Good morning!
Losses overnight… Corn futures faced some profit-taking overnight and most contracts are currently down 4 to 6 cents. Soybeans are 12 to 17 cents lower after USDA delivered better than expected crop condition ratings. Winter wheat futures are 2 to 5 cents lower, while spring wheat is 3 to 9 cents lower. The U.S. dollar index is down slightly. Crude oil futures are slightly higher.
Crop Progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Aug. 1. Find more details here.
- Corn: 91% silking, 38% in dough, 62% “good” to “excellent” (G/E)
- Soybeans: 86% blooming, 58% setting pods, 60% G/E
- Spring wheat: 10% G/E, 17% harvested
- Winter wheat: 91% harvested
- Cotton: 82% squaring, 50% setting bolls, 60% G/E
CCI rating improves for spring wheat and soybeans, drops for corn… When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 2.3 points to 363.8 points while the soybean crop rose 1.7 points to 352.9 points. The CCI ratings are 8.0 points below the five-year average for corn and 7.8 points below for soybeans. The spring wheat CCI rating improved 5.2 points over the past week to 221.8 points. That’s the first uptick for the spring wheat crop this growing season, though the CCI rating is still 136.2 points (38.0%) below the five-year average.
Cordonnier sticks with U.S. yield pegs, but anxious about dry northwest Corn Belt… Crop Consultant Dr. Michael Cordonnier stuck with his U.S. corn yield projection of 175.5 bu. per acre and his bias is neutral going forward. “The month of July ended up being beneficial for most of the corn in the eastern Corn Belt, but not as beneficial in the western Corn Belt especially in Minnesota, South Dakota and North Dakota. I think Iowa is going to be the swing state this year,” Cordonnier says. This week’s forecasts signals soil moisture will likely decline in Iowa and other areas of the western Corn Belt, he adds. Cordonnier also maintained his soybean yield projection of 50 bu. per acre and his bias is neutral going forward. With soybeans filling pods, adequate moisture is critical and more of it is needed in the northwestern Corn Belt, he reports.
Consultant makes another cut to Brazil’s corn crop… Brazil’s corn crop will likely total 84 MMT this season, forecasts Cordonnier, which is a 2-MMT drop from his forecast last week. His bias is neutral to lower going forward. He explains, “What still needs to be harvested is the safrinha corn planted last, which was the most impacted by the drought and numerous frosts. There continue to be reports that some of the safrinha corn may not be harvested at all due to the plants being killed during pollination or shortly after pollination. A lot of the late planted corn is expected to be poor quality.” Cordonnier maintained his Argentine corn crop estimate of 48 MMT.
Frost shrinks Brazil’s winter wheat crop… Three rounds of frost for Brazil have clipped Brazil’s winter wheat crop. In top-producing Parana, around 27% of the wheat crop had heads emerged when the third and hardest freeze hit last week, making it very sensitive to frost. “The extent of the damage will not be known until grain filling starts. Some of the most advanced wheat may be a complete loss due to the repeated frosts,” Cordonnier says. Wheat in No. 2 producing Rio Grande do Sul is still in vegetative development and has not been impacted by the frosts/freezes. Cordonnier says the situation could increase in wheat imports and increase pressure to limit how much wheat can be used for animal feed given tight milling supplies. This will add to livestock producers’ struggles; they are already importing corn from Argentina and Paraguay due to the short safrinha corn crop.
Egypt to raise subsidized bread prices… Today, Egypt’s President Abdel Fattah al-Sisi said it’s time for its subsidized bread prices to increase. Subsidized bread currently costs 0.05 Egyptian pounds (0.3 cents) and the country’s citizens are allocated five loaves a day. Sisi did not detail how much prices would rise, but the country is very sensitive to food price changes. A 1977 decision to reduce bread subsidies led to deadly riots. “It is time for the 5 piaster loaf to increase in price… I’m not saying we make it significantly more expensive, to as high as it costs to make it, 65 or 60 piasters, but [an increase] is necessary,” Sisi said. “Nothing stays stagnant like this for 20 or 30 years.” Egypt is the world’s largest wheat importer.
Update reminds of China’s crackdown on commodity market speculation… China’s Dalian Commodity Exchange said it investigated 48 cases of abnormal trading behavior in July as part of the country’s efforts to regulate trade and control its supply of commodities. The exchange detailed that it had restricted one customer’s open positions for its January 2022 soyoil contract for a month after the customer had for a third time reached the handling standards of abnormal trading behavior.
Senate Ag Appropriations Subcommittee clears $25.5 billion FY 2022 bill for USDA… The bill includes $7 billion in ag disaster aid. The full Senate Appropriations Committee will take up the bill on Wednesday. The Wildfire Hurricane Indemnity Program (WHIP+) Plus measure includes:
- $6.28 billion for disaster assistance to aid producers who suffered losses due to droughts, hurricanes, wildfires, floods and other qualifying disasters in calendar years 2020 and 2021. The $6.28 billion is for the WHIP+ disaster program for 2020 and 2021 losses. The House ag panel last week approved an extension of WHIP+ for $8.5 billion but left the funding for appropriators later.
- $750 million for livestock producers for losses incurred during 2021 due to drought or wildfire.
- More broadband funding. USDA’s ReConnect broadband grant and loan program would get another $700 million.
Yellen pushing Congress to increase or suspend debt limit… Treasury Secretary Janet Yellen revealed further measures to avoid breaching the federal government’s borrowing limit and urged Congress to increase or suspend the ceiling. Congress voted in July 2019 to suspend the debt limit until July 31, 2021, after which the prior limit of $22 trillion would be reset to include any new borrowing in the intervening years. On Sunday, the limit was reinstated at around $28.5 trillion. The Treasury uses emergency accounting maneuvers to conserve cash so the government can keep paying its obligations to bondholders, Social Security recipients, veterans and others. Once those measures run out, the Treasury could begin to miss payments on its obligations, which could trigger a default on U.S. debt.
Graham tests positive for Covid, could impact infrastructure vote… Senator Lindsey Graham (R-S.C.) tested positive for Covid-19 despite being vaccinated, raising concerns about the Delta deviant on Capitol Hill. His symptoms are mild, which he attributed to being vaccinated. He has gone into a 10-day quarantine, and if infections spread to other supporters of the bill, it may cost the votes required to pass the physical infrastructure legislation, delaying a vote into the Senate’s planned August recess.
China NDRC releases fertilizer to flood-hit Henan… China’s National Development and Reform Commission (NDRC) has delivered the first batch of fertilizer to flood-hit Henan province to help the province’s efforts for post-disaster agricultural production, according to a Xinhua report. The NDRC issued a notice requiring “relevant companies” to release national reserves of “disaster-relief fertilizer” to areas hit hard by floods in Henan, the NDRC said. The agency said it would monitor crops in affected areas and the fertilizer market across the country and “may continue to release national commercial reserves of fertilizer if needed,” Xinhua reported.
ASF spreading across the Dominican Republic… African swine fever is spreading rapidly across the Dominican Republic, with outbreaks reported in 11 of the country’s 32 provinces. Officials have not detailed how many pigs will be slaughtered, but authorities say tens of thousands of pigs will be culled. Rafael Abel, head of the agriculture committee in the lower house of Congress, last week estimated the slaughter would result in economic losses of around $180 million. If operations to slaughter animals began immediately, the outbreak could be eradicated in around five months, Julio Cesar Estevez, director of the Ministry of Agriculture in the Northwest region, told Reuters.
Beef prices still marching higher… Cash cattle traded at an average price of $121.68 last week, up 91 cents from the average price the week prior and near in line with where August live cattle are trading. Boxed beef values continue to climb, with Choice up $2.54 to start the week and Select shooting $4.19 higher. Neither movement nor prices give any indication the rally is faltering. Both grades have climbed $12 to $13 over the past week. Meanwhile, Day 1 of an Oklahoma City feeder cattle auction saw feeder steers and heifers trade at steady to $3 lower prices.
Pork cutout value surges, too… Lean hog futures got off to a solid start to the week, with October futures uncovering support at the 100-day moving average. The pork cutout value shot $4.82 higher with all cuts rising. But that did slow movement to 238.06 loads. Average cash hog bids edged 70 cents lower to start the week, according to USDA’s national update.
Overnight demand news… Egypt bought 60,000 MT of wheat from Romania. Turkey’s state grain board initially bought around 325,000 MT of animal feed barley from optional origins; more is expected to be purchased later today. Taiwan’s MFIG purchasing group bought around 55,000 MT of animal feed corn that’s expected to be sourced from South Africa. The country’s Flour Millers’ Association also tendered to buy 48,000 MT of grade 1 milling wheat from the United States. Ethiopia cancelled a tender to buy 400,000 MT of wheat after limited participation. Japan is seeking 119,435 MT of food-quality wheat from the U.S., Canada and Australia in a regular tender.
Today’s reports
- No reports