Good morning!
Corrective trade lifts grain and soy futures overnight... The grain and soy markets enjoyed some corrective short-covering overnight. As of 6:30 a.m. CT, corn futures are mostly up 2 to 3 cents, soybeans are 5 to 6 cents higher, and wheat futures are up 2 to 4 cents in most contracts. The U.S. dollar index is marginally lower while crude oil futures are marginally higher.
Cool, wet forecast for much of the country... The National Weather Service forecast for Aug. 6-10 calls for cool, wet conditions across the bulk of the country. The exceptions include the Northern Plains where stressful dryness is likely to continue and areas west of the Rockies where heat is expected. The forecast is likely to remain a source of pressure for the corn and soybean markets.
Firm pegs corn crop well below USDA... INTL FCStone on Tuesday estimated the U.S. corn crop will yield an average 162.8 bu. per acre this year for a 13.590 billion bu. crop. The brokerage estimates the U.S. bean crop will yield 47.7 bu. per acre for a 4.235 billion bu. crop. For comparison, USDA in July estimated the U.S. corn crop at 14.255 billion bu. on an average yield of 170.4 bu. per acre. For soybeans, the department estimated production at 4.260 billion bu. with an average yield of 48.0 bu. per acre.
Uneven monsoon rains causing problems in India... While monsoon rains have brought India 1% more rain than normal so far this season, some areas are dealing with drought while others are dealing with flooding since distribution has been erratic. This has raised concerns about the country’s summer crops and led to talk India may need to increase imports of edible oils, sugar and pulses while restricting its exports of cotton, rice and feed ingredients. The India Meteorological Department details that while 58% of the country has received normal rainfall this year, the remaining 42% has received either excess of deficient rains.
Traffic again flowing on Mississippi River... The Mississippi River reopened to vessel traffic on Tuesday afternoon after a barge collision forced its closure just north of St. Louis for around 14 hours, according to the U.S. Coast Guard. Repairs to the lock were reportedly completed faster than anticipated.
Congress has a lot to do on a tight schedule... There are seven legislative days in the Senate until the August recess. There are just 12 days with both chambers in session until the end of the fiscal year on Sept. 30. Issues in focus include the need for a fiscal year 2018 budget, budget resolution and a debt-limit hike. GOP leaders have begun their multi-month focus on tax reform.
Administration readying to probe China’s trade practices... The White House is preparing to investigate China’s trade practices and suspected violations of American intellectual property, according to reports. He Weiwen, a former Commerce Ministry official and longtime trade expert who is now a senior fellow at the Center for China and Globalization, a Beijing research group, told the New York Times that the Chinese government would study any American trade case before deciding how to respond and whether to seek intervention from the World Trade Organization. “China thinks that the bilateral trade relation is governed by WTO rules, not American domestic law,” He said.
Democrats offer Cuba trade plan amid hurdles in Congress... Lifting the economic embargo against Cuba is the goal of legislation offered by a group of Democratic senators. “It is well past time for the United States to abandon the failed policy of trying to isolate Cuba,” Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) said. “Decades of experience have proven the embargo will never improve the lives of the Cuban people. Instead, this policy only serves to shut U.S. exporters out of a natural market for American agricultural and manufactured goods.” The so-called U.S./Cuba trade Act of 2017 has little chance of becoming law.
EPA now looking into dicamba situation... Directions on use of the chemical dicamba are being reviewed in the wake of hundreds of reports of crop damage from chemical drift, a spokesperson for the Environmental Protection Agency (EPA) confirmed to Reuters. “We are reviewing the current use restrictions on the labels for these dicamba formulations in light of the incidents that have been reported this year,” said EPA spokeswoman Amy Graham said. EPA approved new formulations of dicamba late last year for two years as older formulations were known to drift from their initial target field. Scores of states are investigating damage reports from dicamba and some states have taken action to either bar its use or set restrictions on conditions under which it can be used.
Ethanol producers looking to alternative uses... Yesterday, Archer Daniels Midland Co. and Green Plains Inc. both said they will convert some fuel ethanol capacity into beverage and industrial alcohol production in addition to idling some mills as the ethanol producers continue to struggle with overcapacity and thin margins. In June, Pacific Ethanol announced it would by a beverage grade facility in Illinois.
ICAC expects slight decline in ending stocks from 2016-17 levels... The International Cotton Advisory Committee (ICAC) yesterday raised its 2017-18 global cotton production forecast by 320,000 MT from July to 24.89 MMT, which is a 1.860-MMT drop from year-ago levels. But consumption is also expected to climb from year-ago, which is expected to contribute to a 100,000 year-over-year decline in ending stocks to 18.80 MMT.
Stock market gains help lift cattle futures... The cattle complex enjoyed solid gains yesterday as traders noted the ongoing surge in the equities markets and futures’ discount to the cash index. And after a slow start to the day in terms of beef movement, load counts improved to 121 by the end of the day on mixed prices. Meanwhile, traders are still waiting for cash cattle trade to get underway.
Some positive signals for lean hog market... The pork cutout value fell $1.11 yesterday and movement picked up to an impressive 399.86 loads. Also encouraging, cash hog bids were mixed on Tuesday, with bids climbing in the western Corn Belt and Iowa/Minnesota markets but softening in the eastern Belt.
Overnight demand news... Japan says it will import 39,540 MT of feed-quality wheat and 14,345 MT of barley for livestock use via a simultaneous buy and sell auction. Bangladesh issued an international tender to buy 50,000 MT of milling wheat.
Today’s reports:
- 9:30 a.m., Weekly Ethanol Production -- EIA
- 2:00 p.m., Broiler Hatchery-- NASS
