Good morning!
Light pressure on corn and soybeans overnight… Corn futures are around a penny lower in early trade as traders engage in some light profit-taking after yesterday’s solid move to the upside. Soybean futures are around 4 to 5 cents lower amid similar action. Winter and spring wheat futures are choppy to higher. Market risk aversion is on the rise this week, with bond yields climbing as major central banks around the world prepare to wind down easy-money policies. The market is also anxious about the possibility of a government shutdown. The U.S. dollar index is at its highest level since mid-August. Crude oil futures have pushed to the highest level since July 6.
Crop Progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Sept. 26.
- Corn: 97% dented, 74% mature, 18% harvested, 59% “good” to “excellent” (G/E)
- Soybeans: 75% dropping leaves, 16% harvested, 58% G/E
- Cotton: 60% bolls open, 11% harvested, 65% G/E
- Winter wheat: 34% planted, 9% emerged
Little change in late-season corn, soybean CCI rating… 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 crop was unchanged at 357.2 points. The soybean crop slipped 0.7 points to 349.2. The CCI rating is now 9.2 points below the five-year average for corn and 9.5 points below for soybeans.
Cordonnier cuts U.S. corn yield estimate, citing pushed maturity and foliar disease… The U.S. corn crop will likely yield an average of 175 bu. per acre for a 14.87 billion bu. crop, estimates Crop Consultant Dr. Michael Cordonnier; that’s a 1-bu.-per-acre cut from his forecast last week. He has a neutral to slightly lower bias going forward. He says crop maturity is being pushed by warm, dry weather, and noted “A quick maturing of the crop can cut short the grain filling process resulting in lighter test weights and slightly lower yields,” with “excessive foliar diseases, especially tar spot in the eastern Corn Belt” being another concern. Cordonnier maintained his U.S. soybean yield projection of 50.3 bu. per acre for a 4.34 billion bu. crop and his bias is neutral to slightly lower going forward. Again, he notes crop maturity is being pushed and says that’s not the best way to maximize soybean yields.
CNGOIC official expects Chinese grain imports to hold strong in 2021-22… Chinese corn prices are likely to retreat in 2021-22 amid an increase in supplies thanks to a bumper new corn crop, Li Xigui, an analyst with the China National Grain and Oils Information Center (CNGOIC), said during a live streamed talk yesterday. Chinese corn prices have already pulled back 13% from record levels hit in May. And Li expects China’s wheat and rice use in feed to remain high, helping to curb corn prices. He expects China to import 20 MMT of corn in 2021-22, which compares to imports of 29 MMT for 2020-21. Li also commented that feed wheat and rice stocks were plentiful and that grain imports should remain elevated in the new year. Li expects China’s sorghum imports to climb from 8.5 MMT in 2020-21 to 10 MMT in 2021-22. Barley imports are expected to climb from 11.4 MMT to 12 MMT in 2021-22. And China will likely import a near-steady 200,000 MT of distillers dried grains (DDGs) in 2021-22.
World Weather says western HRW wheat areas should see some dryness relief this week… A series of weather disturbances is expected to improve soil moisture in the HRW wheat region this week. “Western HRW wheat areas, such as an area from the northwestern Texas panhandle through eastern Colorado, far western Kansas, and western Nebraska, will receive the lowest rain amounts and be most in need of greater rainfall after this event. There will be at least some rain in this part of the region though,” World Weather Inc. reports.
CR/stopgap spending bill update… As expected, the Senate on Monday rejected two bills: A Democratic effort to fund the government until early December that also extends the debt limit until Dec. 2022, and a GOP effort to fund the government until December without the debt limit. Senate Majority Leader Chuck Schumer (D-N.Y.) said “Keeping the government open and preventing a default is vital to our country’s future. And we’ll be taking further action to prevent this from happening this week.” Meanwhile, the House Rules Committee recessed without approving a rule for three education and labor bills . Chairman Jim McGovern (D-Mass.) said the panel would leave room to consider a rule for debate on a possible second continuing resolution (CR) today.
Democratic lawmakers push Biden not to lower RFS… A group of Democratic lawmakers, including Senator Amy Klobuchar (Minn.) and Representative Cheri Bustos (Ill.) penned a letter to President Joe Biden urging the administration not to cut biofuel blending requirements under the Renewable Fuel Standard (RFS) for 2020 through 2022. This came following a report from Reuters that the administration was planning to do so. “This action would directly undermine your commitment to address climate change and restore integrity to the Renewable Fuel Standard,” the letter said.
Jayme White sworn in as deputy USTR… Jayme White was sworn in as Deputy United States Trade Representative (USTR) yesterday by USTR Katherine Tai. Deputy Ambassador White’s portfolio will include the Western Hemisphere, Europe, the Middle East, Labor, and Environment. He was confirmed by the U.S. Senate on Sept. 22, 2021.
Czech Republic records first bird flu outbreak since spring… The Czech Republic has recorded an H5 bird flu outbreak at a small, non-commercial region near the center of the country. Five of the 30-geese flock was killed by the virus. This is the first case of the virus for the central European nation since May.
Futures signal traders expect another week of near steady cash action… Cattle futures had a mildly negative response to Friday’s Cattle on Feed Report, but the report should have limited impact the remainder of the week. USDA reported cash cattle traded at an average price of $123.64 last week, down 24 cents from the week prior. Our early expectation is for near steady trade again this week, and October futures are around a buck under last week’s action. Choice and Select boxed beef values fell 62 cents and 15 cents, respectively, to start the week. Those represented milder setbacks vs. recent action, which could signal prices are nearing value levels.
Hog futures surge on bullish H&P data… Lean hog futures posted sharp to limit gains in response to Friday’s highly bullish Hogs & Pigs Report, leaving open wide gaps to the upside on the charts. Limits expand to $7.00 today. The pork cutout value has also climbed to the highest level in roughly a month, with the pork cutout value rising $1.18 on Monday and all cuts except loins rising. Pork processing margins have shot more than $20 higher over the past week to $53.10 a head as of Monday, reports HedgersEdge.com.
Overnight demand news… Taiwan’s MFIG purchasing group purchased around 65,000 MT of animal feed corn that’s expected to be sourced from Brazil in an international tender.
Today’s reports
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Egg Products — NASS
- 2:00 p.m. Potatoes — NASS