Good morning!
Corrective short-covering overnight... Corn futures are steady to fractionally higher as of 6:30 a.m. CT after holding to a narrow range overnight. Soybeans are posting fractional gains. Wheat futures are up 1 to 3 cents, with the spring wheat market leading gains. The U.S. dollar index is firmer today, but it remains within a pronounced downtrend. Crude oil futures are slightly lower.
Cool temps expected early next month... The National Weather Service forecast for Sept. 4-8 calls for cool weather across the Corn Belt with the exception of western areas of the Dakotas and Nebraska where normal temperatures are anticipated. The coldest temps are expected for the eastern Belt. At this point, most crop watchers say a frost/freeze event is unlikely, but the forecast bears monitoring given the immaturity of this year’s crops. During this timeframe, the western Corn Belt is expected to be dry, with Illinois and Indiana seeing normal precip and Ohio expected to be wet.
U.S./China ag trade dispute focus at WTO... The World Trade Organization’s Dispute Settlement Body has a meeting planned for Thursday, including a U.S. challenge to Chinese agricultural import policy, which the U.S. claims is unfairly keeping out billions of dollars’ worth of foreign crops. China is widely expected to move to delay the start of this case. Under WTO rules China wouldn’t be able to block a second request for a panel. That would likely come at the next meeting of the Dispute Settlement Body, scheduled for Sept. 29. The U.S. filed a dispute challenging China’s tariff rate quotas (TRQs) for imports of rice, wheat and corn. Under the quotas, a low tariff rate applies to imports up to a certain quantity; if a country sends more than that amount, higher duties apply to the additional imports.
U.S. FY 2017 agricultural export, import forecasts raised... USDA has increased its forecast for the value of U.S. agricultural exports for fiscal year (FY) 2017 to $139.8 billion and imports to $116.2 billion, according to the latest Outlook for U.S. Agricultural Trade update. The levels now forecast by USDA would result in a trade surplus of $23.6 billion, versus a May forecast for a $22.5-billion surplus on forecast exports of $137 billion against $114.5 billion in imports. For FY 2018, USDA’s initial outlook is for exports valued at $139 billion and imports at $115.5 billion, both down from the revised FY 2017 levels. The FY 2018 forecast levels would result in a near-unchanged ag trade surplus of $23.5 billion.
Mexico’s Guajardo: End of NAFTA is a possibility... Mexico Economy Minister Ildefonso Guajardo told lawmakers in Mexico City that trade between the U.S. and Mexico would continue without NAFTA. “No one sits down to trade talks without a plan B,” Guajardo said. He said Mexico would not accept a NAFTA 2.0 deal that comes at too high a cost, and that Mexico can pass laws to reassure foreign investors that they are protected even without NAFTA. Some Mexican products would face high tariffs without NAFTA. Meanwhile, Mexico Foreign Minister Luis Videgaray and Guajardo are in Washington, D.C., for meetings on trade relations topics.
Harvey leaves some cattle stranded... There are an estimated 1.2 million cattle within Texas’s 54-county disaster area for Hurricane Harvey, estimates Texas A&M University Livestock Economist David Anderson. He added that given the time of year, there are also a lot of young calves in the disaster area. Many ranchers worked to move cattle to higher ground or northern areas of the state ahead of the storm. But some animals are now stranded by high water that is filled with alligators, venomous snakes and fire ants. Longer-term, hoof rot and mosquito-carried diseases will also be concerns.
Texas ranchers eligible for emergency aid after Hurricane Harvey… Ranchers whose pastures have been flooded by Hurricane Harvey, leaving cattle stranded or displaced, will get emergency assistance from USDA. There also are several state programs that provide assistance. At the federal level, the Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish Program (ELAP) will provide support to ranchers. ELAP was included in the 2014 Farm Bill, authorizing up to $20 million in funds in a fiscal year. It covers losses not covered under the other disaster assistance programs such as the Livestock Indemnity Program (LIP), which provides benefits to livestock producers for livestock deaths in excess of normal mortality. LIP provides payments equal to 75% of the market value of the applicable livestock. LIP eligibility must also first be determined by USDA Secretary Sonny Perdue.
China to use subsidies to improve animal waste disposal... China will provide farmers with subsidies to build animal waste processing facilities to make fertilizers or to treat manure so it can more safely be disposed of, according to government plans announced Aug. 1. Beijing will also subsidize farmers’ efforts to install biogas plants that use methane to produce electricity. The ag ministry gave few details about the subsidies aimed at cutting down ag pollution and improving energy efficiency. Farmers researching the use of organic fertilizer will also get preferential treatment on loans, taxes, power use and land rent, reports Zhong Luqing, director of the fertilizer department at the ag ministry. China’s livestock farms generate roughly 4 billion MT of waste each year.
Beef market perks up... Both Choice and Select boxed beef values strengthened for the second day in a row Tuesday, with Choice rising 27 cents and Select surging $2.17. The spread between the cuts is narrow -- just 98 cents, premium Choice. Traders are optimistic that recent price gains could hint that retailers are gearing up for fall beef features.
Pork and cash hog markets improve... Pork movement surged to 415.37 loads, which is a welcome change from sub-250 load counts the past three days. This came on a 98-cent drop for the pork cutout value as a $9.43 drop in bellies offset gains for other cuts. Also encouraging, cash hog prices strengthened in the western Corn Belt and the Iowa/Minnesota market yesterday, though bids softened in the eastern Belt.
Overnight demand news... Egypt purchased 235,000 MT of wheat from Russia as well as 30,000 MT of wheat from Ukraine. South Korea’s corn processing industry association tendered to buy around 55,000 MT of optional-origin yellow corn. The country’s Major Feedmill Group has started talks to buy up to 65,000 MT of optional origin feed wheat and 55,000 MT of South American-origin soymeal. Tunisia tendered to buy around 100,000 MT of soft milling wheat from optional origins. Japan tendered to buy a total of 125,713 MT of food-quality wheat from the U.S. and Canada in its regular tender.
Today’s reports:
- 10:00 a.m., Farm Income Forecast-- ERS
- 9:30 a.m., Weekly Ethanol Production -- EIA
- 2:00 p.m., Agricultural Prices-- NASS
- 2:00 p.m., Broiler Hatchery-- NASS
