Good morning!
Slight gains overnight... Corn futures are steady to fractionally higher as traders note disappointing yield results from the No. 2 producing state of Illinois on the Farm Journal Midwest Crop Tour. Soybeans are also enjoying gains of around 3 cents. Winter wheat futures are around a penny higher, while spring wheat is up 3 to 5 cents. The greenback is up slightly, while crude oil futures are posting slight losses.
Day 3 Midwest Crop Tour results... The Farm Journal Midwest Crop Tour released official results from Illinois last night. Scouts found an average corn yield of 180.72 bu. per acre, compared to the three-year average of 187.37 bu. per acre, and a soybean pod count in a 3 foot by 3 foot square of 1,230.77, compared to the three-year average of 1,269.24 pods. Click here for western Iowa Tour results.
Scouts on the eastern leg of the Tour began their day in Coralville, Iowa, and scouts on the western leg started their day in Spencer, Iowa. Both legs will meet tonight in Rochester, Minnesota. This evening we will release official Tour results from Iowa and Minnesota.
Export Sales Report Expectations for the week ending Aug. 17:
| Commodity | 2016-17 | 2017-18 |
|---|---|---|
| Corn | 50,000 to 250,000 | 400,000 to 700,000 |
| Wheat | NA | 300,000 to 600,000 |
| Soybeans | 250,000 to 450,000 | 400,000 to 600,000 |
| Soymeal | 25,000 to 100,000 | 50,000 to 150,000 |
| Soyoil | 8,000 to 30,0000 | 0 to 10,000 |
Brazil to tax ethanol imports to slow the flood of the biofuel from the United States... Camex, Brazil’s foreign trade chamber, on Wednesday approved a 20% tax on any ethanol imports in excess of a 600 million liter tax free quota, its ag minister, Blairo Maggi, confirmed via Twitter. The move is meant to protect domestic producers against rising shipments from the United States. For the first half of 2017, Brazil imported 1.29 billion liters of ethanol (1.045 billion liters from the U.S.), a 330% surge from the year prior. Brazil’s action ends an agreement with the U.S. to keep global ethanol trade free of taxes. The tax will remain in place for two years, at which point it will be re-evaluated. The measure will take effect once it’s published in the official gazette. This should happen in a matter of days. Get more details.
Argentine biodiesel loses big market in U.S.... A major impact is being felt by Argentine biodiesel producers following Tuesday’s U.S. Commerce Department slapping preliminary duties on the country’s biodiesel exports. Argentina exported $1.2 billion of biodiesel to the U.S. last year, the destination for about 90% of Argentine biodiesel last year. The U.S. ruling followed similar moves from the EU in 2013 and Peru last year. However, the World Trade Organization ruled against the EU and said it had to remove its tariffs. According to Argentina’s head of Carbio, that market should open in “a few weeks.” The U.S. Commerce decision is preliminary, and the department will decide on Nov. 7 whether to finalize it. Read more.
SovEcon raises Russian wheat crop... Russia’s will likely produce a 78.9 MMT wheat crop, according to the ag consultancy SovEcon. This is up 1 MMT from its previous crop peg. The increase contributed to a 2.4-MMT boost to its grain crop forecast for 2017-18, which now stands at 127.6 MMT. The consultancy raised both its grain and wheat export forecasts by 400,000 MT to 44.0 MMT and 32.4 MMT, respectively.
Central banker focus begins today in Wyoming confab... The annual Jackson Hole conference hosted by the Kansas City Fed begins in Wyoming today, with the main focus for traders coming Thursday when both Fed Chairwoman Janet Yellen and European Central Bank President Mario Draghi will speak. Draghi’s address will be monitored as the European Central Bank is due to discuss the future of its monetary policy at its September meeting amid persistently low inflation and a strengthening currency.
China’s appetite for beef on the rise... Beef is now the fastest growing meat in China, with consumer food safety fears subsiding amid strict inspections and Chinese people looking to move away from pork to reduce fat in their diets. Domestic demand has been unable to keep up, plus it’s getting more expensive to raise cattle in China. Therefore, Beijing has opened its market to beef from the U.S., South Africa and Ireland this year and it is considering bringing in beef from Namibia. Last year China imported 800,000 MT of beef, making it the second largest importer of beef after the United States. China’s beef and veal consumption has climbed more than 10% over the past five years, while consumption of chicken and pork have declined.
Light test of cash market at lower prices... Some cash cattle changed hands at $106 in the Iowa/Minnesota market and at $107 in Colorado, Kansas and Nebraska yesterday, but so far volume has been quite light. These prices are down $2 to $4 from last week’s action, but the low end is roughly in line with where futures are trading. That could blunt the impact of any reaction to these lower prices today.
Pork bellies continue to lead the cutout value lower... Cash hog bids ticked up a penny in the Iowa/Minnesota market on Wednesday, but bids were down slightly across the western Corn Belt and they dropped $3.65 in the eastern Belt, according to USDA’s daily summary. Meanwhile, pork prices continue to slide, with the cutout value down $3.66 from last Thursday. Pork belly prices have dropped a dramatic $29.22 over that period, as buying for BLT season has come to an end.
Overnight demand news... Jordan purchased 50,000 MT of hard milling wheat from optional origins, but it made no purchase in its tender to buy 100,000 MT of feed barley. Iran issued an international tender to buy around 200,000 MT of soymeal. South Korea purchased around 60,000 MT of corn from optional origins. Ethiopia issued an international tender to buy around 70,000 MT of milling wheat. Japan purchased 98,574 MT of food-quality wheat from the U.S., as well as 35,217 MT from Canada in its regular tender. Iraq purchased 50,000 MT of wheat from the U.S. as well as 50,000 MT of wheat from Australia. Tunisia tendered to buy 167,000 MT of milling wheat.
Today’s reports:
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 7:30 a.m., Weekly Export Sales -- FAS
- 2:00 p.m., Livestock Slaughter -- NASS
- Tonight, Midwest Crop Tour results from Iowa and Minnesota -- Farm Journal
