Good morning!
Soybeans and wheat higher overnight, corn faces light pressure… Corn futures faced pressure overnight and the market is currently trading high-range and mixed. Soybeans saw two-sided action overnight, with futures currently up 4 to 9 cents. Winter and spring wheat futures are around 4 to 5 cents higher. The U.S. dollar index is posting modest gains. Crude oil futures are trying to rebound.
July jobs update awaited... U.S. growth in nonfarm payrolls in July is expected to have been strong, with expectations for at least 800,000 jobs added. But there are more than a few questions ahead of the data. The private-sector numbers from ADP earlier this week came in well below expectations and the ending of additional jobless benefits in some states is also an unknown. But there are no lack of jobs available. More than 9 million job openings have been reported, equivalent to roughly the entire pool of unemployed in the U.S. The employment report isn’t likely to reflect the growing threat posed by the fast-spreading Delta variant.
Temperature swings stressing Argentine wheat, but not enough to lower production prospects… Bad weather over the past two weeks has damaged the Argentine wheat crop, according to the Buenos Aires Grains Exchange. But damage was not enough to prompt a cut to its 19 MMT crop estimate for 2021-22. “The fluctuation between high and low temperatures continues to affect wheat fields, mainly in the western parts of the main farm belt, where there is less moisture in the ground,” the exchange detailed, adding that temperature swings are also stressing wheat in northern provinces. But it also said wheat grown in southern areas of the farm belt is in good shape.
Two-thirds of France’s wheat crop has been harvested, well behind usual pace… French producers had harvested 66% of their soft wheat crop as of Aug. 2, the country’s farm office reports. That was a 19-point advance from the week prior but well behind 97% harvested last year at this point. Progress lags the five-year average by 11 days, according to FranceAgriMer. Harvest has been slowed by late-season rains that have also sparked concerns about crop quality. The farm office now rates 74% of the crop good or excellent, a one-point drop from the week prior. Last year at this time, just 56% of the crop received top marks.
Russian wheat duty edges lower… Russia’s duty on wheat exports will drop 40 cents from the current rate to $31.00 per metric ton for Aug. 11-17, the country’s ag ministry announced. The tariffs have fallen over the past month.
Kazak rail exports of grain ahead of year-ago, despite slow sales to China… Kazakhstan’s state railroad company reports it has shipped 3.9 MMT of grain for export the first seven months of the year, which is up 17% from last year at this time. Oralkhan Kulakov, deputy chief executive for the railroad company, says China has only shipped 260,000 MT of grain to China this year vs. the 3 MMT that could have been shipped due to Beijing’s quarantine restrictions.
China to release reserves of commodities ‘essential for livelihood’… China will release reserves of commodities “essential for livelihood” in a timely, targeted manner, the country’s National Development and Reform Commission (NDRC) announced today. This comes after devastating flooding for Henan province, a key ag region, and a resurgence in Covid-19 infections. The state planner also said it would work to ensure prices do not spike higher and said the country will strengthen market supervision and crack down on fabricating and spreading price increase information, hoarding and collusion to drive up prices. An official with Yangzhou Micipal Development and Reform Commission told Reuters that in eastern Jiangsu province, an area hard-hit by Covid-19, vegetable prices shot 50% higher on July 27, with prices for pork, seafood and eggs also skyrocketing.
Slack demand continues at Chinese auctions of reserve corn… China sold 26,447 MT of GM corn from the U.S. at its latest auction of state reserves, representing 12% of the total volume. In a separate auction, 12,962 MT of reserve non-GMO corn from Ukraine was sold — 26% of the total offer.
China takes more steps to control its hog supply… Chinese authorities today released guidelines on advancing sustainable, healthy development of its hog industry. The country hopes to maintain a self-sufficiency rate of 95% over the next 5 to 10 years, but while the hog supply has gradually been restored after African swine fever, the wild swings in production capacity that have long been an issue for the country’s hog industry have not yet been fundamentally solved. China wants to strengthen monitoring and early warning to maintain a reasonable level of pig production capacity and to control abnormal changes in production and sales. The country plans to maintain a breeding sow herd of about 43 million head in 2021 through 2025, with a minimum sow inventory of 40 million head. Beijing will advise hog producers to restock sows or get rid of less productive ones when the sow herd changes more than 5% from the previous year. China has pushed local authorities to register pig farms with more than 500 animals and monitor their output and operation. Larger farms that experience monthly sow herd drops of more than a 10th from the previous year and live hog farms with losses for more than three consecutive months can receive spot subsidies.
Centrist Republicans for physical infrastructure bill have a problem: A big budget deficit hole… The Congressional Budget Office (CBO) delivered a major blow regarding the 2,702-page infrastructure package in the Senate. In an analysis posted Thursday as senators were trying to complete work on the $550-billion bill, the CBO said the measure would result in $256 billion in higher deficits over the next decade. Reason: announced spending offsets either didn’t materialize or had to be tweaked as negotiators finalized the bill. Negotiators had argued the cost of the legislation would be fully paid for by new revenue and saving measures. Fiscal watchdogs have warned that lawmakers have used budgetary gimmicks to obscure the true cost. A White House official, speaking on the condition of anonymity to reflect internal dynamics, said there was agreement within the bipartisan group of supporters to not judge the cost of the measure by the CBO score. Most of the centrist Republicans supporting the measure are big spenders. A final vote could come this weekend.
USDA sends OMB final rule on COVID aid, adjustments to CFAP for review… USDA has now sent the Office of Management and Budget (OMB) a final rule for aid to farmers that was provided for in the Consolidated Appropriations Act of 2021 that was signed into law in December 2020. USDA said it would issue new rules to make the aid payments and would also “revise the Coronavirus Food Assistance Program (CFAP) regulations to provide additional assistance.” It is not clear what the scope of the final rule and the regulations for CFAP will entail. Given review times of regulations at OMB, it would suggest that any additional aid and/or changes to CFAP will not likely be announced until September at the earliest.
Deere buys ag tech startup with goal of accelerating efforts to automate tractors… Deere & Co. on Thursday announced it would buy the ag tech startup Bear Flag Robotics for $250 million. The startup develops autonomous driving technology compatible with existing machines. “The deal accelerates the development and delivery of automation and autonomy on the farm and supports John Deere’s long-term strategy to create smarter machines with advanced technology to support individual customer needs,” John Deere said in a press release.
Officials warn North Dakota producers to be on-watch for Anthrax… Antrhrax was reported in cattle in a Kidder County, North Dakota beef herd earlier this week. State ag officials are warning producers to monitor their herds and check with veterinarians to see if they should begin vaccinating their cattle. Vaccines for Anthrax are readily available, but it takes around a week to establish immunity and the shot must be administered annually. Two cases of anthrax were reported in North Dakota last year, and in 2005 around 1,000 head were thought to be lost due to the disease.
Beef rally shows no sign of wavering… Heavy selling in the lean hog market put some spillover pressure on the cattle complex Thursday, despite continued product market gains. Choice beef climbed $3.24 yesterday, marking the 12th consecutive day of gains. Select marched another $2.62 higher as retailers stock up for Labor Day features. Soaring beef prices paired with near steady cash action has strengthened processing margins. Packer profit margins have pushed to $623.50 a head as of Thursday, reports HedgersEdge.com. Cash cattle prices in Iowa edged up to $125.50 yesterday, while action to the south held at $121. Nebraska saw some additional trade at $125.
Big down day for hogs on morning pork dive… USDA reported solid pork export sales and shipments as July wound down, but lean hogs were nevertheless hit with heavy selling. October futures settled their $3.00 limit lower yesterday, so daily trading limits will expand to $4.50 today. Some of the pressure stemmed from recent steep declines in the pork cutout value. Yesterday morning, it dropped more than $5, but by the afternoon the cutout had stabilized and ended 13 cents higher on the day. That could bring some corrective short-covering to the market today. There has also been some talk fourth quarter contracts are priced too high, despite supportive underlying fundamentals.
Overnight demand news… Bangladesh issued a tender to buy 50,000 MT of wheat. The Taiwan Flour Millers’ Association bought an estimated 48,000 MT of milling wheat to be sourced from the U.S. in a tender that closed Friday.
Today’s reports
- 7:30 a.m. Monthly employment summary — Labor
- 10:00 a.m. Livestock and Meat International Trade Data — ERS
- 1:00 p.m. Weekly Red Meat Production Report — AMS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Cash Rents- State — NASS
- 2:00 p.m. Land Values — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders Report — CFTC