Good morning!
Selling dominates as trade prepares for USDA’s reports… Corn futures faced pressure overnight and the market is currently trading low-range and down 6 to 9 cents. Soybean futures are generally 4 to 5 cents lower. SRW wheat is down 1 to 3 cents, while HRW wheat is 4 to 6 cents lower. Spring wheat futures are up 3 cents in the July contract but down 5 to 12 cents in deferred contracts, with futures trading within the lower end of yesterday’s wide range of trade. The U.S. dollar index is slightly higher. Crude oil futures are posting strong gains but have thus far stopped short of taking out Monday’s high. Today is the last day of the month and quarter, raising its importance from a technical perspective.
June Acreage Report, Quarterly Grain Stocks out today… USDA’s much anticipated survey-based update on planted acreage arrives today. On average, analysts surveyed by Reuters expect corn plantings to rise notably from March intentions to around 93.787 million acres with soybean plantings climbing to 88.955 million acres. All wheat plantings will likely come in around 45.940 million acres, with other spring wheat acres expected at 11.408 million. Cotton plantings are expected to edge down from March intentions to 11.856 million acres. June 1 stocks of corn, soybeans and wheat are all expected to tighten dramatically compared with year-ago levels. But traders have struggled to peg this report, especially corn stocks. Find full report expectations here.
Rains limit frost damage in Brazil’s northern Parana… Frosts hit some major safrinha corn producing states in Brazil like Parana and Mato Grosso do Sul overnight, with a third consecutive frost/freeze event expected tonight. Rain in northern Parana helped to reduce damage for Brazil’s second-largest corn producing state. Meteorologist Marco Antonio dos Santos said “harsh” frosts also reached into neighboring Paraguay. Assessing damage will take time. South American Crop Consultant Dr. Michael Cordonnier yesterday said that around 30% of the safrinha corn crop in these areas would be susceptible to additional losses.
More than half of Argentina’s soybean crop has been sold… Argentine farmers have sold 23 MMT of their 2021 soybean crop, a weekly advance of 518,800 MT, the country’s ag ministry reported Tuesday. That’s represents 52.9% of the 43.5 MMT crop, as estimated by the Buenos Aires Grains Exchange. Last year at this time, 25.8 MMT (52.7%) of the 49 MMT crop had been sold. There has been talk that farmer sales could dive if prices continue to correct, tightening the availability of soymeal later this year.
Argentina to offer a one-year dredging contract of the Parana River as it readies for a longer effort… Argentina will offer a one-year contract to maintain dredging of the Parana River while the government prepares for a longer concession, the country’s transport minister, Alexis Guerrera, said yesterday. Currently, the Belgian company Jan de Nul is dredging the river under a 90-day contract that it was awarded in April. It’s expected to bid for the upcoming concessions. Under the one-year concession, the state rather than the dredging company will charge fees cargo ships pay to use the waterway. Currently, the dredging company charges the fee. Dredging of the Parana river (on which around 80% of the country’s grain exports flow) has enabled the loading of cargo ships directly at Rosario, saving time and money vs. trucking and loading and unloading cargo like the U.S. and Brazil.
China’s PMI edged lower in June… Expansion in China’s factory sector slowed in June, as export demand weakened and supply bottlenecks held back production. China’s official purchasing managers index fell to 50.9 in June from 51.0 in May. A reading above 50.0 suggests growth in the sector.
Tandem still in play with House Democrats... In a closed-door meeting with fellow Democrats, House Speaker Nancy Pelosi (D-Calif.) on Tuesday reiterated an earlier pledge that the House would not consider the bipartisan package until the Senate had approved the Democratic bill. Some far left lawmakers in the House continue to say that they won’t vote in favor of any bipartisan bill from the Senate unless the second, larger bill is approved and sent to the House. Their threat holds power given Democrats’ narrow majority in the House. In the Senate, Joe Manchin (D-W.Va.), one of the moderates who negotiated the bipartisan infrastructure bill, urged Democrats to support both bills, neither of which have yet been written.
Bipartisan low-carbon biofuels bill to be unveiled today… Senator Amy Klobuchar (D-Minn.) and Republican Senators Joni Ernst of Iowa and John Thune of South Dakota today are introducing a package of bills to expand access to low-carbon biofuels. The measures include a bill to fund renewable fuel infrastructure like blender pumps and storage tanks; a bill to create a $200 refundable tax credit for each flex-fuel vehicle manufactured; and a bill allowing ethanol blenders or fuel retailers to claim a 5-cent tax credit for each gallon of E15 blended or sold. The measure could be swept into the broader infrastructure or spending bills.
Biden promotes infrastructure deal in Wisconsin; Vilsack canceled his trip to the state... Efforts to generate support for the infrastructure package was the only major focus when President Joe Biden visited Wisconsin on Tuesday. This came after a botched rollout of dairy aid that required days of cleanup. The nearly $1 billion in direct payments to dairy awaits final workings as the plan grinds through the regulatory government process. Last Tuesday — before Biden and the bipartisan Senate group reached their compromise agreement — the White House had announced the president would travel to southwest Wisconsin with USDA Secretary Tom Vilsack to talk about rural economies. After the deal was announced, the visit was revamped to focus on infrastructure and Vilsack was a no show. The shift in focus was likely the real reason nothing was announced for dairy producers.
Slight cash cattle market gains… USDA reported some light cash cattle trade in Iowa at $126.50 yesterday, and this follows trade at $126.50 in Nebraska on Monday. This represents a slight gain from action largely ranging from $125 to $126 last week in the western Corn Belt. All has been quiet farther to the south, where trade generally occurred around $122 last week. After a sharp, $7-plus dive for Choice boxed beef values to start the week, the grade dropped another $5.09; Select fell $3.56. But an uptick in movement to 157 loads signal prices may be nearing value levels.
Rebound in lean hog futures continues… Lean hog futures extended their rebound to three days yesterday, with intraday price action failing to test extended trading limits. Daily trading limits revert to $3.00 today. The pork cutout value fell 91 cents and movement was light at 288.91 loads on Tuesday. Cash hog bids fell a national average of $1.90 yesterday. Two days into the week, this week’s kill is lagging week-ago by 28,000 head and year-ago by 23,000 head, according to USDA estimates. Packer profit margins remain in the red, but they have been roughly halved from where they stood last week.
Overnight demand news… Iran’s state-owned animal feed importer issued an international tender to buy up to 60,000 MT of corn, 60,000 MT of feed barley and 60,000 MT of soymeal. South Korean flour mills bought around 77,000 MT of milling wheat to be sourced from the U.S. in a tender. Taiwan’s MFIG purchasing group bought around 55,000 MT of animal feed corn to be sourced from South Africa; no U.S. offers were reported. Thailand rejected all offers and made no purchase in its tender to buy 197,700 MT of animal feed wheat, citing high prices.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 11:00 a.m. Acreage — NASS
- 11:00 a.m. Grain Stocks — NASS
- 11:00 a.m. Rice Stocks — NASS
- 2:00 p.m. Agricultural Prices — NASS
- 2:00 p.m. Broiler Hatchery — NASS