Evening Report | August 12, 2024

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Corn strengthens after USDA’s August crop reports... Corn futures rebounded from price pressure ahead of USDA’s August crop reports to post key bullish reversals on the day. While the crop estimate was slightly greater than the average pre-report estimate, the old- and new-crop ending stocks forecasts were lower than expected. Soybeans faced heavy selling after the reports as the crop estimate came in much higher than anticipated, which pushed new-crop ending stocks up more than expected. Wheat production and ending stocks both came in lower than expected, but the market reaction was mixed, with winter wheat ending the day lower while spring wheat futures posted gains. Click here to view the full report details.

FSA releases first batch of certified acreage... USDA’s Farm Service Agency released reported certified acreage as of Aug. 9.

· Corn: Planted/failed of 89.104 million acres, with 2.670 million acres of prevent-plant (PP).

· Soybeans: Planted/failed of 86.046 million acres, with 774,962 acres of PP.

· Wheat: Planted/failed of 49.666 million acres, with 389,373 acres of PP.

· Cotton: Planted/failed of 10.785 million acres for upland and 192,289 acres for ELS, with 314,564 acres of PP for upland and 32,144 acres of PP for ELS.

We’ll have details about acreage assumptions as we have time to further analyze the data. Note: NASS incorporated the FSA certified acreage data into its August crop estimates.

Corn conditions unchanged... USDA rated 67% of the corn crop as “good” to “excellent” as of Sunday, unchanged from the previous week. Analysts expected a one-point decline. The “poor” to “very poor” rating also held at 10%.

USDA reported 94% of the crop was silking (94% five-year average), 60% was in dough stage (56%) and 18% was dented (12%).

Soybean conditions unchanged... USDA rated 68% of the soybean crop as “good” to “excellent,” unchanged from last week, though there was a one-point decline in the top category. Analysts expected the rating to slip to 67%. The “poor” to “very poor” rating held at 8%.

USDA reported 91% of the soybean crop was blooming (90% average) and 72% was setting pods (70%).

Cotton conditions modestly improve... USDA rated 46% of the cotton crop as “good” to “excellent,” up one point from last week. The “poor” to “very poor” rating dropped two points to 25%. USDA rated the Texas crop as 33% in the top two categories and 37% in the bottom two.

USDA reported 96% of the crop was squaring (95% average), 74% was setting bolls (73%) and 13% had bolls opening (12%).

Spring wheat conditions decline... USDA rated 72% of the spring wheat crop as “good” to “excellent,” down two points from the previous week. Analysts expected no change. The “poor” to “very poor” rating increased one point to 5%.

USDA reported 18% of the spring wheat crop was harvested, three points behind average.

Winter wheat harvest winding down... USDA reported winter wheat harvest reached 93%, two percentage points ahead of the five-year average. Harvest was finished aside from Idaho (48% vs. 45% average), Montana (69% vs. 60%), Nebraska (99% vs. 96%), Oregon (83% vs. 83%), South Dakota (95% vs. 89%) and Washington (66% vs. 61%).

Argentine grain shipments normalizing... Grain shipments out of Argentine ports started normalizing after the government ordered oilseed workers to suspend a nearly week-long strike earlier on Monday, the head of the country’s ports chamber said. The government sent an order to two oilseed workers unions to suspend a strike for 15 days. More than 40 ships had been delayed by the strike, according to the Rosario Grain Exchange.

“Once conciliation has been ordered, the terminals call in their employees and they get back to work according to their scheduled shifts,” ports chamber director Guillermo Wade told Reuters.

Labor strike could halt U.S. port operations... A labor strike that could halt cargo-handling operations at ports from Houston to Boston appears increasingly likely, according to Bloomberg. The United States Maritime Alliance (USMX), representing terminal operators and ocean carriers, and the International Longshoremen’s Association (ILA) issued conflicting statements, indicating significant differences remain. USMX expressed willingness to continue bargaining, highlighting “industry-leading wage increases” in their latest offer, while ILA’s Executive Vice President Dennis Daggett criticized shipping CEOs for taking home large bonuses and ocean carriers for profiting from global conflicts and natural disruptions. ILA President Harold Daggett has warned of a potential strike if no agreement is reached by the deadline, scheduling a meeting in early September to discuss wage demands and strike strategies.

Some importers are rerouting cargo and stockpiling goods in anticipation of potential disruptions ahead of the holiday season. Despite USMX’s readiness to negotiate, ILA stated the two sides are “very far apart, particularly on the economic issues,” signaling an impasse. Charles van der Steene, Maersk’s North America president, noted that a week of disruption could have long-lasting effects on the industry, and U.S. industry groups, including the Retail Industry Leaders Association, are urging the White House to intervene to prevent a strike.

EU confident tariffs on Chinese EVs are WTO-compliant... The European Union (EU) expressed confidence that its tariffs on Chinese electric vehicles (EVs) comply with World Trade Organization (WTO) rules, despite a complaint from Beijing. On Aug. 10, China requested a consultation with the WTO over the EU’s anti-subsidy tariffs on Chinese EVs, which were imposed following an eight-month investigation. The investigation concluded that China’s battery EV value chain benefits from unfair subsidies, posing a threat to EU producers. In response, the EU imposed provisional tariffs ranging from 17.4% to 37.6% on Chinese-made EVs, affecting brands like BYD and Western brands manufactured in China.

China’s ministry of commerce has criticized the EU’s findings as baseless and a violation of WTO rules, arguing the measures undermine the global fight against climate change. Nevertheless, the European Commission has stated the WTO complaint will not impact the ongoing anti-subsidy investigation, which is expected to conclude by November.

To mitigate the impact of these tariffs, Chinese EV manufacturers are exploring options to set up production facilities overseas. For instance, BYD recently signed a $1 billion investment deal to build a factory in Turkey, which is part of the EU Customs Union and enjoys zero tariffs on vehicle exports to the UK. However, to benefit from lower tariffs, Chinese companies will need to ensure that a significant portion of their vehicles is manufactured in the countries where they establish these new factories, rather than simply assembling parts made in China.

OPEC lowers global oil demand growth forecasts... OPEC revised its global oil demand growth forecast for 2024 downward, now estimating growth at 2.11 million barrels per day (bpd), a reduction from the previous estimate of 2.25 million bpd. The organization also lowered its outlook for 2025, forecasting demand growth at 1.78 million bpd, down from 1.85 million bpd previously. OPEC attributed these adjustments to updated data from the first quarter of 2024 and, in some cases, the second quarter, as well as weaker-than-expected oil demand growth in China. Despite a slower start to the summer driving season compared to the previous year, OPEC expects transport fuel demand to remain strong due to continued road and air mobility. The organization maintains a relatively optimistic view of crude demand growth for 2024, even as the global shift toward renewable energy sources introduces varying perspectives on current crude oil demand.