Good morning!
Grain and soy futures strengthen overnight... Corn futures are fractionally higher after seeing two-sided trade overnight. Soybean futures are up 6 cents, which is well off session highs. Winter wheat is fractionally to a penny higher, while spring wheat is up 3 to 4 cents. The U.S. dollar index is under light pressure, as are crude oil futures.
Day 2 Crop Tour results... The Farm Journal Midwest Crop Tour released official results from Nebraska and Indiana last night. For Nebraska, the Tour found an average corn yield of 165.42 bu. per acre, compared to the three-year average of 162.51 bu. per acre, and a soybean pod count in a 3 foot by 3 foot square of 1,131.02, compared to the three-year average of 1,182.12 pods.
For Indiana, the Tour found an average corn yield of 171.23 bu. per acre, compared to the three-year average of 167.13 bu. per acre, and a soybean pod count in a 3' x 3' foot square of 1,168.78 compared to the three-year average of 1,164.09 pods.
Scouts on the eastern leg of the Tour began their day in Bloomington, Illinois, and travel to Coralville, Iowa. Scouts on the western leg travel from Nebraska City, Nebraska, to Spencer, Iowa. Tonight, we will release official Tour results from Illinois.
Chinese corn buys surge... China imported 910,000 MT of corn in July, the fourth highest figure on record, according to customs data from Beijing. This represented a 238% surge from June and an even more dramatic climb from purchases of 28,985 MT in July 2016. The surge in imports came amid low global prices and a rise in Chinese corn prices as drought curbed production prospects.
U.S. soybean shipments to China still running well ahead of year-ago... China imported nearly 10.081 MMT of soybeans in July, a 29.92% gain from June, with Brazil as its top supplier, followed by Argentina. The U.S. still managed to ship the country 499,922 MT of beans last month, which was up notably from July 2016. So far this year, China has imported 54.890 MMT of the oilseed, a gain of 16.79% from last year at this point. The U.S. has supplied it with 19.562 MMT of that business, up 20.09% from year-ago.
China’s imports of ethanol and DDGs remain very limited... China exported 19,814 cubic meters of ethanol in July, six times last year’s light total and the highest monthly volume of shipments so far this year. The country has been encouraging its processors to utilize the country’s massive and aging stockpiles, and has restricted imports of the biofuel via high tariffs. Its ethanol imports for the first seven months of the year are down more than 99% from year-ago at just 2,792 cubic meters. Its imports of distillers dried grains (DDGs) were also down a sharp 94.5% from year-ago in July at 20,8181 MT; the feed ingredient is also subject to restrictive taxes.
Trump: Withdrawal from NAFTA will ‘probably’ happen... President Donald Trump during a campaign-like rally Tuesday night in Phoenix, Arizona, said he would “end up probably terminating NAFTA at some point.” Trump said, “I personally don’t think you can make a deal without a termination, but we’re going to see what happens,” his first comments on NAFTA 2.0 since the renegotiation process began. Trump said he didn’t think a deal could be reached “because we have been so badly taken advantage of... but in particular Mexico... I don’t think we can make a deal,” he said. Trump has the executive authority to withdraw from the deal, some observers note, but any such move would face some resistance in Congress and have major impacts industries like agriculture.
U.S. trade restraints proposed on imports of Argentine, Indonesia biodiesel... An initial finding that Argentina and Indonesia are subsidizing biodiesel production, as expected, prompted the U.S. Department of Commerce on Tuesday to set preliminary countervailing duty rates of 41% to just over 68% on imports of the product from Argentina and Indonesia. The levels vary based on the companies involved. Commerce will take comment on the preliminary rulings and then issue final decisions, which are likely to come next year. Preliminary determinations in the associated anti-dumping investigations are due to be issued in October. Get more details.
South Korea pushes back on reopening KORUS... U.S. Trade Representative (USTR) Robert Lighthizer said Trump wants to see “substantial improvements” to the U.S./South Korea trade deal (KORUS). But South Korea made clear it will not agree to any changes until it investigates the cause of any trade imbalance — a process that could take months to unfold. South Korea officials repeated the country wants to begin a joint study to investigate potential causes of the trade gap and evaluate the overall impact of the agreement. U.S. officials made no response to the South Korean request. The two countries are expected to continue discussions over the coming weeks.
More sanctions against China, Russia... U.S. imposed additional sanctions on Chinese and Russian entities that it alleges have aided Kim Jong Un’s push for intercontinental nuclear capabilities. American prosecutors are also looking to recover $11 million from certain companies for money they allege was laundered via U.S. accounts in an attempt to avoid sanctions. China responded by saying these moves put the bilateral relationship with the U.S. at risk. It is reviewing anti-dumping levies against a type of optical fiber produced in the U.S. and the European Union.
JBS to build fertilizer plant in Brazil... JBS SA will invest 30 billion reals ($9.53 million) to build a new plant to produce fertilizers in Brazil. The country currently imports the bulk (around 75%) of its fertilizers. The company hopes to have the unit up and running within a year.
Still awaiting cash direction... Cattle futures posted solid gains yesterday, as traders worked to narrow futures’ discount to last week’s $109 to $110 cash action. So far, there have just been a few sales in the dressed market at slightly lower prices. Today’s online Fed Cattle Exchange auction could provide additional guidance. But at last week’s online auction, all lots went unsold. Also of note, a disappointing showing in yesterday’s Cold Storage Report could spur some profit-taking today.
Attitudes remain bearish in lean hog futures... The pork cutout value remains under pressure, dropping another $1.63 on Tuesday, but movement improved to 389.89 loads. And packers are having no trouble securing needed supplies. As a result, cash prices continue to slide. This weighed on lean hog futures yesterday, with futures dropping to new multi-month lows. On a more positive note, frozen pork stocks at the end of July were a bit lighter than anticipated and the nine-day relative strength index is signaling a time or price correction is due.
Overnight demand news... Algeria tendered to buy a nominal 50,000 MT of milling wheat. Japan’s ag ministry received no offers in its tender to buy 120,000 MT of feed-quality wheat and 200,000 MT of barley in its simultaneous buy and sell auction. Taiwan bought around 130,000 MT of corn, likely from Brazil. South Korea tendered to buy 55,000 MT to 70,000 MT of corn.
Today’s reports:
- 9:30 a.m., Weekly Ethanol Production -- EIA
- 2:00 p.m., Broiler Hatchery-- NASS
- Tonight Midwest Crop Tour results from Illinois and western Iowa -- Farm Journal
