Good morning!
Corn lower, soybeans and wheat mixed overnight... Corn futures faced pressure overnight and the market is fractionally lower as of 6:35 a.m. CT. Soybean futures are also fractionally to a penny lower as a choppy overnight session winds down. SRW wheat futures are around a penny higher, HRW wheat is mixed, and HRS wheat is under light pressure. The U.S. dollar index is higher again today, while crude oil futures are posting light losses.
PF CCI: Slight improvement in CCI ratings... When USDA’s crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the corn crop climbed 1.18 points to 358.19 points, while the soybean crop rose 2.28 points to 348.95 points. Both crops are still rated roughly 27 to 28 points under year-ago levels, however. Get details here.
Consultant: Weather concerns on the horizon for South America... South American Crop Consultant Dr. Michael Cordonnier left his 2017-18 soybean and corn crop estimates for Brazil unchanged from week-ago at 109 MMT and 88 MMT. He notes that while planting is off to a slow start, the more important factor is what sort of weather the crop will encounter from November through January. The weather watcher Inmet calls for conditions to be drier and hotter than normal from central Brazil eastward from October through December. Cordonnier also made no changes to his Argentine soybean or corn crop pegs that stand at 55.0 MMT and 42.0 MMT, respectively. He reported drier weather has helped producers to finish harvest of the 2016-17 corn crop and to advance planting of the 2017-18 crop. But he adds that the 10-day forecast calls for wet weather to return.
North Korea and U.S. options... The U.S. says it has “four or five” options for resolving the North Korea standoff, National Security Adviser H.R. McMaster said, as tensions between the two nations continue to mount. White House spokeswoman Sarah Sanders confirmed that the U.S. had not actually declared war on Kim Jong Un’s regime after North Korea’s foreign minister said that President Donald Trump’s recent comments constituted such a declaration, impacting markets in the process.
Report defends U.S. farm programs... A comprehensive study by Brandon Willis, a lawyer, academic, and former administrator of USDA’s Risk Management Agency (RMA), examined the implications of the Heritage Foundation recommendations to eliminate the farm bill’s safety net, deeply cut and phase out crop insurance, make unilateral concessions in the context of the World Trade Organization (WTO), and repeal U.S. domestic trade laws. He called the report flawed because it “selectively uses data” to draw certain conclusions. Find his arguments here.
NAFTA 2.0 talks update... The chief U.S. North American Free Trade Agreement (NAFTA) negotiator said talks are progressing at a rapid pace, despite a lack of final U.S. proposals in several contentious areas. “We’ve been working very hard, so I don’t see a problem,” John Melle, assistant U.S. trade representative for the Western Hemisphere, said. “We’re moving across the board, so it’s very ambitious.” On Sunday, Canada’s chief NAFTA negotiator Steve Verheul said he did not expect the U.S. to make any proposals in Ottawa on sensitive areas. The Ottawa-based round continues through Wednesday, and the three countries have four more rounds scheduled this year in the hopes of reaching a deal by December.
The bulk of China’s bean buys came from Brazil in August... China imported nearly 8.448 MMT of soybeans in August, a 10.12% gain from year-ago. Brazil supplied 6.079 MMT of this business followed by Argentina at 1.379 MMT and Uruguay at 762,941 MT. But next month’s data should reflect more of a shift to U.S. supplies if daily sales announcements are any indication. From January through August, China has brought in more than 63.337 MMT of the oilseed, a 15.85% gain from year-ago. Brazil has made up 58.3% of these shipments, while the U.S. has supplied 31.2% of the business.
Chinese wheat, DDG and ethanol imports down from year-ago in August... China imported 277,000 MT of wheat last month, with the U.S. as its top supplier, according to official customs data. This was down 20.34% from year-ago levels. Its wheat imports for the first eight months of the year are running 29.31% ahead of year-ago, however, at nearly 3.141 MMT. Australia is the lead supplier, closely followed by the United States. Also of note, China’s trade restrictions on ethanol and distillers dried grains continue to limit its purchases of these byproducts. In August, it imported 4,095 cubic meters of ethanol, down 89.35% from year-ago, while it brought in just 8,161 MT of DDGs, down 98.4% from year-ago.
China delays new food import rules... China has pushed back the deadline on a new rule that would have tightened food import regulations by two years. The regulation that was set to take effect this week would have required all food imports to carry health certificates, even if the product is low-risk. Government and trade officials with both the EU and U.S. lobbied against the rules, saying they would have restricted billions of dollars worth of trade. The new standards are now set to take effect Oct. 1, 2019.
China official: U.S./China shared economic interests outweigh differences... Chinese Premier Li Keqiang said while meeting with Commerce Secretary Wilbur Ross in Beijing Monday that China and the United States’ shared economic interests far outweigh their differences, Xinhua reported. “As each other’s largest trading partner, the main trend of China-U.S. economic and trade ties is cooperation,” Li said while meeting with visiting U.S. Secretary of Commerce Wilbur Ross. China will work with the U.S. in the spirit of mutual respect and win-win cooperation to expand cargo and service trade and resolve frictions and differences through dialogue and consultation, Li said. The premier said China’s market will be more and more open and its business environment will get better and better. “We welcome more U.S. enterprises to invest in China,” he said. Get more details.
Much confusion regarding poppy seed situation in Egypt... Egypt’s supply ministry yesterday reported that the country had finished sieving a Romanian wheat cargo that contained poppy seed. But this confused traders who noted the process should take several more weeks. An ag ministry official later told Reuters that the process had not been completed. A decision has not yet been made whether to use or re-export the shipment. The market has been watching Egypt’s action on two cargoes held up due to the presence of poppy seed (the other being from France), speculating that the situation could be a repeat of its ergot debacle that ultimately cut the country off from trade last year.
Cattle futures tumble to start the week... Limits will be expanded for both live and feeder cattle futures after both markets were hammered to start the week as traders responded to bearish Cattle on Feed and Cold Storage data. The price pressure did bring the front month to within $1 of last week’s cash action, which took place at an average price of $108.51, according to USDA. Also of note, while Choice and Select boxed beef values climbed more than $2 to start the week, movement dropped off to just 86 loads.
Momentum is still to the downside for lean hog futures... Pork movement, on the other hand, was pretty good for a Monday at 348.06 loads on a 79-cent gain for the pork cutout value. But momentum is on the side of market bears as building supplies remain a weight on both the cash and futures markets. USDA will provide a quarterly update on the supply situation on Thursday. More choppy action is possible leading up to the release.
Overnight demand news... Algeria issued an international tender to buy a nominal 50,000 MT of wheat.
Today’s reports:
- 11:00 a.m., Cotton Ginnings-- NASS
