Softer tone in grain and soybean markets overnight... Corn and soybean futures are steady to fractionally lower of as of 6:30 a.m. CT. Winter wheat futures are down 4 to 5 cents, while spring wheat is mixed with a downside bias. The U.S. dollar index is holding near unchanged, while crude oil futures are slightly higher.
Export sales report out this morning... USDA will release its weekly update on export sales activity at 7: 30 a.m. CT. Traders expect the report to show corn sales ranging from 650,000 MT to 1.050 MMT, soybean sales between 350,000 and 750,000 MT, wheat sales of 300,000 MT to 500,000 MT, soymeal sales ranging from 50,000 MT to 300,000 MT and soyoil sales between 8,000 MT and 40,000 MT..
Mandatory budget cut proposals could include food stamps, crop insurance... House Budget Committee Republicans are close to a fiscal 2018 budget resolution that would raise defense spending and cut nondefense spending slightly and require a minimum of $150 billion in mandatory spending cuts over 10 years, with tentative cuts for food stamp funding and perhaps crop insurance. House Ag Chairman Mike Conaway (R-Texas) has been talking with the budget committee and arguing against raiding the ag budget. Spending limits would be $72.5 billion above the fiscal 2018 defense discretionary cap of $549 billion, and $5 billion below the nondefense cap of $516 billion. The goal is to mark up the budget next week, likely Wednesday. If the committee marked up the plan next week, House floor consideration would not likely occur until after the July Fourth recess.
Trump comments on ethanol, estate tax, regulations and trade policy... President Donald Trump in Cedar Rapids, Iowa, on Wednesday, said that his administration’s efforts to remove regulations, negotiate better trade deals, eliminate the death tax, promote ethanol and focus on worker training “will usher in a new era of prosperity for American agriculture.” Trump noted that, “Farming, that is something very beautiful to me; I’m not a farmer, but I’d be very happy to be one.” Of note, Trump acknowledged that erasing the estate tax won’t be so easy. “I don’t know if we are going to pull that one off, but we are working very hard to do it,” he said.
Senate Republicans to release version of healthcare reform legislation this morning... It will be the first time the public will get to see what they have been working on behind closed doors. The Congressional Budget Office is expected to release its analysis of the bill early next week, with a Senate vote possible before the July 4 recess. There are concerns the bill would undermine coverage in Rural America.
Paraguayan farmers protest new tax on ag exports... Farmers in Paraguay protested yesterday against a proposed 15% tax on corn, soy and wheat exports that its Senate will likely vote on today. Growers argue the tax would end corn and wheat planting and diminish soybean production. The proposal stemmed from a leftist coalition in Congress, but President Horacio Cartes’s party agreed to support the measure as part of a political deal formed last week that allowed the party to take back control of Congress. Paraguay’s finance minister warned the tax would hurt the country’s fast-growing economy and suggested raising the value-added tax on agriculture as an alternative.
Bigger Mexican corn crop to curb its 2016-17 import needs... Mexico’s 2016-17 corn crop will likely total 27.4 MMT, says a USDA ag attaché in the country, which is above USDA’s official 27.0-MMT crop peg. “This in turn will reduce corn imports,” the post notes. It pegs Mexico’s 2016-17 imports at 13.9 MMT, which is 900,000 MT lighter than USDA’s official forecast. The U.S. is expected to contribute 13.6 MMT of this figure. Looking ahead to 2017-18, the attache expects Mexico to bring in 15.5 MMT of corn, including 15.350 MMT from the United States.
Ergot played a role in Egyptian court’s decision to halt new food inspection system... This month, an Egyptian court suspended the country’s new food inspection system, and the written verdict explained that the inspection system “resulted in a breach of the [import] requirements stipulated by the agriculture ministry’s quarantine service, which banned the entry of wheat shipments containing pests that are prohibited from entering the country, including the fungus ergot.” This raises concern that the controversial rule on ergot could be reenacted if the ag ministry resumes authority over inspections.
Light sales of 2013-crop corn at Chinese reserve auctions... China sold 120,924 MT of 2013 corn at its auction of state reserves today, or just 9.38% of the more than 1.288 MMT up for grabs. The grain sold at an average price of 1,386 yuan ($202.90) per metric ton.
U.S. cattle futures trading firm gets fined by CFTC… Fines totaling $5 million were levied against McVean Trading and Investments (MTI) and three associates for market manipulation in live cattle futures, the Commodity Futures Trading Commission (CFTC) announced. Civil penalties of $2 million were leveled against McVean Chairman and Chief Executive Charles Dow McVean, Sr., with $1.5 million to be paid by MTI. President Michael J. Wharton was fined $1 million and Samuel C. Gilmore, an MTI consultant, was ordered to pay $500,000.
Brazil suspends beef exports to the U.S. from some plants amid food-safety concerns... Brazil suspended exports of fresh beef to the U.S. from five slaughterhouses belonging to the country’s three biggest meat producers because of what the ag ministry called “irregularities” observed in the beef by U.S. authorities. A June 21 statement from the Brazilian Association of Beef Industry Exports (ABIEC) said the suspension occurred “after the detection of [bovine] reactions to the vaccine for foot-and-mouth disease, that in some cases can provoke internal, and not externally visible abscesses.” ABIEC called the suspension “a temporary, preventative action to avoid problems on the U.S. market.” The ministry received an alert from USDA’s Food Safety and Inspection Service about the irregularities June 16 and suspended exports from the five slaughterhouses the same day, the ministry said. The suspension will last until “corrective measures are taken to normalize the situation,” the statement said.
Cash cattle trade gets underway at lower levels, as expected... Cash cattle trade picked up across the Plains yesterday around $122. While packer profit margins are near the $200 per cwt. threshold, an uptick in showlist numbers and softer beef prices meant they could slash cash prices this week. Last week, trade took place at an average price near $130.
Pork price surge continues... The pork cutout value climbed another $1.67 today, putting it within 3 cents of the $100.00 per cwt. level. Also encouraging, movement was impressive at 360.99 loads, keeping concerns that the lofty price level might slow demand at bay for now. Bellies again led gains.
Overnight demand news... Egypt tendered to buy an unspecified amount of wheat from global suppliers. Japan bought 69,961 MT of food-quality wheat from the U.S. as well as 31,106 MT from Canada and 34,680 MT from Australia.
Today’s reports:
- 7:30 a.m., Weekly Export Sales -- FAS
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 2:00 p.m., Cold Storage -- NASS
- 2:00 p.m., Livestock Slaughter -- NASS
