’s ag ministry reached an agreement with exporters and farmer groups to cap wheat exports at 16.2 MMT for 2024-25. Ukraine exported 18.3 MMT of wheat in 2023-24. Through the first two months of the 2024-25 marketing year, Ukraine exported 3.59 MMT of wheat, up 2.53 MMT (239%) from the same period last year. The ministry said wheat is the only ag commodity that will have an export limit for 2024-25.
Australia raises wheat crop forecast... The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) raised its 2024-25 Australian wheat production forecast by 2.7 MMT to 31.8 MMT as key production areas have received rains. At that level, wheat production would top year-ago and the 10-year average by around 20%. ABARES said winter crop production is forecast to rise to near-record levels in New South Wales and Queensland, while Western Australia is expecting above-average production. Dry weather will trim crop production in South Australia and Victoria.
China hits Canada with anti-dumping probe on canola imports in response to EV tariffs... China plans to start an anti-dumping investigation into canola imports from Canada, after Ottawa moved to impose tariffs on Chinese electric vehicles (EVs). The commerce ministry said China will also initiate an anti-dumping investigation into some Canadian chemical products. More than half of canola produced in Canada makes its way to China, the world’s largest oilseed importer. China imported 5.5 MMT of canola in 2023, valued at $3.72 billion, with Canadian supplies accounting for 94% of the total. China could turn to Australia and Ukraine for alternative supplies, especially as Australia’s canola production is ample.
Mixed showing by China’s manufacturing sector in August... China’s official manufacturing purchasing managers index (PMI) fell to 49.1 in August, the fourth straight monthly contraction amid larger and state-owned factories and the lowest reading since February. The Caixin/S&P Global manufacturing PMI, which gauges smaller and export-based factories, rose to 50.4 in August, as new orders fueled production expansion amid better underlying demand conditions.
Podesta to visit China for climate talks... U.S. climate envoy John Podesta will visit today through Friday to discuss climate change issues, China’s environment ministry said. Podesta is set to meet Chinese counterpart Liu Zhenmin in the second round of formal climate talks between China and the U.S. since he replaced John Kerry as senior envoy at the start of the year. Washington is trying to push China to set more ambitious climate targets as a deadline approaches by the beginning of next year for countries to submit new “nationally determined” contributions to the United Nations. The U.S. wants China to contribute to a new climate finance program called the New Collective Quantified Goal that aims to deliver billions of dollars to help developing countries boost climate ambitions.
The week ahead in Washington... Congress remains on recess through this week, which will keep focus on campaigning for the November elections. The U.S. Trade Representative (USTR) is set to finalize tariff increases on billions of dollars’ worth of Chinese goods, with the changes set to take effect two weeks after approval. The ag sector will get updated USDA farm income forecasts on Thursday. The economic focus will be Friday’s employment data for August.
Economist warns inflation fight may soon shift to rising unemployment... Gauti Eggertsson, an economist at Brown University, introduced the “Beveridge threshold,” a concept explaining why inflation has fallen without a significant rise in unemployment. Eggertsson argues that while the economy has achieved a “soft landing,” the risk of rising unemployment may now surpass that of inflation. His analysis suggests that as the labor market cools, further reductions in inflation could become more painful, with unemployment potentially increasing beyond current levels. Eggertsson’s insights add a new layer of caution to current economic optimism.
H5N1 confirmed in California... Cows at three dairy farms in California tested positive for the H5N1 virus, the state’s ag department announced late last Friday. H5N1 infections have now been confirmed in dairy cattle in 14 states totaling more than 190 herds, along with 13 dairy and poultry farm workers.
Post-Labor Day retailer demand in focus... With the passing of Labor Day, the summer “beef” holidays have ended. That will put a focus on retailer beef demand, as they gear up for pork features during October, which is national pork month.
Hog traders’ attention will shift to cash index... After actively narrowing the discount nearby lean hog futures hold to the cash hog index last week, buyer interest is likely to pause unless the index stabilizes. With the discount in October hogs down to $4.245 as of last Friday’s close, it’s unlikely traders will narrow it much more without signs of the cash index temporarily halting the seasonal slide.
Holiday weekend demand news... Algeria purchased at least 30,000 MT of corn to be sourced from Brazil or Argentina. Thailand purchased 120,000 MT of Black Sea origin feed wheat. Japan is seeking 87,660 MT of milling wheat in its weekly tender.
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
· 10:00 a.m. Weekly Export Inspections — AMS
· 2:00 p.m. Cotton System Consumption and Stocks — NASS
· 2:00 p.m. Fats and Oils: Oilseed Crushings — NASS
· 2:00 p.m. Grain Crushings and Co-Products Production — NASS
· 3:00 p.m. Crop Progress — NASS