Good morning!
Buying fading for corn and beans as overnight session winds down… Corn futures favored the upside in a quiet overnight session, but the market has since slipped to trade fractionally lower. July through January soybean futures are holding on to 2 to 5-cent gains, with far deferred months down 1 to 2 cents. Spring wheat has rallied 12 to 14 cents amid shrinking crop prospects; HRW wheat is up 5 to 7 cents and SRW wheat is 2 to 3 cents higher. The U.S. dollar index and crude oil futures are down slightly.
Heavy rain and storms on tap for southern and eastern areas of the Midwest… Rains over the past 18 hours once again favored southern and eastern areas of the Corn Belt, with the dry northwest Corn Belt and Dakotas missing out. More heavy rains, flooding and severe storms are expected from Kansas to Indiana today, with heavy rain also possible on Saturday. The greatest rainfall is expected from western Missouri into Illinois, according to World Weather Inc. The National Weather Service has issued flash flood watches and warnings from southeast Nebraska/northeast Kansas through Indiana.
Another consultancy drops Brazilian corn crop peg near 90 MMT… AgroConsult lowered its safrinha corn crop estimate for Brazil to 65.3 MMT, a 900,000-MT decline from its May forecast. That drops the consultancy’s total corn crop estimate from 91.1 MMT to 90.2 MMT. AgroConsult expects Brazil to export 24.2 MMT of the grain this year.
Argentine corn yields continue to impress… The Buenos Aires Grains Exchange held its Argentine soybean production estimate at 43.5 MMT, with harvest now basically complete. Yields were estimated at a five-year low. The crop is estimated 11.2% under last year’s. Corn harvest, meanwhile, is nearing half complete, with wet corn slowing harvest efforts. “The recorded yields continue to exceed the expectations of the beginning of the campaign,” the exchange says. Consequently, it maintained its 48-MMT corn crop estimate. Winter wheat planting advanced to just shy of 71% complete, with farmers still expected to seed 6.5 million hectares (16.1 million acres) to the crop.
French wheat crop rating slips… The French farm office lowered the amount of soft wheat it rates good to excellent two percentage points to 79% as of June 21. France is expected to see a mix of erratic rain and sunshine over the coming week, as well as cooler temperatures. This is well-timed for the EU’s biggest wheat producer as weather has been dry of late.
Russian tariff on wheat exports continues to climb… Russia’s ag ministry has set the duty on wheat exports at $41.30 per metric ton for June 30 through July 6. That’s up $3.20 from the week prior, with the formula-based duties slated to kick off July $13.20 (47%) higher than they started June. Duties are still under the set tariffs of around $61 per metric ton that had been in place during the spring.
Infrastructure agreement, but there is a signing caveat… President Joe Biden and a bipartisan group of senators announced they had reached a compromise on part of it: a $1.2 trillion framework to fund roads, electric-vehicle charging stations, broadband and other physical infrastructure. In all, the total package would spend $973 billion in new and baseline dollars over five years or $1.2 trillion over eight years. Biden and Democratic leaders said that advancing the deal will hinge on the passage of more elements Biden’s $4 trillion economic agenda. The two-track process sets up weeks of negotiations to gather support for the bipartisan plan and a separate Democratic proposal. Biden said he wouldn’t sign the bipartisan deal until a bill containing the rest of his agenda also is on his desk. The “human” portion will come later via a budget reconciliation package; the linkage between that and infrastructure is already facing Republican opposition. Senate Majority Leader Chuck Schumer (D-N.Y) said he plans to move both the bipartisan bill and approve a budget resolution in July. That resolution, once adopted by the House and Senate, will launch the reconciliation process, which would likely include Biden’s more partisan priorities, such as universal Pre-K, two years of free college and national paid leave. Democratic leaders signal the deadline for getting the measures to Biden’s desk is Sept. 30. Bottom line: Despite bipartisan progress, advancing the infrastructure plan in Senate is a tall order.
Biden administration likely to announce another $750 million to $1 billion in direct payments to dairy producers... The total of the coming direct payments has changed several times, as well as how it will be distributed. It is unclear if this will be part of an announcement on June 29 when Biden and USDA Secretary Tom Vilsack visit Wisconsin.
EPA advances proposed rule to OMB to reconsider Trump SAFE vehicles rule... EPA has sent a proposed rule to reconsider the Trump administration’s Safer Affordable Fuel Efficient (SAFE) Vehicles Final Rule for Model Years 2021-2026. EPA in April said it was reconsidering the Trump administration’s action to withdraw California’s waiver to enforce greenhouse gas (GHG) standards for cars and light trucks. That effort is still ongoing with a public comment period open until July 6 on its notice of reconsideration. The review of the SAFE Vehicles Rule was ordered via an executive order issued by Biden on Jan. 20. EPA indicated that based on its reevaluation of the SAFE Vehicles Rule, it would determine whether or not it would revise vehicle GHG standards.
Chinese hog prices rebound… China’s live hog futures rebounded in response to improved spot prices as fewer heavy pigs were sent to market. This comes against the backdrop of China’s state planner last week urging hog producers to keep production capacity at reasonable levels, adding that it would monitor pig production and market price trends and adjust reserves as necessary. The country’s government-backed livestock industry body also urged producers not to panic in the face of rising feed and hygiene costs that along with sliding hog prices have pushed margins to their lowest level since 2014.
Mexican authority: Resumption of exports from two U.S. pork facilities will take at least two months… Mexico’s health safety agency, Senasica, told Reuters Mexican inspectors rejected three cargoes of pork skins at the U.S./Mexico border in April from Smithfield Foods and another shipper due to “yellowish spots” and fungus. This led to the mid-June revocation of Smithfield’s export license for its Tar Heel, North Carolina plant (the world’s largest pork plant) as well as that for third-party shipper Rava Forwarding Inc. Any resumption in shipments from either facility will likely take at least a few months, according to Senasica’s press office. In the meantime, Smithfield has many other facilities still eligible to ship pork to Mexico.
Gearing up for Cattle on Feed… Most live cattle contracts were able to finish in positive territory yesterday, with feeder cattle posting solid gains. Today, attention will shift to USDA’s monthly Cattle on Feed Report that’s expected to show the June 1 cattle on feed herd up 0.5% from year-ago. Placements are expected to fall 4.6% from year-ago with marketings up 23.4%. Boxed beef values were mixed yesterday, with Choice down $4.63 and Select up 73 cents. Movement improved to 132 loads. Additional cash cattle trade took place in Kansas and Texas at $122, with Nebraska and Iowa still seeing action in the $125 to $126 area,
Big gain for the pork cutout… July lean hog futures dived their $4.50 limit yesterday; daily trading limits will remain at the extended $4.50 per contract today. July futures settled nearly $20 below the CME lean hog index and expiration is around two weeks away. Deferred months were able to finish mixed. The headliners from yesterday’s Quarterly Hogs & Pigs Report were near in line with expectations. Near-term slaughter numbers will likely be larger than previously anticipated based on heavyweight market hog inventories. The pork cutout value climbed $5.17 yesterday, with bellies soaring $33.75. This could signal a short-term low is in the mix. Movement was also solid at 336.90 loads. On the other hand, cash hog bids dropped an average of $6.60 nationally yesterday.
Overnight demand news… Turkey provisionally purchased around 320,000 MT of animal feed barley in an international tender.
Today’s reports
- 8:00 a.m. Food Price Outlook — ERS
- 1:00 p.m. Weekly Red Meat Production Report — AMS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Milk Production — NASS
- 2:00 p.m. Peanut Prices — NASS