Good morning!
Choppy to higher trade overnight… Corn futures have seen two-sided trade and futures are currently favoring the downside, with December down a penny. Old-crop soybeans are 1 to 2 cents higher, while new-crop futures are mixed. Spring wheat futures have rallied 11 to 13 cents, with HRW wheat up 9 to 10 cents and SRW wheat 6 to 7 cents higher. The U.S. dollar index is just above unchanged. Crude oil futures are posting moderate gains.
Welcome rains for Iowa, but western areas again missed out…Yesterday, between 0.07 and 1.75 inches of rain fell from west-central Iowa to northwest Illinois, but the event again missed the dry northwest part of the state, according to maps from World Weather Inc. Some generally light rain also fell in western Nebraska and northern Michigan. World Weather reports, “A particularly significant rain event remains a possibility in Illinois, Missouri, and potentially eastern Kansas, Indiana and southeastern Iowa as well late Wednesday through Friday.” Some areas of flooding are likely.
ANEC lowers Brazil’s soybean export forecast for June… Brazil will like export 11 MMT of soybeans this month, forecast the association of grain exporters ANEC. That’s a 500,000-MT retreat from its forecast last week. ANEC now expects Brazil to export nearly 124,000 MT of corn this month vs. expectations for 0 MMT in shipments last week.
Farm sales of Argentine soybeans tracking in line with year-ago… Argentine producers have sold 22.5 MMT of their 2020-21 soybean crop as of June 16, the country’s ag ministry says. That represents just over half (51.7%) of the 43.5 MMT crop the Buenos Aires Exchange expects to be harvested. Last year at this time, 25.2 MMT (51.4%) of the 49 MMT crop had been sold.
Parana River levels remain problematic… Water levels along Argentina’s Parana River continue to slide amid lingering drought, with barges continuing to reduce loadings and reports of boats being stranded along the river. Yesterday, a bulk carrier was stranded in the Ramallo area in Buenos Aires province, with work underway to determine if the vessel obstructs navigation.
Federal Reserve Chair Jerome Powell said high prices should wane… The price increases seen in the economy recently are bigger than expected, Powell told lawmakers on Tuesday, but he reiterated that they will likely wane. The Fed chair said, “a pretty substantial part, or perhaps all of the overshoot in inflation comes from categories that are directly affected by the re-opening of the economy such as used cars and trucks.” Fed officials responded last week to increasing inflation risks by pulling forward their expected timing and pace of interest-rate increases, while also kicking off a discussion of when to taper asset purchases. Powell told lawmakers the Fed will not pre-emptively raise interest rates on expectations that inflation will get out of hand. His comments do not mark a major departure from the stance he outlined following last week’s Federal Open Market Committee (FOMC) meeting. But they do signal Powell and the Fed are aware that markets are increasingly on edge over what was perceived as a more-hawkish view from the U.S. central bank.
China’s focus on commodity prices continues... Teams from the pricing department of China’s National Development and Reform Commission (NRDC) have been dispatched to various Chinese provinces and cities to investigate bulk commodity prices and supplies, according to a Reuters report recapping a statement from the agency. “The working groups will learn more about ... bulk commodity spot market transactions and carefully listen to feedback from midstream and downstream companies” on supply levels and price fluctuations, the statement said, and those teams will also “listen to suggestions on how to combat speculation — after speculative buying on commodity exchanges partly fueled the price rally — and ensure supply, Reuters said. This is the latest in a series of actions the Chinese government has announced recently to address commodity prices.
Biden, Vilsack going to Wisconsin next week… President Joe Biden and USDA Secretary Tom Vilsack will be in Wisconsin Tuesday June 29 to discuss agriculture and rural economies, according to the White House. Dairy is likely to figure high on the list of issues that will be focused on with the administration having announced additional aid will be coming to the sector over the next 60 days. But there has been little detail on the aid plans as of yet. However, we would expect this visit to Wisconsin could be a format for some additional details to emerge on that and other aid to the ag sector.
Democrats eye path for citizenship... Senate Democrats plan to include a pathway to citizenship for certain immigrants in the country illegally as part of the sweeping infrastructure bill they hope to enact on a partisan basis this year. Senate Budget Committee Chairman Bernie Sanders (I-Vt.), whose committee would start the process of crafting a bill, confirmed Tuesday that it would include a pathway to citizenship but said Democrats are still determining who would be covered. An early draft would call for $150 billion to go toward immigration policies, including the path to citizenship and some border security, according to a document circulating on Capitol Hill.
China’s ambassador to the U.S. departing… Cui Tiankai has served as the Chinese ambassador to the U.S. since April 2013 and this week announced he is returning to China. “I will leave for China soon. This was the longest term in my diplomatic career abroad, which allowed me to experience many historic events, meet many friends, and left me with memories for life,” he said in a letter released noting his departure. Cui labeled the Sino/U.S. relationship as being at a “critical crossroads,” saying that the choice facing the U.S. in that relationship is one of dialogue and cooperation, or confrontation and conflict, according to a China Daily story. He expressed a hope that China will “continue to be a firm promoter and active contributor to the healthy and stable development of Sino/U.S. relations.” Cui has been a steady voice for China in the U.S. during his time in Washington and there has been no word on who might replace him.
Trudeau responds to China’s call for a UN probe into Canada’s treatment of First Nations children… Justin Trudeau had harsh words for China after Beijing called for a United Nations probe into crimes against Indigenous children in Canada. The prime minister, asked about the move Tuesday, slammed the “systemic abuse and human rights violations” against Uyghur Muslims, as well as the situations in Hong Kong and Tibet. Chinese diplomats raised Canada’s treatment of its First Nations in an apparent response to Ottawa joining an international effort to force Beijing to allow UN officials access to Xinjiang province.
Yantian port signals full operations to return Thursday… Yantian International Container Terminals announced in a notice to port customers that it will resume normal operations June 24 after a month of disruptions due to a Covid outbreak at the key container port in Shenzhen, China. “Currently, Covid-19 has been effectively under control in the port area, and the operation capacity of the terminals have steadily recovered,” Yantian said. It will likely take an extended period to address the shipping backlogs that have emerged, with some expecting it could take until year-end before things are cleared up.
White House acknowledges vaccination goal will not be met… White House officials Tuesday said that the administration’s goal that 70% of the population 18 and over would receive at least one vaccination for Covid will not be met. The main factor, officials said, is that younger adults have been resistant to getting the vaccine. “The reality is, many younger Americans have felt like Covid-19 is not something that impacts them and have been less eager to get the shot,” said Jeff Zeints who heads up the White House Covid response. The 70% mark is expected to be reached for those 27 and older by July 4, he noted, but it will take a while longer before those 18 to 26 reach that mark.
Group sues Smithfield for allegedly misleading consumers during pandemic... Consumer group Food & Water Watch filed suit against Smithfield Foods, charging the company with “fearmongering” about a meat shortage during the Covid-19 pandemic and misrepresenting worker safety measures. The group took issue with Smithfield stating that the country was “perilously close to the edge in terms of our meat supply” while the company’s meat exports were rising. “Government data further refute Smithfield’s doom-and-gloom warnings, showing that pork inventory held in cold storage warehouses was well into the hundreds of millions of pounds, which analysts have estimated could have kept grocery stores stocked with pork for months, even absent any additional production,” the suit stated. The group said that Smithfield’s warnings on supply prompted consumers to stock up on meat. Smithfield said the allegations of price manipulation are “wrong,” and it stressed its worker safety measures were comprehensive and guided by medical and worker safety experts.
Some higher cash cattle trade begins… Live and feeder cattle futures posted a strong rebound Tuesday, a largely-technical-based recovery. Cash cattle trade got started yesterday at prices ranging from $120 to $126.50, with the bulk of action taking place at the upper end of that range. Sales last week ranged from $122 to $124. Packer profit margins have retreated nearly $170 over the past week to just shy of $691 a head, according to HedgersEdge.com’s Tuesday update. Choice boxed beef values dived $5.45 yesterday, while Select fell $1.71. But Cold Storage data for May was encouraging. The drawdown in frozen beef stocks during May of 34.8 million lbs. was a bit stronger than the five-year average retreat.
Cold storage data raises demand concerns… Lean hog futures tried to rally Tuesday, but the market was only able to muster a low-range close with modest gains. HedgersEdge.com estimates packers were losing $23.50 a head as of Tuesday vs. making $1.40 a head the week prior. Also of note, USDA reported frozen pork stocks edged higher from the close of April to the end of May, whereas stocks typically slide 34 million lbs. during May. That adds to existing concerns about a slowdown in Chinese buying. The pork cutout value plunged $12.93 yesterday, with all cuts sliding and bellies plummeting $59.30. On the other hand, cash hog bids shot $4.47 higher. Average hog weights in the Iowa/southern Minnesota/South Dakota market dropped 2.2 lbs. the week ending June 19, with weights now 6.3 lbs. under year-ago.
Overnight demand news… Jordan’s state grain buyer canceled a tender Tuesday to buy 120,000 MT of milling wheat for December shipment and issued a new tender to buy 120,000 MT of wheat with a bidding deadline of July 6. Egypt purchased 63,000 MT of soyoil and 10,500 MT of sunflower oil in an international tender. The Taiwan Flour Millers association issued an international tender to buy 55,000 MT of grade 1 milling wheat from the United States.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS