Good morning!
Rains weigh on grain and soy futures… Corn futures are trading mid- to low-range and down 13 to 17 cents, with futures still well within Friday’s wide range of trade. Soybean futures are trading near their lows and down 17 to 26 cents. Winter and spring wheat futures are down 7 to 9 cents. The U.S. dollar index is down slightly and crude oil futures are slightly higher to start the week.
Eastern Corn Belt receives the best rains; more is in the forecast… Rains favored the southern half of Iowa over the weekend, with accumulation fading to the north where rains are most needed. Light rain also fell in North Dakota and into northern Minnesota, with better rains across much of the eastern Corn Belt. Accumulation generally ranged from 0.20” to 0.75”, according to World Weather Inc. It says, “All of U.S. grain and oilseed areas in the Midwest, Delta and southeastern states will receive additional rain over the coming week to 10 days.” Cooler temperatures are also likely across the Midwest early this week with highs only expected to reach into the 60s and 70s today and Tuesday. The Plains are expected to warm into the 90s to 100s Tuesday into Thursday, with Corn Belt also expected to heat back up the latter half of the week. Tropical storm Claudette made landfall in southern Mississippi Friday night; the storm brought 0.75” to 2.00” of rain to the Carolinas, southern Georgia and parts of Florida.
Chinese imports of Brazilian beans picked up last month… China imported 9.23 MMT of soybeans from Brazil during May, an 82% (4.15-MMT) surge from April and a 4% (370,000-MT) rise from year-ago levels, according to data from the country’s General Administration of Customs. The arrival of delayed cargoes helped push up the tally. China also imported 244,431 MT of soybeans from the U.S. last month, a 50% drop from year-ago and an 89% dive from the 2.15 MMT of the oilseed China imported from the U.S. during April. Five months into the year, China has imported 15.66 MMT of soybeans from Brazil, which lags year-ago by 28.9% (6.38 MMT). Beijing has imported 21.53 MMT of soybeans from the U.S. so far in 2021, a dramatic 240% surge from its imports of 8.97 MMT last year at this point.
Chinese corn auction met with strong demand… China’s Sinograin sold all (37,126 MT) of the imported corn for Ukraine it put up for auction Friday. The small sale was part of the country’s multifaceted effort to cool domestic prices.
Indonesia lowers top tariff on palm oil exports… Indonesia will soon announce plans to lower its highest duty on palm oil exports to $175 per metric ton, which would be an $80 decline from its current top-end rate, according to Finance Minister Sri Mulyani Indrawati. She also indicated that a new rule will soon be issued for authorities to collect a $50 per MT export levy when crude palm oil prices hit a minimum of $750 per MT; for every $50 price increase, that duty will rise $20 for crude palm oil and $16 for derivative products. The new ceiling of $175 takes effect when crude palm oil prices push above $1,000 per metric ton.
Russia preparing its first wheat shipment to Algeria in 4.5-years… Russia is loading a 28,000 MT shipment of wheat for Algeria, marking the country’s first shipment of the grain to the country since December 2016. Last fall, Algeria relaxed some restrictions, making it possible for Russia and other Black Sea wheat traders to participate in tenders for higher-protein wheat.
The week ahead… Bipartisan infrastructure talks continue, with infighting among Democrats adding more hurdles to the topic, but it will be hearings this week in Washington that will be the focus of many. On Wednesday, the Senate Ag Committee holds a long-requested session on cattle marketing. Various legislative bills have been introduced that would mandate a specified number of cattle priced on the spot market. The issue is a complex one. Also on Wednesday, the House Ag General Farm Commodities and Risk Management Subcommittee will hold a hearing to review “The Efficacy of the Farm Safety Net.” While some farm-state lawmakers may say the current safety net just needs tweaking, the events over the past few years clearly signal that at least a major airing out of the safety net provisions is needed. The Senate may try to clear the Global Climate Solutions Act, bipartisan legislation to provide much-needed rules for private carbon markets and hopefully how to measure and price carbon credits. The House Agriculture Appropriations Subcommittee will mark up its FY 2022 bill this week, as the House begins its annual spending bill process. The Senate spending timeline is murky.
Spokesman reiterates President Joe Biden’s opposition to indexing the gasoline tax to inflation… The latest bipartisan effort on infrastructure in the Senate would do so, raising new questions about its viability. “After the extraordinarily hard times that ordinary Americans endured in 2020 — job losses, shrinking incomes, squeezed budgets — he is simply not going to allow Congress to raise taxes on those who suffered the most,” White House spokesman Andrew Bates said in a statement Friday. Biden on said that he’ll have a response to the $579-billion plan after reviewing it this week. “I’ll tell you Monday when I get the copy of it,” the president said at the White House. A draft outline of the lawmakers’ plan lists several funding sources that have been opposed by the White House, including the gas tax proposal, a fee on electric vehicles and re-purposing unspent Covid-19 relief funds. Meanwhile, far-left Democratic infighting on the topic is adding another hurdle. The most liberal members of the party favor a $6 trillion infrastructure package that stands no chance of passing the close Senate.
CNH to buy Raven Industries in $2.1 billion deal… CNH Industrial has agreed to buy Raven Industries for $58 per share in a deal that will build CNH’s stance in the agriculture equipment business. The deal, valued at $2.1 billion, marks a 33.6% premium based on a four-week volume-weighted average stock price. “Precision agriculture and autonomy are critical components of our strategy,” CNH Industrial Chief Executive Scott Wine said in a statement. CNH said it will spin off its Iveco truck and bus units along with its FPT engine division. The company is the second largest in the farm equipment business with the New Holland, Case IH and Steyr brands, putting it just behind Deere and Company. The deal is expected to close in the fourth quarter of this year.
Iowa Poll shows almost two-thirds want someone to replace Grassley… Almost two-thirds of likely Iowa voters polled say it is time for someone other than Chuck Grassley to serve in the U.S. Senate, casting doubt on the prospects of the longest-serving senator in the state’s history. In a poll published Saturday by the Des Moines Register (link) 64% of those surveyed said it’s time for someone else to occupy that seat, compared to 27% who said they’d vote to elect Grassley to an eighth term in 2022. Notably, Grassley’s job approval stood at 45%, which the Des Moines Register said is his worst since 1982.
Argentine deal on beef exports expected early this week… Argentina has reportedly reached a deal with meatpackers that will be announced early this week, according to two sources with direct knowledge of the matter cited by Reuters. One said a deal will be announced Tuesday. Argentina’s beef exports have been halted since mid-May due to high domestic food prices. Government officials made comments late last week signaling a partial reopening of beef exports was likely, but this will be done in a way that guarantees more meat on the domestic market.
More warnings to Chinese hog producers not to panic… Chinese hog prices continue to slide, with live hog prices now down 65% since the start of the year. In response, China’s Animal Agriculture Association (CAAA) issued a notice saying, “In a period of declining prices, don’t panic, and further, don’t listen to rumors and plan production with a gambling mentality.” This follows similar comments from China’s state planner. CAA also encouraged farmers to speed up elimination of less-efficient breeding sows and to focus on cost-cutting. Hog margins are at their lowest level since 2014, with farmers selling heavy pigs and China remaining an aggressive importer of pork. Some expect the situation to force out smaller producers, accelerating the country’s move toward factory hog farming. Cofco Futures recently noted, “Currently large companies are at 55% of their slaughter schedule and small farmers still have a lot of stock on their hands. We expect supply pressure to be quite large in late June.”
Will the cash cattle market continue to strengthen?… Beef production edged 0.5% lower the week ending June 19, according to USDA, with year-to-date production up 6.4% from last year’s tally which was clipped to some degree by spring processing disruptions stemming from the Covid-19 pandemic. Another Cattle on Feed Report will be released Friday, but comparisons should be made to numbers two years ago given last spring’s disruptions. Long-awaited strength in the cash market helped futures to strengthen last week. If that continues, futures could climb to another round of contract highs.
Cold Storage and Quarterly H&P Report both out this week… The pork cutout value dropped $4.18 on Friday, extending the market’s rather dramatic pullback. The decline was led by butts, which dropped more than $21, and ribs, which retreated nearly $11. Cash hog bids gained a national average of 34 cents on Friday, according to USDA. Efforts to secure animals ahead of July fourth could keep cash prices supported near-term. The market will receive an extra update on the demand front this week via USDA’s monthly Cold Storage Report on Tuesday. A highlight for the complex this week will be USDA’s Quarterly Hogs & Pigs Report on Thursday. Comparisons to year-ago will be skewed by the Covid-19 pandemic.
Weekend demand news… Egypt’s state grain buyer is seeking at least 30,000 MT of soyoil and 10,000 MT of sunflower oil.
Today’s reports
- 10:00 a.m. Weekly Export Inspections — AMS
- 2:00 p.m. Milk Production — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitment of Traders Report — CFTC
- 3:00 p.m. Crop Progress — NASS