Good morning!
Corn and beans firm overnight, though wheat was mixed… Soybeans traded at the highest level since July 28 after gapping higher overnight, while corn gapped higher but has since faded from overnight highs. Wheat failed to maintain early overnight strength and has since turned lower. As of 6:30 a.m. CT, corn futures are trading 3-4 cents higher soybeans are 18-23 cents higher and wheat markets are 4-6 cents lower. Front-month crude oil futures are around $1 higher while the U.S. dollar index is roughly 200 points 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 #pftour23 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.
Warm and dry weather off to a hot start… The Midwest and is expected to see little to no rain for the next 11 days and the same is true for most of the Plains and Delta as well. Temperatures in the central and southern Plains, western Midwest and Delta are expected to remain hot through mid-week before some cooling is expected, says World Weather Inc.
Ukraine nears deal to insure grain ships… Ukrainian officials have been pursuing deals with local banks and international insurance groups to find a solution on insuring grain shipments in the Black Sea, according to Ukrainian officials. Ships could be insured as early as next month, though more costly routes are in place for the interim to ensure grain is leaving the nation.
Russia shoots down two Ukrainian drones… Ukraine has continued recent attacks on the Russian mainland, with Russian officials saying they shot down several Ukrainian drones over the weekend. One drone targeted a military airfield, another crashed into a train depot, while two more were shot down near Moscow. Meanwhile, Denmark is set to provide 19 F-16 jets to Ukraine, to which Ukrainian president Zelensky said that it “will instill fresh confidence and motivation to both warriors and ordinary citizens.”
The Kremlin’s efforts to paralyze Ukrainian food shipments are succeeding… A third of the country’s crop exports wiped out since its Black Sea ports were effectively blocked last month, Bloomberg reports. Ukraine was only able to export 3.2 million tons of grains, vegetable oils and meals in the four weeks through August 15, down from 4.4 and 4.8 million tons in May and June when the Black Sea deal was still in place, according to estimates from analyst UkrAgroConsult. Crop stockpiles are now expected to swell through next year as better-than-expected harvests face fewer routes to market.
China’s banks cut lending rates slightly as woes continue… The People’s Bank of China cut its 1-year loan prime rate (LPR) by 10bps to a record low of 3.45% while unexpectedly holding steady the 5-year rate at 4.2% (most economists had predicted a 15 basis-point cut). Monday’s move came after a surprising reduction in both short-term loan rates and the medium-term rate by the central bank last week, as it seeks to strike a balance between helping the economy and stemming further falls in the yuan. Industrial Profits in China fell more than expected in a report released over the weekend. China has opted to hold back on cutting rates excessively as President Xi is determined to shift away from debt fueled growth, even if it means reduced economic growth and a potential real estate crisis.
Farmland values stay strong… A study from the Kansas City Federal Reserve found that farmland values stayed strong through the first half of 2023 despite farm income falling and the average fixed interest rate on farm loans rising above 8% across all regions, a 30-basis point rise from the previous quarter. Demand for loans has fallen, but that has not led to a drop in values, with the value of non-irrigated cropland acres increasing an average of 7% from year-ago.
The week ahead in Washington... Congress remains on its summer recess into September, though some key events are happening this week. The first GOP presidential candidate debate takes place in Milwaukee, Wisconsin on Wednesday. Former President and current poll leader Donald Trump has opted to forego the debate and is pursuing alternative options. The annual gathering of global central bankers for an economic policy symposium in Jackson Hole, Wyoming, gets underway Aug. 24. Fed chairman Powell is set to speak on Friday on the economic outlook.
Farm bill update… House Ag Chair G.T. Thompson (R-Pa.), speaking at a Minnesota Ag Leadership conference last night, reiterated that a farm bill draft would come in September, followed by a panel markup a week or two later. As for a House floor vote, Thompson said that depends on leadership scheduling. “But if we can get time, we can get it done in a week,” he told the gathering. As for the bill itself, Thompson said it must be “very effective.” The Ag Chair will also be traveling to Illinois this week.
Cattle on Feed mildly bullish compared to expectations… USDA estimated there were 11.03 million head of cattle in large feedlots (1,000-plus head) as of Aug. 1, down 259,000 head (2.3%) from last year and 140,000 head less than the average pre-report estimate implied. The marked the 11th consecutive month of year-over-year declines in feedlot inventories – a trend that will continue. Placements fell 8.3% from year-ago levels in July, while Marketings dropped 5.3%. The placements figure was lower than anticipated after consecutive months when that category topped expectations.
Cattle prices expected to remain strong… Last week saw trade pulled lower by the south despite impressive prices coming out of the north. Trade occurring on Friday afternoon was higher, but was not enough to bring the weekly average higher another week. The mildly bullish Cattle on Feed report paired with continued strength in wholesale prices should support cash prices for another week.
Cash hogs continue to weaken… The CME lean hog index is down 71 cents to $100.32 as of August 16, marking the tenth straight day of losses. Wholesale prices have seemingly rolled over as well, falling $3.91 last week to $106.17. The steep discount in October futures compared to the cash index should keep losses at bay, but traders are clearly not confident about cash hog market fundamentals heading into fall.
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. Export Inspections — AMS
· 2:00 p.m. Chickens and Eggs — NASS
· 2:00 p.m. Milk Production — NASS
· 3:00 p.m. Crop Progress — NASS