Good morning!
Light profit-taking overnight… Corn futures are 3 to 4 cents lower in early trade, as the market faced some light profit-taking overnight. Soybean futures are down 1 to 3 cents amid similar action after climbing to a new high for the week earlier in the session. HRS wheat futures are up 5 to 6 cents amid ongoing production worries. HRW wheat futures are down 2 cents and SRW wheat is a penny lower. Crude oil futures are under pressure and the U.S. dollar index is just above unchanged.
Another slowdown in crush expected for June… Members of the National Oilseed Processors Association (NOPA) will likely report they crushed 159.48 million bu. of soybeans during June, down 2.5% from May’s crush of 163.52 million bu. and 4.7% under year-ago when 167.26 million bu. of beans were crushed, according to analysts surveyed by Reuters. This would mark the smallest crush in four months as soybean supplies dwindle and the cost of those beans climbed. Some plants were also down for maintenance, with some facilities planning longer downtimes than usual. Soyoil stocks are expected to close June at 1.623 billion lbs., down nearly 50 million bu. (2.9%) from the end of May. That would be a seven-month low. The report will be out at 11:00 a.m. CT.
Expectations for today’s Weekly Export Sales Report… The report is for the week ending July 8.
| 2020-21 (MT) | 2021-22 (MT) |
Corn | -100,000-400,000 | 150,000-500,000 |
Soybeans | -100,000-350,000 | 200,000-600,000 |
Wheat | NA | 200,000-500,000 |
Soymeal | 125,000-350,000 | 150,000-300,000 |
Soyoil | -3,000-15,000 | 0 |
Strategie Grains bumps up EU soft wheat and barley crop and export forecasts… Strategie Grains lifted its 2021-22 EU soft wheat crop forecast by 1.9 MMT from June to 133 MMT, which would be a 14.2-MMT jump from last year’s weather-clipped crop. The consultancy hiked its soft wheat export forecast for the EU from 28.6 MMT to 31.0 MMT, which would be a 15% jump from last season. Strategie Grains also bumped its barley crop estimate up from 53.9 MMT in June to 55.0 MMT, but that would be a 400,000 MT retreat from the 2020-21 season. The consultancy expects the EU to export 7.2 MMT of barley in 2021-22, up 500,000 MT from its forecast last month and just under year-ago. “The wheat and barley harvests are arriving late this year, but yields are expected [to be] good, with exceptions in a few places in Central Europe,” Strategie Grains said in its report.
Favorable weather lifts Argentine wheat seedings to a 20-year high… The Rosario Grains Exchange raised its Argentine wheat crop estimate by 500,000 MT, pushing its crop estimate to 20.5 MMT. The exchange says good weather boosted planting on the Pampas Grains Belt, detailing that more than 2 million hectares (4.9 million acres) have been planted over the last three weeks. “This would be the highest level of wheat seeding of the last 20 years,” the exchange said.
Low water levels on Argentina’s Parana River still causing headaches… Dryness in Brazil has once again resulted in low water levels along the Parana River that is so key to Argentina’s main Rosario shipping hub. “Handymax ships are leaving port with 9,250 MT less cargo than normal and Panamax ships 11,350 MT less,” Guillermo Wade, manager of Argentina’s Chamber of Port and Maritime Activities (CAPyM), told Reuters in an interview. To improve the river’s depth, the firm Jan de Nul is dredging the river. A report from the Rosario Grains Exchange last week said shallow waters on the Parana could cost the country’s farmers and exporters nearly $315 million over a six-month stretch ending in August. But environmental activists warn this could dry out nearby wetlands and hurt aquatic life by lowering water oxygen levels, in addition to affecting local water quality.
Fed in no hurry to pare monthly asset purchases… Federal Reserve Chairman Jerome Powell told lawmakers on Wednesday that the central bank wouldn’t be in a hurry to start paring monthly asset purchases and that the economy “is still a ways off” from the Fed’s goals. He also said the Fed wouldn’t hesitate to raise interest rates to keep inflation under control, while repeatedly emphasizing that he still expects price pressures to ease later this year. Inflation “has been higher than we’ve expected and a little bit more persistent,” Powell said in a semiannual report Wednesday to House lawmakers. His appearance came a day after the government reported the fastest monthly rise in consumer prices in 13 years. He is slated to testify before the Senate Banking Committee today.
China reports Q2 GDP of 7.9%... China’s economic rebound slowed in the second quarter but continued to show unusual resilience more than a year after the country largely got control of the coronavirus within its borders. Gross domestic product grew 7.9% in the second quarter from a year earlier. While that growth rate was far slower than the 18.3% year-over-year GDP jump during the first three months 2021, analysts did not expect China’s economy to sustain that pace of growth as the statistical distortions from last year’s pandemic crisis faded. Of note, stronger-than-expected readings on factory output, retail sales and fixed-asset investment in June are likely to ease talk that Beijing will intervene more forcefully to keep its growth momentum going in the latter half of the year.
Biden summit moves closer, senior U.S. diplomat visits China next week... The State Department No. 2 will meet Chinese foreign vice-minister Xie Feng next week, paving the way for top-level encounter, the South China Morning Post reported. Deputy Secretary of State Wendy Sherman will meet China’s foreign vice-minister Xie Feng in Tianjin, where they will discuss the possibility of a meeting between U.S. Secretary of State Antony Blinken and Chinese foreign minister Wang Yi, a source told the newspaper. Such a meeting is seen as essential to pave the way for further engagement between President Joe Biden and his Chinese counterpart Xi Jinping.
Senate Democrats want to tax carbon-intensive imports… Senate Democrats are moving to impose tariffs on carbon-intensive imports to help pay for their tax-and-spending legislation, Bloomberg reports. The plan also includes expanding tax credits for renewable energy and electric vehicles as well as the creation of a clean energy standard that could mandate utilities generate carbon-free power. The plan dovetails with efforts by other countries — including the European Union — to use trade policy as a tool for curbing greenhouse gas emissions.
Chinese pork production hits seven-year high in Q2… During the second quarter of 2021, China’s pork production shot to a seven-year high of 13.46 MMT, up 40% from Q2 of 2020 and well above the usual 10 MMT produced for the quarter, according to Reuters analysis of data from China’s National Bureau of Statistics. The stats bureau said Chinese pork output surged 35.9% from year-ago in the first half of 2021 to 27.15 MMT. It also reports China slaughtered 337.42 million hogs the first half of 2021, a 34% jump from last year. Normally, the second quarter is a period of low consumption and production, but this year, big producers ramped up production in the wake of African swine fever (ASF). Sales data from 16 listed hog producers showed they produced 42.8 million hogs for slaughter in the first half of 2021, more than a 100% surge over the prior year, Boya Consulting said in a report on Wednesday. Some provinces are still dealing with ASF outbreaks, accelerating slaughter and encouraging others to produce overly heavy hogs that came to market during the April-June quarter. China’s statistics bureau reports China’s hog herd stood at 439.11 million head at the end of June, up 29% from year-ago.
Cash cattle prices pull back… Some additional light cash cattle action took place at $119 in Texas, at $120 in Kansas, at $123 in Nebraska and at $124 in Iowa, steady to lower compared with more active trade earlier in the week. Pressure on futures at midweek weighed on the cash market, with boxed beef values still under pressure. Choice dropped 46 cents on Wednesday and Select dropped $2.99; 136 loads changed hands. The pace of the decline has slowed, but beef prices are still working their way lower.
Cash hog bids still climbing… Cash hog bids climbed a national average of $1.49 after solid gains Tuesday. The pork cutout value edged 12 cents lower at midweek and movement dropped to 270.21 loads after impressive movement on Tuesday. Today, analysts will turn their attention to USDA’s weekly update on export sales activity, and particularly any business to China or Mexico. Recent reports of new cases of ASF have once more amplified attention on Chinese demand, but a surge in China’s second quarter pork production could dampen near-term export prospects.
Overnight demand news… Japan bought 62,300 MT of food-quality wheat from the U.S. and 56,611 MT of the grain from Canada in a regular tender. Egypt’s state grains buyer bought 180,000 MT of wheat from Romania yesterday.
Today’s reports
- 7:30 a.m. Weekly Export Sales — FAS
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
- 11:00 a.m. Monthly soybean crush — NOPA