Good morning!
Mix of corrective buying and followthrough selling overnight... Corn futures saw a mix of followthrough selling and corrective buying overnight and the market is currently trading mixed, with nearbys favoring the upside and new-crop futures the downside. Soybeans also saw two-sided trade overnight, but futures are currently trading low-range and down 4 to 8 cents. SRW wheat futures are trading 3 to 5 cents lower, HRW wheat is down 1 to 3 cents and spring wheat futures are 3 to 4 cents lower. The greenback is posting modest gains and crude oil futures are down slightly.
Another strike at Argentine ports underway as Covid-19 spreads… Argentine port workers launched another 48-hour strike at midnight as they continue to push to be designated essential workers so they can receive Covid-19 vaccines. Eleven unions announced the work stoppage, saying a strike was necessary “given the exponential increase in cases, the regrettable loss of several colleagues and the failure of all negotiations we have held with national authorities.” A similar strike last week at its main Rosario port upended traffic and stranded seven ships due to falling water levels along the Parana river. The last of those ships was freed on Tuesday. Harvest of the country’s soybean and corn crops are underway. Argentina is the world’s top exporter of soymeal and its No. 3 exporter of corn.
ANEC reins in Brazilian soybean export forecast… Brazil will likely export 14.9 MMT of soybeans this month, forecasts the association of grain exporters ANEC. That’s roughly a 1.3-MMT drop from its forecast last week. The association also edged its soymeal export forecast 100,000 MT higher to 1.9 MMT. It now expects the country to export 21,991 MT of corn during May versus its forecast last week for no exports of the grain this month.
China stops banks from selling commodity-linked products to retail buyers… The China Banking and Insurance Regulatory Commission (CBIRC) has asked lenders to stop selling investment products linked to commodity futures to mom-and-pop buyers, three sources with knowledge of the matter told Reuters. The banking regulator has also reportedly asked lenders to completely unwind their existing books for such products. This comes at a time when commodity prices are soaring and China has been importing huge quantities of corn and other feed grains. The price surge has elevated regulatory concerns about the risks of speculative bets, which has already prompted China’s state planner and exchanges to take steps to control prices. The Reuters sources indicated the ban on new sales has widened to a clean-up of the entire sector, including products linked to commodities but not targeted before, like soybeans, natural gas, gold, silver, platinum and palladium. Critics say this is a major step back in China’s effort to open its markets.
U.S. consumer confidence ticked lower in May for the first time this year... The Conference Board’s consumer confidence index slipped to 117.2 from 117.5 the previous month. While small, the headline figure masked a sharp shift in assessments of current economic conditions, which are the brightest since the pandemic hit, and short-term economic prospects, which fell to a three-month low. “Consumers’ short-term optimism retreated, prompted by expectations of decelerating growth and softening labor market conditions in the months ahead,” said Lynn Franco, senior director of economic indicators at the Conference Board.
Prices for new and previously owned U.S. homes are surging… The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 13.2% in the year that ended in March, the highest annual rate of price growth since December 2005. Separately, the Commerce Department said the median price of a new home sold in April was $372,400, up 20.1% from a year earlier, the strongest annual gain since 1988. Robust homebuying demand, driven by ultralow mortgage interest rates and a shortage of homes for sale, have pushed prices rapidly higher in recent months.
Summers again writes U.S. inflation risk is real... “Even six months ago, it was reasonable to regard slow growth, high unemployment and deflationary pressures as the predominant risk to the economy. Today, while continuing relief efforts are essential, the focus of our macroeconomic policy needs to change. Inflationary pressures are mounting from the boost in demand created by the $2 trillion-plus in savings that Americans have accumulated during the pandemic; from large-scale Federal Reserve debt purchases, along with Fed forecasts of essentially zero interest rates into 2024; from roughly $3 trillion in fiscal stimulus passed by Congress; and from soaring stock and real estate prices,” former Treasury secretary and current Harvard professor Lawrence Summers writes in the Washington Post.
Biodiesel tax credit extension pushed by Grassley, Cantwell… Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) introduced legislation to extend the current federal biodiesel tax credit program through 2025. “The biodiesel tax credit has proven to work by reducing our dependence on foreign oil and lowering greenhouse gas emissions,” Grassley said in statement. Reps. Cindy Axne (D-Iowa) and Mike Kelly (R-Pa.) introduced the legislation in the House Tuesday.
Biden plan calls for sourcing EV battery metals from friendly countries… Reuters reports President Joe Biden will “rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on processing them domestically into battery parts, part of a strategy designed to placate environmentalists,” two administration officials with direct knowledge told Reuters. The plans “will be a blow to U.S. miners who had hoped Biden would rely primarily on domestically sourced metals, as his campaign had signaled last autumn, to help fulfill his ambitions for a less carbon-intensive economy.” The sources said that “rather than focus on permitting more U.S. mines, Biden’s team is more focused on creating jobs that process minerals domestically into electric vehicle (EV) battery parts.”
White House plans two California offshore wind farms that could power 1.6 million homes… The U.S. government plans to open more than 250,000 acres off the California coast to wind development, the Biden administration announced Tuesday, as part of a major effort to ramp up the nation’s renewable energy and cut its climate-warming emissions. Under the plan, the administration would allow wind power projects to be built in federal waters off the coast of Central California northwest of Morro Bay, as well as at a second location west of Humboldt Bay. Officials estimate that the two areas combined could generate 4,600 megawatts of electricity — enough to power 1.6 million homes.
Republican ag panel members call on Vilsack to release details on impact of proposed tax increases… Republican members of the Senate ag panel are calling on USDA Secretary Tom Vilsack to make public a detailed explanation and any supporting economic analyses that clarifies how the Biden administration’s proposed tax increases will affect farm estates. Senator John Boozman (R-Ark.), the committee’s ranking member, authored a letter to Vilsack that questions USDA’s analysis of Biden’s proposed changes in capital gains tax rates and the modification to stepped-up basis on America’s family farms and ranches. The letter, which was signed by seven other Republican senators who serve on the panel, specifically asks the secretary to explain of how USDA arrived at the conclusion 98% of farm estates will not be impacted by the proposed tax changes.
U.S. has vaccinated 50% of its adult population against Covid-19… It’s the first large country to do so. Today, the state of Ohio will randomly draw the name of one vaccinated adult to win $1 million. It’s the first of five such drawings that are part of a lottery to spur people to get the shot. Vaccinated individuals in the 12-17 age group will have their own chance to win tuition to a four-year college. Some other incentives: New Jersey will buy of-age vaccinated individuals a beer. Maryland is giving state employees $100. Lancaster, California is offering scholarships. Krispy Kreme is still providing free doughnuts.
Biden, Putin to meet in Geneva on June 16... Biden and his Russian counterpart Vladimir Putin will meet in the Swiss city of Geneva on June 16, the White House and the Kremlin confirmed in separate May 25 statements. The White House said the leaders will broadly “seek to restore predictability and stability to the U.S./Russia relationship,” while the Kremlin said the talks will span strategic stability, the Covid-19 pandemic and various regional conflicts. The talks will be the first face-to-face meeting between the two leaders since Biden took office in January. Earlier this year, Biden labeled Putin a “killer” during a television interview and the U.S. has imposed multiple rounds of sanctions against Russian individuals and entities over various grievances. The meeting will take place after Biden attends a G7 summit.
Democratic Iowa farmer running for Chuck Grassley’s Senate seat... Dave Muhlbauer, an Iowa farmer and a former county supervisor, on Monday became the first Democrat to announce he is running for Grassley’s seat. Muhlbauer says onetime rural Democrats “just feel like Democrats are leaving rural areas high and dry.” He portrays himself as vested in the future of struggling rural America as a fifth-generation farmer. Grassley, a powerful seven-term GOP senator, is 87 and has said he will announce whether he plans to run again by autumn. At 37, Muhlbauer provides a stark generational contrast.
Cash cattle trade once again off to an early start… A big decline in corn futures caught the livestock sectors’ eye on Tuesday, with feeder cattle rallying. But June live cattle remain at roughly a $3 discount to last week’s cash cattle trade, signaling traders are still skeptical about the cash market’s ability to rise given ample market ready supplies. Cash cattle trade is again off to an early start, with fairly active trade occurring from $118 to $120 in Iowa, from $119.50 to $120.00 in Kansas and Texas and from $120 to $123 in Nebraska. This is steady to higher compared with last week’s action. Given concerns about market ready supplies, daily kill numbers have taken on more focus. This week’s kill is running 2,000 head ahead of last week’s strong tally, which is encouraging. Meanwhile, boxed beef values extended their charge yesterday, though movement slowed to 93 loads.
Pork rally continues… Cash hog bids fell $1.89 on Tuesday, a retreat from midday gains. But the pork cutout value shot $2.31 higher, with bellies, butts and loins driving gains. The cutout value has been on the rise for more than three weeks thanks to strong grilling demand, tight cold storage supplies and food service restocking. That’s helping to lift daily kills. Tuesday’s kill was estimated at 485,000 head, a marked improvement from 466,000 head slaughtered last Tuesday.
Overnight demand news… Japan’s ag ministry is seeking 80,000 MT of feed wheat and 100,000 MT of feed barley via a simultaneous buy and sell auction to be held June 2. Jordan canceled its tender to buy 120,000 MT of animal feed barley due to a lack of participants.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Outlook for U.S. Agricultural Trade: May 2021 — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Farm Labor — NASS
- 2:00 p.m. Peanut Stocks and Processing — NASS
- 2:00 p.m. Broiler Hatchery — NASS