Good morning!
Corn and soybeans under pressure, but spring wheat soaring… Corn futures strengthened to kick off the overnight session, but most contracts are currently down 1 to 3 cents. Soybeans have fallen 2 to 6 cents, with new-crop leading losses. SRW wheat futures are 1 to 3 cents lower, while HRW wheat is up 1 to 2 cents. Spring wheat hit new contract highs overnight and the market is currently posting gains of 11 to 12 cents. Spring wheat ratings dived overnight, and the Pacific Northwest is in the grips of a heatwave. Crude oil is down slightly, and the greenback is posting modest gains.
Frost/freeze the latest ding for Brazil’s battered safrinha corn crop… “Frost and light freezes were reported this morning in interior southern Brazil from southern Mato Grosso do Sul and southeastern Paraguay into western and southern Parana, Santa Catarina and northern Rio Grande do Sul. The region produces wheat and safrinha corn,” reports World Weather Inc. More frost and light freezes are expected Wednesday and Thursday morning. Damage assessment will occur over the next few days. World Weather reports, “there is some potential for the heavily frosted areas in Parana and Mato Grosso do Sul for some negative impact on the most immature Safrinha corn,” but it does not expect the region’s wheat crop to be seriously impacted.
Cordonnier sticks with his Brazilian corn crop estimate, but worried about cold snap… South American Crop Consultant Dr. Michael Cordonnier made no change to his corn crop estimate for Brazil of 90 MMT, but his bias is neutral to lower going forward and the coldest air of the season is moving in. He warns frosts/freezes and possibly even some snow are possible Monday night through Wednesday night. “Brazil is experiencing the longest nights of the year right now, which allows for even more cooling,” he adds. A frost/freeze in western and northern Parana and southern Mato Grosso do Sul would further damage the country’s safrinha corn crop with late-planted crops still pollinating and filling grain. Cordonnier says roughly 30% of corn in these areas would be susceptible to additional losses if the forecast verifies. Cordonnier made no change to his Argentine corn crop estimate of 47 MMT and his bias is neutral to slightly higher going forward. The crop was 48% harvested late last week.
Solid heat wave for the western Corn Belt likely the latter half of July… During the first half of July, there is the potential for a small insurgence of heat to briefly move through the Midwest as a high-pressure ridge retreats from the Prairies, according to World Weather Inc., but it says the heat should only last a day or two. The weather watcher does not expect a solid heat wave to impact the eastern Plains or western Corn Belt until the latter part of July and more likely the last 10 days of the month. “However, when that time comes the dry bias that will still be prevailing in the northern Plains and upper Midwest will become much more significant and there could be some expansion to the southeast,” World Weather reports. In the meantime, World Weather says, “the Dakotas, Canada’s Prairies and Montana will remain at ground zero for the most stressful conditions due to heat and dryness.”
Cordonnier maintains U.S. crop pegs, but bias is to the downside… Cordonnier maintained his 177.5 bu. per acre U.S. corn yield estimate this week, and his bias is neutral to lower going forward. He reports rains over the weekend from eastern Kansas to southern Michigan was beneficial outside of the flooded areas, as it comes just a few weeks before pollination. In areas dealing with flooding, soybeans are more likely to be impacted than corn. Cordonnier says that if the forecast for hotter, drier weather in July verifies, “we may look back at this past weekend as a giant “missed opportunity” for the corn crop in the northwestern Corn Belt.” Cordonnier also left his U.S. soybean yield projection at 50.8 bu. per acre, but again, his bias is neutral to lower going forward. He reiterated rains over the weekend for the central and eastern Corn Belt were generally beneficial. But he adds, “We may have missed an opportunity to jump-start the soybean development in the drier areas of the northwestern Corn Belt. The growing season is shorter in the northwestern Corn Belt, so the soybeans can ill afford to miss any opportunity for additional growth.”
Crop progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended June 27. Find more details here.
- Corn: 4% silking, 64% “good” to “excellent” (G/E)
- Soybeans: 96% emerged, 14% blooming, 60% G/E
- Spring wheat: 88% headed, 20% G/E
- Winter wheat: 33% harvested, 48% rated G/E
- Cotton: 32% squaring, 7% setting bolls, 52% G/E
Spring wheat CCI rating continues to fall… When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn and soybean crops showed little change. The corn crop rose 0.3 point to 367.0 points, while the soybean rating slipped 0.3 point to 354.3 points. The corn CCI rating is 8.9 points below the five-year average for the end of June, while the soybean rating is 8.8 points below average. The spring wheat CCI rating fell another 7.5 points over the past week to 269.5 points. That’s now 94.3 points below the five-year average for the end of June. Find more details here.
Brazil pushing for more details in China’s new soybean standards proposal… In February, China proposed changes to its national soybean standard to the World Trade Organization, with discussions underway about replacing the current standard that was set in 2009. Brazil is asking China to clarify certain aspects of the new standard that changes quality requirements for the grain, Glauco Bertoldo, director of Brazil’s agriculture ministry’s inspection services department for vegetable products, said at a recent event. “Our first impression is that the Brazilian market will not be significantly affected,” Bertoldo said. And he says the new Chinese norm seems to be “less rigorous” regarding quality parameters. But there is some concern about China’s new maximum moisture level proposal of 13%, which is under Brazil’s 14% threshold.
Consultancy raises Russian wheat crop forecast… IKAR now estimates Russia’s wheat crop at 83.6 MMT, a 1.6-MMT increase from its previous forecast. It expects the country to export 39 MMT of the grain in 2021. Southern areas of the country and Siberia have recently received welcome rain, improving crop prospects.
EU’s soft wheat exports lagging year-ago by 27%... With just three days remaining in the 2020-21 marketing year, the European Union had exported 25.38 MMT of soft wheat, data from the European commission showed. That’s well under 34.64 MMT shipped last year at this time. But last year’s data did include Britain. The country’s barley exports stood at 7.08 MMT, lagging 2019-20 by 530,000 MT. The EU’s corn imports at 14.36 MMT were well under the 19.59 MMT the country brought in at this point the previous season.
China trade practices remain under scrutiny… China rejected an initial request by Canada for a dispute settlement panel to be established over China’s restrictions on imports of Canadian canola, which Canada maintained at a WTO meeting Monday were not based on science and were unfairly deployed by China. The country rejected Canada’s first request for a panel, a move it is allowed to do under WTO rules, maintaining its actions were to protect human and plant health, actions allowed under the WTO. Meanwhile, Australia formally requested consultations over China’s antidumping and countervailing duties it imposed on Australian wine. The Australian request sets off a 60-day period for consultations, but few expect any solution to emerge in that timeframe. China lashed out against Australia if the form of trade bans and restrictions after the country pushed for an international inquiry regarding the origins of Covid-19.
Direct payment for dairy producers may NOT be unveiled today in Wisconsin… USDA Secretary Tom Vilsack will visit the state with President Joe Biden. While a payment is coming, some sources signal a changed focus for the trip to help sell the recently announced bipartisan infrastructure package — especially after Biden had to walk back comments that he would only sign an infrastructure measure in tandem with a reconciliation bill loaded with spending (“investment”) items pushed by far-left Democrats. But veteran observers continue to note that when a government official, especially a USDA secretary, goes to Wisconsin, they usually have something to announce about dairy policy.
Big drop in beef movement… There was Pressure on live cattle futures to start the week, despite futures’ discount to the cash market and lower than expected cattle placements during May. Cash cattle traded at an average price of $125.47 last week, up $2.63 from the week prior, marking the second consecutive week of strong gains. Traders are uncertain about this week’s cash prospects. A heatwave and building dryness on the Northern Plains and into the northwest Corn Belt is stressing pastures and animals, but conditions are far less stressful in other areas of the Plains. Feeder cattle were pressured by strong gains in the corn market. Choice and Select boxed beef dropped $1.40 and $1.50 to start the week and movement slowed dramatically to 48 loads.
Pork and cash hog bids moving in opposite directions… Limits expand to $4.50 today after the front three contracts settled their $3 limit higher to start the week. Followthrough buying today would signal the market has put in a low. Buying was largely in response to ideas the market had been highly oversold the past two weeks, with the July contract still more than $10 under the CME lean hog index after Monday’s limit surge. Cash hog bids dropped a national average of $4.36 on Monday. But the pork cutout value shot $5.09 higher.
Overnight demand news… Egypt’s state grain buyer bought 180,000 MT of wheat from Romania in an international tender yesterday. Thailand tendered to buy up to 197,799 MT of animal feed wheat. Tunisia issued an international tender to buy 100,000 MT of soft wheat and 100,000 MT of animal feed barley from optional origins.
Today’s reports
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Egg Products — NASS