Good morning!
Grains mixed overnight… Corn and soybeans saw lack of conviction either way overnight, though wheat futures saw corrective buying. As of 6:30 a.m. CT, corn futures are trading steady to a penny higher, soybeans are 2 to 3 cents lower and wheat futures are 3 to 5 cents higher. Front month crude oil futures are modestly weaker and the U.S. dollar index is just 35 points higher.
Day 1 Crop Tour results for South Dakota and Ohio… Scouts on the first day of the Pro Farmer Crop Tour found an average corn yield of 157.42 bu. per acre in South Dakota, up from 118.45 bu. per acre last year and the three-year average of 149.71 bu. per acre. Soybean pod counts in a 3’x3’ square came in at 1,013 for South Dakota, up from 871.4 last year but down from the three-year average of 1,039.71.
In Ohio, samples yielded an average corn yield of 183.94 bu. per acre, up from 174.17 bu. per acre in 2022 and up from the three-year average of 175.64 bu. per acre. Soybean pod counts in a 3’x3’ square totaled 1,252.93 for Ohio, up from 1,131.64 in 2022 and above the three-year average of 1,160.9.
Today, scouts on the eastern leg of the Tour will sample routes from Noblesville, Indiana to Bloomington, Illinois, and scouts on the western leg will sample central and southern Nebraska.
Consultant leaves corn, bean estimates steady… Crop consultant Dr. Michael Cordonnier left his corn and soybean estimates unchanged at 175 bu. per acre and 51 bu. per acre as he waits to see how the weather plays out this week. He maintains a neutral bias going forward, but notes that the forecast of extremely hot and dry weather in the central U.S. is not a good combination for the crops. Cordonnier estimates production at 15.10 billion bu. for corn and 4.21 billion bu. for soybeans.
Soybean conditions steady, corn and spring wheat conditions slip… 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 fell 2.4 points to 350.2 and is now 5.4 points (1.6 %) above last year at this time. The soybean crop fell .3 points to 348.9 and is now 2.4 points (.7%) above last year at this date. The spring wheat crop fell 4.6 points to 316.1, which is 53.6 points (14.5%) below last year. Click here for details.
Crop progress report highlights… Following are highlights from USDA’s crop progress and condition update as of Aug 20.
· Corn: 78% dough (77% average); 35% dented (33% average); 4% mature (4% average); 58% good/excellent (59% last week).
· Soybeans: 96% blooming (96% average); 86% setting pods (84% average); 59% good/excellent (59% last week).
· Cotton: 81% setting bolls (84% average); 18% bolls opening (19% average); 33% good/excellent (36% last week).
· Spring wheat: 39% harvested (46% average); 38% good/excellent (42% last week).
· Winter wheat: 96% harvested (96% average).
Ukrainian “reconnaissance boat” destroyed in Black Sea… Russia’s defense ministry announced one of its fighter planes successfully destroyed a Ukrainian “reconnaissance boat.” This came after a recent occurrence of a Ukrainian drone targeting a Russian naval base along the Black Sea coast, which caused damage to a Russian warship. Conflict continues to rise in the Black Sea following the termination of the Black Sea grain deal last month.
Ukrainian president Zelensky seeks to end grain import bans… The president told the European Commission president Ursula von der Leyen he wants to normalize his country’s grain exports by next month after several European Union states were allowed to block purchases. Poland, Slovakia, Hungary, Romania and Bulgaria signed a joint declaration to extend the block of Ukrainian grain imports in July to protect their farmers interests, though Ukrainian grain is still allowed to move through the nation to help with shipments.
Conservatives within the House Freedom Caucus intensifying pressure on Speaker Kevin McCarthy… These conservatives have taken an official stance against a “clean” short-term funding bill, which would prevent a government shutdown in the upcoming month. They are asserting that any stopgap funding bill must address specific policy areas such as border security, the Department of Justice and FBI, and what they refer to as “woke” policies in the military. Speaker McCarthy recently informed House GOP members about his plans to pass a short-term funding measure to extend gov’t funding beyond Sept. 30, the end of the fiscal year. This would avert a potential government shutdown, which has not occurred in years. However, the demands outlined by these hardline conservatives in the Freedom Caucus are adding pressure on House GOP leaders. Given their slim majority, House GOP leaders can only afford to lose a small number of votes to pass bills without relying on Democratic support.
U.S. ag organizations issue plea to presidential candidates… Organizations are urging candidates to prioritize the establishment of new trade agreements that would offer fresh market access. This move is intended to bolster the U.S. ag sector and reduce the nation’s dependence on China. The organizations emphasize that any approach towards holding China accountable should be responsible, avoiding potential harm to the significant export market for U.S. food and agriculture or the imposition of retaliatory tariffs that might adversely affect American farmers. They reference the U.S.-Canada-Mexico Agreement (USMCA) and propose that future free trade agreements can be modeled after it.
Mexico will make no changes on GMO decree… Mexico’s economy minister, Raquel Buenrostro, has stated that Mexico will not make any changes to its decree on genetically modified (GMO) corn in advance of a dispute settlement panel convened under the USMCA. The decree allows the importation of GMO corn for use as animal feed. Buenrostro affirmed that the decree is already established and includes provisions for defining corn designated for human consumption. The U.S. is disputing this decree through the USMCA, arguing that Mexico’s actions do not align with their obligations under the trade agreement.
BRICS summit starts om South Africa… The 15th BRICS summit, involving Brazil, Russia, India, China and South Africa, has commenced in Johannesburg, South Africa. The group aspires to be seen as a counterpart to the G7, a consortium of affluent nations, which is growing amidst dissatisfaction with the global order among developing nations. Collectively, the BRICS nations encompass 41% of the global population and contribute 26% of the world’s GDP. The group is likely to discuss other nations that are attempting to join the group, which is over 40 countries, including Iran, Saudi Arabia and Argentina.
China boosting ties with Russia… In the first seven months of this year, China’s total trade with Russia has surged 36% compared to the same period last year, reaching $134 billion. This has helped Russia receive equipment largely unavailable elsewhere due to sanctions. China has benefited from Russian oil and gas exports, ensuring a buyer for Russian commodities that have been riddled by sanctions elsewhere.
China is boosting the yuan… China has escalated the defense of the yuan, pushing up funding costs in the offshore market to squeeze short positions. The People’s Bank of China sets a daily fixed rate for the currency. The bank posted the largest gap from a Bloomberg survey ever today. The yuan has been under pressure as concerns rise from China’s economy struggles, the state’s bank is attempting to reverse that trend.
Cattle futures continue bounce… Cattle futures continued last Friday’s bounce and bid above $180. Last week’s cash average came in 84 cents lower than the prior week to $185.04, drug lower by trade taking place late in the week. Wholesale values struggled to maintain strength yesterday, with Choice falling 55 cents to $315.56 and Select falling $1.03 to $287.33. While an improvement from the midsession report, weaker wholesale prices will not encourage packers to continue to pay up for cash cattle. Tight market supplies may force their hand this week and encourage higher cash cattle trade, but packers have shown they are willing to wait as long as they can before making purchases.
Hog futures struggle against resistance… Hog futures gapped higher but ultimately continued the downtrend stemming from the August 1 high. The cash index continues to deteriorate with the August 17 quote falling 74 cents to $99.61, putting the index below $100 for the first time since July 12. The seasonal slide in cutout values is of no help to bulls either, with wholesale prices falling 96 cents to $105.21, with losses across the board apart from bellies and butts.
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Today’s reports
· No reports scheduled.