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Your Pro Farmer newsletter is now available... Corn crop conditions continued to decline, while the soybean crop stabilized and spring wheat ratings improved. Weather was favorable to start July, with moderate temps and rainfall, though some northern areas of the Corn Belt remained too wet. But without any significant heat or moisture stress, it’s going to be difficult to get traders concerned about corn and soybean crop prospects. The bearish reaction to USDA’s June 28 Acreage and Grain Stocks Reports points to further price pressure this month, especially for corn. But funds are already heavily net short across the grain and soy markets. USDA’s July 12 Supply & Demand Report will incorporate the June planted/harvested acreage estimates and June 1 stocks into the new-crop balance sheets for corn, soybeans and wheat. USDA will also issue is first all-wheat production estimate. The Supreme Court issued several significant rulings to finish its 2023-24 term, including the Chevron deference that has potential ag impacts, which we highlight in our News page 4 feature. We cover all of these items and much more in this week’s newsletter, which you can access here.
July 4th holiday schedule... All markets and government offices are closed on Thursday, July 4, for the Independence Day holiday. Grain and livestock markets resume trading at 8:30 a.m. CT on Friday, July 5. We will only send out two reports Friday – “First Thing Today” around 8:00 a.m. CT and “After the Bell” briefly highlighting the day’s price action after the closes. Happy Fourth of July from Pro Farmer.
SovEcon raises Russian wheat crop forecast... SovEcon has increased its Russian wheat production forecast 3.4 MMT to 84.1 MMT due to “relatively high initial yields” in the Southern Region and improved crop prospects in other areas of the country. Russia’s wheat crop is still expected to be down sharply from 92.8 MMT last year and below the five-year average of 86.7 MMT.
FOMC minutes: Officials noted price pressures diminishing but patience still needed... Federal Reserve officials at their last meeting acknowledged the U.S. economy appeared to be slowing and “price pressures were diminishing.” The minutes noted a weak May reading in the consumer price index as one among “a number of developments in the product and labor markets” that supported a view that inflation was easing. Still, “some participants” emphasized the need for patience before cutting rates, and “several” cited the possible need to raise rates further if inflation resurged.
Refiners shifting toward SAF to counter low returns from renewable diesel... Major producers like Valero Energy, Phillips 66 and Calumet Specialty Products are retrofitting facilities to produce sustainable aviation fuel (SAF). Government incentives aimed at reducing aviation emissions are expected to support SAF production despite its higher costs and complex logistics, according to Bloomberg.
SAF is crucial for reducing airline emissions but is more expensive to produce and involves more rigorous refining compared to renewable diesel. Current SAF production yields smaller volumes and more low-value byproducts like naphtha and propane.
Diamond Green Diesel is converting half of its southeast Texas plant to SAF production, benefiting from its access to inedible animal fats and used cooking oil.
Phillips 66 has converted a San Francisco-area refinery to produce SAF and other renewables, reducing its crude-based fuel output.
Calumet is expanding SAF production at its Montana Renewables facility.
Of note: SAF currently makes up only 0.1% of global jet-fuel supplies, compared to green diesel’s 4.5% share of the diesel market. Government mandates and subsidies are seen as essential for the expansion of both fuels.
Colorado reports first human case of H5N1 in dairy worker... Public health officials in Colorado announced an adult male had tested positive for the H5N1 virus after reporting mild symptoms, including conjunctivitis (pink eye). The man is an employee at a dairy farm who had exposure to infected cattle and recovered after antiviral treatment, officials said.
This was the fourth human case of H5N1 reported in the U.S. since the virus was confirmed in dairy cows in March.
FDA issues rule revoking authorization for use of BVO in food... The decision is based on the lack of reasonable certainty regarding the safety of brominated vegetable oils (BVOs) continued use in food, specifically in stabilizing flavoring oils in fruit-flavored beverages. Although FDA has not authorized BVO for any other food uses, it recognizes that food companies will need time to reformulate products and work through distribution chains. Therefore, compliance with this rule is required one year after the effective date, allowing companies time to reformulate, relabel and deplete existing BVO-containing inventory. FDA first proposed this revocation in November 2023 and indications suggest that very few beverages still contain BVO.
Iowa leads ethanol production... According to data from the Iowa Farm Bureau, about 50% to 70% of Iowa’s corn production is used to make ethanol compared to the national average of about 35% to 40%. Iowa alone accounts for nearly 30% of the nation’s ethanol production. In 2023, Iowa produced about 4.6 billion gallons of ethanol.
Powell: Debt path ‘unsustainable’... Fed chair Jerome Powell urged the Biden administration to address the deficit, warning the U.S. economy is too strong to justify running such high levels of debt. “Fiscal policy is a job for elected people. We’re not elected people, so we don’t comment on it, particularly in advance of a presidential election,” Powell said at an European Central Bank conference in Portugal. “I will say more broadly, though, the United States is running a very large deficit at a time when we’re at full employment. The level of debt that we have is not unsustainable, [but] the path that we’re on is unsustainable – that’s completely not controversial. This is something that should be a top-level issue. You can’t run these kinds of deficits [even] in good economic times for very long. In the longer run, we’re going to have to do something sooner or later, and sooner will be better than later.”