Good morning!
Day 2 Crop Tour results for Nebraska and Indiana…
Scouts on day 2 of the Pro Farmer Midwest Crop Tour determined an average corn yield of 158.53 bu. per acre in Nebraska, down from both last year’s 182.35 bu. per acre estimate and the three-year Tour average of 176.68 bu. per acre. Soybean pod counts in a 3’x3’ square came in at 1,063.72 for Nebraska, down from both 1,226.43 in 2021 and the three-year Tour average of 1,245.06.
In Indiana, samples yielded an average corn yield of 177.85 bu. per acre, down from both 193.48 bu. per acre in 2021 and the three-year Tour average of 178.26 bu. per acre. Soybean pod counts in a 3’x3’ square totaled 1,165.97 for Indiana, down from 1,239.72 in 2021 but above the three-year average of 1,148,26.
On Day 3 of the Crop Tour, scouts on the western leg will sample fields in western Iowa and southern Minnesota, and scouts on the eastern leg will sample Illinois and eastern Iowa.
Corn futures extend rally to two-month high overnight... December corn futures rose to the highest price since late June and soybeans and wheat also rose amid concern over dry weather. As of 6:45 a.m. CT, corn futures were trading 6 to 8 cents higher, soybeans were 6 to 14 cents higher and wheat was 10 to 18 cents higher. Front-month crude oil futures were up slightly under $1 and the U.S. dollar index was about 200 points higher and near a20-year high.
China baking under high temperatures… Extreme heat in China is causing widespread problems, with authorities across the Yangtze river basin scrambling to limit damage to power, crops and livestock. China’s heatwave, stretching past 70 days, is its longest and most widespread on record, with around 30% of the 600 weather stations along the Yangtze recording their highest temperatures ever by last Friday. Chongqing’s agriculture bureau also drew up emergency measures to protect livestock at more than 5,000 large-scale pig farms, which have faced “severe challenges.” Damage to crops and water scarcity could “spread to other food-related sectors, resulting in a substantial price increase or a food crisis in the most severe case,” a professor at City University of Hong Kong said. China’s National Meteorological Centre downgraded its national heat warning to “orange” on Wednesday after 12 consecutive days of “red alerts,” but temperatures are still expected to exceed 40 Celsius (104 Fahrenheit) in Chongqing, Sichuan and other parts of the Yangtze basin.
Central bankers convene in Jackson Hole facing critical questions… As policymakers gather for the Kansas City Federal Reserve’s annual monetary policy conference in Jackson Hole, Wyoming, the U.S. central bank looks like it might manage a “soft landing” for its own economy, but the outlook for Europe is far more worrying, Reuters reported. Much of the world is facing the fastest price growth since the early 1980s, raising fears of a repeat of that era’s wage-price spiral phenomenon. That leaves many of the central bankers hoping today’s inflation pressures will abate quickly enough to allow them to counter the downturns anticipated in economies around the world. “They are caught between a coming recession and sky-high inflation. Their first concern is to react to high inflation,” said Holger Schmieding, chief economist at Berenberg. “Once the recession is clearly there, the concern will shift.”
Ukraine grain production poised to drop sharply… Ukraine’s 2022 grain harvest could shrink to 52.5 to 55.4 MMT from a record 86 MMT due to the Russian invasion cutting harvested area, Reuters reported, citing analyst APK-Inform said. The consultancy said the harvest could include up to 18.2 MMT of wheat, 29.9 MMT of corn and 5.9 MMT of barley. It said a smaller harvest and logistics difficulties could cut 2022-23 July-June exports to between 22.9 and 39.6 MMT depending on logistics situation.
Russia-Ukraine war marks sixth month with no end in sight… Today marks the six-month anniversary of Russia’s invasion of Ukraine, and Russia has failed to meet any of its military objectives: conquering Kyiv, the capital, capturing the eastern Donbas region or seizing Ukraine’s coastline. Around 15,000 Russians have been killed, according to the Pentagon, roughly the same number that died in the Soviet Union’s decade-long occupation of Afghanistan. The frontlines have barely moved in recent weeks, though Ukraine hopes to push Russian troops out of Kherson, a city in the south, in the coming months. Both armies are exhausted.
Russia is likely to increase attacks, U.S. intelligence warns… According to a warning declassified and sent by the State Department, Ukraine’s civilian infrastructure and government facilities could be targeted in the coming days. Both Ukrainian and American officials have been concerned that possible Russian missile attacks could be timed to Independence Day and in response to a string of Ukrainian assaults on Russian military targets in Crimea. President Volodymyr Zelenskyy warned over the weekend that “Russia may try to do something particularly nasty, something particularly cruel.”
Some Senate Democrats call for USDA to rethink efforts on methane digesters... Five Senate Democrats want USDA to back away from plans to encourage the installation of methane digesters at livestock operations, warning USDA Secretary Tom Vilsack in a letter that the effort will result in more consolidation in agriculture and the U.S. food industry. The lawmakers cited costs for a methane digester range from $400,000 to $5 million and “would not be economic viable without significant public subsidies and incentives.” They argued that money spent on subsidizing methane digesters are funds that “cannot be spent on alternative manure management strategies or regenerative agriculture practices.”
Biden to unveil student loan debt relief… President Biden is expected to announce today he will cancel some federal student loan debt for tens of millions of Americans through a long-awaited executive action, which would provide unprecedented relief for borrowers but will draw political and legal challenges. Biden is also expected to extend the pandemic pause on student loan payments, likely through the end of the year. Loan payments were set to resume for millions of borrowers after Aug. 31. The plan reportedly will forgive around $10,000 of student debt for borrowers who make under $125,000 a year or around double that for married couples, which includes the vast majority of the 40 million people with student debt. The action could render up to 15 million borrowers whose balances are under $10,000 entirely free of student debt. Biden’s expected debt decision would cost $300 billion, according to an analysis from the Penn Wharton Budget Model.
Restart of LNG export terminal again delayed… Freeport LNG said that it will restart its liquefied natural gas (LNG) exports in mid-November, a delay of more than a month from its prior plans. Freeport now expects to have 85% of its capacity online by mid-November and be fully operational by March. Natural gas futures eased after the announcement as the delay will keep more supplies available domestically. The Freeport LNG export terminal has been offline since June after a fire at the facility. The terminal accounts for about 20% of all U.S. LNG exports.
Japan may build next-gen nuke plants… Japan’s prime minister, Kishida Fumio, said his country will consider building a new generation of nuclear-power reactors as it prepares to restart plants left idle since the Fukushima disaster of 2011. The global surge in energy prices helped prompt an about-face. There remains work to be done, Kishida implied, in convincing the public that this counts towards Japan’s “green transformation.”
Food prices may have peaked, official says… “We believe food prices reached their highest level in the second quarter of 2022,” World Bank Senior Agriculture Economist John Baffes said last week in an interview with the Japan Times, noting that the World Bank’s Food Price Index has dropped by roughly 12% since its high in April.
Costly power causing millions of U.S. households to miss utility payments… Some 20 million U.S. households, or one out of every six homes, are missing utility payments amid a blistering surge in electricity prices. A national energy association said it’s the worst crisis it’s ever documented, mirroring even more severe woes in Europe.
Commercial flock confirmed with HPAI in California. USDA’s Animal and Plant Health Inspection Service (APHIS) said a commercial broiler breeder flock of 33,900 birds in Fresno County, California, has highly pathogenic avian influenza (HPAI), marking the 21st state to have HPAI in a commercial operation. With three infections in commercial flocks in Utah last month, there are now four U.S. flocks still under active quarantine in the U.S.
Cattle traders waiting for cash trade to develop… Live cattle futures have traded mostly sideways this week as the market waits for cash prices to establish direction. Futures’ slightly pullback early this week suggest skepticism a three-week cash uptrend may be fading amid expectations for seasonal weakness in beef demand. Choice beef cutout values fell $1.72 Tuesday to $262.80, though movement was strong at 152 loads, indicating retailers remain ready buyers on price drops.
Hog futures fail to sustain early upswing… Lean hogs failed to sustain an initial surge Tuesday amid ongoing pessimism over the cash market’s late summer-early fall outlook, illustrated by October futures’ discount of over $27 to the CME lean hog index. The index is down 80 cents today to $119.18, a one-month low. Wholesale pork is also slumping, with pork cutout values plunging $12.53 Tuesday to $105.08, led by a decline of nearly $49 in bellies. But movement soared to 416 loads, the biggest one-day total since January.
Overnight demand news... Exporters reported no tenders or sales.
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