Good morning!
Soybeans climb ahead of USDA’s reports Thursday… Corn futures are 4 to 6 cents higher, taking back yesterday’s losses and extending the sideways trading range. Soybean futures are up 12 to 17 cents. Winter wheat futures are 1 to 4 cents lower, with SRW wheat leading losses. Spring wheat futures are narrowly mixed. The U.S. dollar index is slightly higher; crude oil futures are under pressure.
Stifling summer heat stretches from coast to coast… Heat continues to impact much of the U.S. with widespread excessive heat warnings and heat advisories in effect. Hot, humid conditions are expected to kick up strong to severe thunderstorms the next several days in southern and eastern areas of the Corn Belt, with the Great Lakes area most at risk today, reports the National Weather Service. Record highs are expected to be challenged in the Northeast and Pacific Northwest. Heat is expected to linger until Friday and then gradually ease. Of note, meaningful rainfall is likely for western and northern Minnesota, eastern South Dakota, and southeastern North Dakota Aug. 18-22. While this could help corn and soybeans, it comes too late for spring wheat. Harvest is well underway.
Heat and dryness remain problematic in Canada… Refinitiv Commodities Research (CRF) slashed its 2021-22 Canadian wheat crop estimate by 4% to 29.1 MMT, citing continued heat across much of Western Canada and continued dryness. “Unfavorable hot and dry conditions continued across much of the Southern Prairies over the past two weeks, depleting soil moisture reserves even further,” CRF reports. It adds that Alberta rates just 19.7% of its crop good to excellent, well under the 5- and 10-year averages in the 71% area. Heat is expected to linger until mid-August, though some moisture could come to core crop areas near the Alberta/Saskatchewan border next week, CRF reports. USDA last month estimated Canada’s wheat crop will total 31.5 MMT, in line with where its Canadian equivalent pegs the crop. Statistics Canada will weigh in near month’s end.
Argentine soybean sales running just ahead of last season… Argentina’s ag ministry reports that so far this year, Argentine producers have sold 26.8 MMT (61.6%) of their 43.5 MMT soybean crop, as estimated by the Buenos Aires Grains Exchange. Last year at this time, producers had sold 28.9 MMT (59.0%) of their 49 MMT crop. Farmers have remained reluctant sellers of soybeans, holding onto the oilseed as a hedge against inflation. The country’s corn sales of 36.4 MMT are running 3 MMT ahead of last season, with around 75% of the crop sold, based on USDA’s crop estimates. Last year at this time, roughly 65% of the crop had been sold.
Democrats take initial step toward $3.5 trillion spending plan, without GOP support… The Senate voted 50-49 to take up a budget resolution that includes instructions on how to draft the spending package and greenlights it to bypass the 60-vote filibuster this fall. No Republicans voted to start the budget debate. Of note, Senator Kyrsten Sinema (D-Ariz.) has warned that she can’t support a bill with a $3.5 trillion price tag and Senator Joe Manchin (D-W.Va.) has expressed concerns about the debt. “They call it $3.5 trillion in spending, nonpartisan experts say those plans would more likely cost Americans about $5.5 trillion. Trillions more borrowing and trillions more spending when inflation is already sticking American families with higher costs,” Senate Minority Leader Mitch McConnell (R-Ky.) said Monday. “New permanent welfare with no work requirements when small businesses are already struggling to find workers. Sweeping amnesty when the southern border is already in a crisis. Green New Deal regulations when Americans’ gas prices have already shot up, crushing tax hikes for family businesses and farms as they fight to recover from the recession.”
Key ag provisions voted as senators continue vote-a-rama... The amendments are non-binding since the budget resolution does not become law. But it is a sign of where the Senate majority lands on issues. Amendments on the following topics were adopted:
- Preserving current tax rules for transferring farms and businesses, including the “full benefit of the step-up in basis for assets acquired from a decedent.”
- Exempting farmers and ranchers from Clean Air Act regs. The amendment would block any U.S. government attempt to require methane emission permits for livestock producers.
- Prohibiting USDA from pulling back federal dollars from rural electric providers to generate power from fossil fuels.
Said one contact: “Democrats are going to have a very tough time passing their reconciliation bill and they will lose by winning if they manage to.”
House to cut recess short, take up Democratic budget plan… House Speaker Nancy Pelosi (D-Calif.) continues to say the House will not take up the bipartisan bill without the passage of the budget that sets the guidelines for them to move on the $3.5 trillion bill. But the House will interrupt its previously scheduled seven-week summer recess later this month to consider the budget resolution. House Majority Leader Steny Hoyer (D-Md.) announced in a letter to lawmakers on Tuesday that the chamber will return to session on Aug. 23 to consider the budget resolution, assuming Senate adoption this week.
Republican strategy re: debt ceiling... Most Republican senators have signed on to a pledge to force Democrats to raise the debt ceiling through procedures that don’t rely on GOP votes, escalating the political tug of war over who is responsible for keeping the U.S. from defaulting, the Wall Street Journal reports. Raising the debt limit doesn’t authorize new spending, but rather allows the Treasury Department to issue new debt to cover spending that Congress has already authorized.
Delta variant is threatening China’s economic recovery… While the number of new Covid-19 infections is small compared with figures from the U.S. and other countries, China’s zero-tolerance strategy means tough countermeasures — likely to have a significant impact on growth if they don’t succeed in snuffing out the virus soon. Over the past week, Goldman Sachs has cut its full-year growth outlook for China to 8.3% from 8.6%; Morgan Stanley cut its forecast to 8.2% from 8.7%.
Final Covid-19 wave?... Dr. Scott Gottlieb, the former commissioner of the FDA, told CNBC that the current surge in Covid-19 cases in the U.S. may be the “final wave” of the pandemic in the U.S. “I don’t think Covid is going to be epidemic all through the fall and the winter. I think that this is the final wave, the final act, assuming we don’t have a variant emerge that pierces the immunity offered by prior infection or vaccination,” he said. Dr. Gottlieb thinks that the high transmissibility of the Delta variant combined with the rising vaccination rates could transform the course of future infections.
Biden announces two more deputies for USTR, but not top ag negotiator… President Joe Biden announced selections of two more deputies at the Office of the U.S. Trade Representative, but not the top agriculture negotiator. María Pagán was named to deputy for World Trade Organization affairs in Geneva and Christopher Wilson was tapped to be the agency’s chief innovation and intellectual property negotiator. Also of note, the Senate agriculture panel approved the nominations of Robert Bonnie to be USDA undersecretary for farm production and conservation and Xochitl Torres Small for undersecretary for rural development on a single voice vote.
Meat plants cleared to resume shipments to Mexico… The Smithfield Foods plant in Tar Heel, North Carolina, and Rava Forwarding in Laredo, Texas, were both cleared to resume shipments to Mexico as of Aug. 6. The plants have been barred from shipping meat products since June 16 for the Smithfield facility and June 18 for the Rava facility. The Food Safety and Inspection Service said products with production dates between those in June and Aug. 5 were still not eligible for export, but those with production dates on or after Aug. 6 will be accepted.
Beef prices have marched higher for 14 straight days… Boxed beef values climbed for a 14th consecutive day Tuesday, with Choice soaring $5.52 and pushing above the $300 per cwt. threshold. Select beef climbed $3.80 to $284.61 per hundredweight. Movement was solid at 128 loads. Meanwhile, feeder steers and heifers traded unevenly steady at Day 2 of an Oklahoma City feeder cattle auction yesterday, with demand said to be moderate to good. Today’s online fed cattle exchange auction could provide additional cash market guidance. So far, all is quiet on the cash market front.
Hogs remain under pressure… Daily trading limits return to $3.00 today after a quieter day of trade on Tuesday. August lean hogs settled with moderate gains, while the rest of the market extended losses. October lean hogs stopped just a few cents shy of testing the July low, with the next layer of support layered from the 200-day moving average near $81.05 to the June low of $80.90. The pork cutout value fell $1.84 on Tuesday and is down nearly 60 cents for the week. But movement has picked up in recent days and 363.91 loads changed hands yesterday. Cash hog bids edged a national average of 14 cents higher yesterday. This week’s kill is running well ahead of week and year-ago.
Overnight demand news… A group of importers in Thailand issued an international tender to buy up to 139,500 MT of animal feed wheat. South Korea’s Major Feedmill Group issued an international tender to buy up to 210,000 MT of animal feed corn. Importers in the Philippines tendered to buy up to 120,000 MT of wheat and 120,000 MT of animal feed barley. Jordan is thought to have at least two participants in its tender to buy 120,000 MT of wheat.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 11:00 a.m. Meat Price Spreads — ERS
- 2:00 p.m. Broiler Hatchery — NASS