Good morning!
Corn and soy higher overnight, wheat lower… Corn and soybeans rebounded of Friday’s weakness overnight though are trading well off session highs, while wheat futures fell. As of 6:00 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 4 to 5 cents higher and winter wheat futures are 4 to 7 cents lower. The U.S. dollar index is down over 200 points and front-month crude oil futures are modestly lower.
Pro Farmer Crop Tour begins today… Scouts will be sampling corn and soybean fields across the seven Crop Tour states over the next four days. Follow along with updates on our website and by searching #pftour24 on X (formerly Twitter). Scouts on the eastern leg of the tour are making their way today from Dublin, Ohio to Noblesville, Indiana. Those on the western leg are scouting fields between Sioux Falls, South Dakota, and Grand Island, Nebraska. Look for preliminary route reports from Tour leaders in “Evening Report” and on our website. We’ll release the Tour results for Ohio and South Dakota and stream the nightly results on our site tonight. The Pro Farmer corn and soybean crop estimates will be released Friday at 1:30 p.m. CT. Our “Crops Analysis” and “Livestock Analysis” reports will be replaced with “After the Bell” this week.
Precipitation falls across Corn Belt… Rain fell across the central and eastern Midwest over the weekend, varying between 0.1 inch to a little over a half inch. Some localized areas received larger totals. Net drying occurred in the Delta, western Corn Belt and much of the western Plains. The forecast calls for net drying with warm temperatures, which should be good for crop maturation. A lack of extreme heat should leave favorable conditions for grain filling in the next few weeks.
Goldman lowers recession odds… Goldman lowers the odds of a U.S. recession within the next year from 25% to 20%, based on positive retail sales and jobless claims data. The bank indicated that if the August jobs report, to be released on Sept. 6, is strong, they might further lower the recession risk to 15%. Recent economic data showing resilience has boosted stocks, and Goldman now expects the Federal Reserve to likely cut interest rates by 25 basis points Sept. 18, though a significant drop in jobs could lead to a 50-basis point cut.
Push to delay crop insurance bills… There is a push to extend the 2024 Spring crop insurance payment deadline due to depressed grain prices. The bill, historically due on Nov. 30, has been due on Sept. 30 for the past 8 to 10 years, with billing occurring on Aug. 15. Despite when the bill is sent, recipients have 30 days to pay. In previous years, deadlines were deferred due to weather issues and Covid-19. However, this year, the Risk Management Agency (RMA) decided not to defer the payment deadline, citing record yields. Some farmers, particularly in Ohio, are requesting a deferral due to late planting and depressed markets, but others argue it is too late to implement the change after the Aug. 15 billing date. Stakeholders note that without an extension, many producers may struggle, as they won’t have new cash sales until after Sept. 30.
Canadian rail strike threatens economic impact… Canada’s freight rail network is on the brink of a significant disruption as Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) have issued lockout notices to the Teamsters union, which represents nearly 10,000 workers. This unprecedented simultaneous labor action could halt the transportation of essential goods like food grains, potash, coal, and timber, potentially causing billions of dollars in economic damage across North America. The lockout is set to begin early Thursday unless an agreement is reached.
Blinken seeks cease-fire in Israel/Hamas… Secretary of State Antony Blinken’s visit to Israel underscores the intense diplomatic efforts underway to resolve the ongoing Israel-Hamas conflict. His statement emphasizes that it might be the last viable opportunity to secure the release of hostages and achieve a cease-fire, which could pave the way for longer-term peace and security in the region. The cautious optimism expressed by Israeli Prime Minister Benjamin Netanyahu’s office suggests that there is some progress, although the situation remains delicate. Hamas’s accusation that Israel is stalling negotiations implies deep mistrust between the parties, which complicates the efforts to reach an agreement.
Ukraine air force destroys second bridge… Ukraine’s air force announced the destruction of a second bridge in Russia’s Kursk region, which borders Ukraine. This strategic attack aims to disrupt supply lines to Russian forces attempting to fend off Ukrainian fighters who crossed into Russian territory on Aug. 6. Ukrainian President Volodymyr Zelenskyy has stated that Ukrainian troops are not only holding their positions in enemy territory but are also strengthening and expanding them. This development underscores Ukraine’s efforts to intensify pressure on Russian forces by targeting critical infrastructure and maintaining an offensive posture beyond its borders.
Trump doubles down on tariff talk… Former President Trump pledged to implement “10% to 20% tariffs on countries that have been ripping us off for years.” Elsewhere, Trump has indicated he would support tariffs of at least 60% on Chinese imports to reduce trade with the world’s second-largest economy. The average tariff is currently around 1% with Chinese goods facing an 11% hike.
Perdue Foods issues chicken recall… Perdue Foods LLC issued a voluntary recall of approximately 167,171 pounds of frozen, ready-to-eat chicken products due to potential metal contamination. This recall was initiated after consumer complaints revealed the presence of metal wire in the products.
Malaysia launches ‘orangutan diplomacy’ to boost palm oil image… Malaysia has launched a controversial “orangutan diplomacy” program aimed at improving the image of its palm oil industry by allowing countries that import palm oil to “adopt” orangutans. This initiative, announced by Malaysia’s Plantation and Commodities Minister Johari Abdul Ghani, is intended to demonstrate Malaysia’s commitment to biodiversity conservation. The plan has drawn parallels to China’s “panda diplomacy” and is seen as a response to the European Union’s ban on imports of commodities linked to deforestation, which includes palm oil.
Japan machinery orders rebound more than expected… A weak yen has spurred development, noted by core machinery orders rising 2.1% month-over-month, exceeding market estimates of 1.1%. The Bank of Japan has been tightly monitoring monetary policy as the yen has been volatile, rebounding machinery orders indicate the banks efforts are working.
The week ahead in Washington... Congress is on recess with focus in Washington on campaigns for the November elections. Focus will be on the Democratic National Convention in Chicago, where Walz and Harris will speak on Wednesday and Thursday, respectively. The Federal Reserve is holding their annual Jackson Hole Symposium. a key event where economists, financial market participants, and U.S. gov’t representatives discuss long-term policy issues. Traders will closely watch Fed Chair Jerome Powell’s remarks for hints on monetary policy easing. Additionally, updates on new home sales and the Fed’s July meeting minutes are expected.
Cash cattle decline expected… Trade into Friday of last week was light though was averaging about $1.50 below the prior week. Weakness in futures likely favored packers in negotiations late in the week, causing weakness in the cash market. Trade is likely to be pushed late into the week with USDA releasing their monthly Cattle on Feed report on Friday. Wholesale beef ended the week strong, as Choice rose 51 cents and Select firmed 56 cents.
Cash hog fundamentals weaken… The bounce in the CME lean hog index was short lived, as the index is down 11 cents to $90.09 as of Aug. 15. After bouncing mid-week, wholesale pork prices continue to fall under pressure, with most cuts lower on Friday. Whole cutout was down $1.20 to $98.67.
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
· 8:00 a.m. Food Expenditure Series — ERS
· 10:00 a.m. Export Inspections — AMS
· 3:00 p.m. Crop Progress — NASS