Good morning!
Sellers have the advantage in grains overnight… Corn, soybeans and wheat fell under pressure overnight as the U.S. dollar index continues its recent rebound. As of 6:30 a.m. CT, corn futures are trading 10 to 12 cents lower, soybeans are 7 to 16 cents lower, SRW wheat is nearly 20 cents lower, HRW wheat is 27 to 28 cents lower and HRS wheat is 13 to 15 cents lower. Front-month crude oil futures are pressuring the highs from the past two weeks.
Ukraine warns ships heading to Russia… Following Russia’s threat of any ships heading to Ukrainian ports being regarded as military vessels, Ukraine released a similar warning for ships heading into Russian ports or Ukrainian areas occupied by Kremlin troops. Kyiv’s announcement puts additional risk on grain heading out of the Black Sea, which was already threatened earlier this week with the conclusion of the Black Sea grain deal.
Russian missiles again strike Odesa… Russia carried out strikes on the Ukrainian port city of Odesa for the fourth night in a row. The missiles targeted the grain terminal of Agricultural Enterprise, destroying 100 tons of peas, 20 tons of barley and injuring two people, the governor of the region said. Russia has since been practicing seizing ships in the Black Sea, though an ambassador has said Russia has no plans to attack civilian ships.
Black Sea grain deal restoration… Turkish President Erdogan is hopeful his planned talked with Putin could lead to a restoration of the Black Sea grain initiative. The leader sympathized with the lack of follow through on the Russian side and called on Western countries to consider Russian demands, which largely entail removing barriers from Russian agricultural exports.
Chinese, U.S. and Russian ag officials could soon meet… The U.S. invited China’s agricultural minister to the 2023 APEC food security ministerial meeting in Seattle, scheduled for August 3. The meeting is expected to focus on the Russian withdrawal from the Black Sea grain deal. China has been a substantial trading partner of agricultural commodities since the invasion last February and imported nearly 25% of Ukrainian grain exports under the recently expired deal.
Rain in China brings corn relief… Recent rainfall in northeast China has relieved drought stress and helped improve soil moisture, according to an agricultural ministry official. The area hit by drought covered 1.33 million hectares (3.29 million acres), an area roughly the size of Connecticut. China is the world’s second largest corn producer, and a large portion of the crop comes from the northeast region.
Bill introduced on foreign ownership of U.S. farmland… Sens. Chuck Grassley (R-Iowa) and Tammy Baldwin (D-Wis.) introduced a new bipartisan bill, the Farmland Security Act of 2023, seeking to further boost transparency in foreign ownership of U.S. farmland. This bill would require greater transparency for foreign purchases of U.S. ag land, impose stronger penalties for reporting non-compliance and mandate USDA to audit a minimum of 10% of foreign agricultural land ownership reports annually.
Former Fed Chair Bernanke comments… Ben Bernanke, who led the Fed throughout the Great Financial Crisis, said he believes next week’s rate hike “may be the last in its current credit-tightening campaign.” Fed futures indicate a 25-basis-point hike next week, but little odds of additional increases.
Biden administration proposes new rule… The administration wants to increase the cost of drilling on public lands. In an effort to reduce the burden on taxpayers in the cleaning up of oil and gas wells, the Bureau of Land Management proposes an increased royalty on the oil drilled, a hike of required bond amounts and increased fees on rented land not currently being drilled.
Japanese inflation seen as peaking… Japan’s core inflation remains above their 2% target as CPI came in at an expected 3.3% in an overnight report. The Bank of Japan is meeting next week and is expected to update their inflation forecast but leave rates unchanged. Japan has had relatively loose monetary policy over the last few years unlike many of it’s Western counterparts, leaving rates in negative territory despite inflation.
Key cattle reports out this afternoon... USDA’s Cattle on Feed Report is expected to show the feedlot inventory down 2.4% from year-ago as of July 1. June placements are expected to have declined 2.9%, while marketings are anticipated to have dropped 4.8% from year-ago levels. USDA’s Cattle Inventory Report is expected to show the U.S. cattle herd 2.3% smaller than last year as of July 1, with all other categories also anticipated to come in well under year-ago levels.
Seasonal rise in lean hog index slows… The most recent quote for the CME lean hog index rose just 30 cents, the smallest rise since June 1. This year’s seasonal rally has extended further into the year than historical norms. Cash fundamentals remain in place for the rally to continue, namely rising wholesale prices to a fresh eleven-month high.
Overnight demand news... Taiwan tenders for 108,000 MT of U.S. origin wheat.
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
· 2:00 p.m. Cattle — NASS
· 2:00 p.m. Cattle on Feed — NASS
· 2:00 p.m. Peanut Prices — NASS
· 2:30 p.m. Commitments of Traders — CFTC