Good morning!
Gains overnight as traders remain focused on the weather... Corn futures are up 2 to 3 cents in most contracts while soybeans are up 5 to 6 cents as rainfall was light and spotty across Iowa yesterday and more dry weather is expected as the calendar flips to August. Spring wheat futures are up 4 to 8 cents, while winter wheat is mostly around 4 cents higher. The U.S. dollar index is again extending its multi-month slide. Crude oil futures are also facing light pressure.
Export sales report on tap... 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 400,000 MT to 900,000 MT, soybean sales between 400,000 MT and 1.3 MMT, wheat sales of 350,000 MT to 550,000 MT, soymeal sales ranging from 50,000 MT to 225,000 MT and soyoil sales between 5,000 MT and 25,000 MT. These tallies include expected old- and new-crop business combined.
Day 2 of wheat tour finds average yield down 10.8 bu. per acre from average... On Day 2 of the Wheat Quality Council’s spring wheat tour through central and northwest North Dakota, scouts measured an average yield of 35.8 bu. per acre, which was down from 46.9 bu. per acre a year ago and 46.6 bu. per acre for the five-year average. The average durum yield stood at 34.4 bu. per acre versus 45.5 bu. per acre last year and 41.0 bu. per acre for the five-year average. Dave Green, the Wheat Quality Council’s executive vice president, reported that “the early-planted stuff looks the toughest,” adding that later-planted fields could still improve if temperatures don’t get too hot. Abandoned or baled wheat fields are not incorporated into the yield estimates. But Green says the tour is having each route make an estimate on the abandonment percentage, and that will be presented to everyone when the final numbers are released later today.
Trump advances WOTUS repeal... Today begins a 30-day comment period on withdrawing the Obama implemented waters of the U.S. (WOTUS) rule. The Environmental Protection Agency and Army Corps of Engineers are publishing the proposal in today’s Federal Register. It would rescind the existing WOTUS rule and reinstate the jurisdiction of the Clean Water Act the way it existed before 2015. A new WOTUS rule is expected by late this year or early in 2018. Environmental groups and lawmakers have urged a longer comment period than 30 days. The repeal rule is seen as a back stop in case the Supreme Court determines the 6th Circuit didn’t have authority over the case and the hold is lifted.
AGCO buys Monsanto’s Precision unit that Deere was nixed from buying... AGCO Corp., the third-biggest U.S. agricultural machinery maker, agreed to buy Monsanto Co.'s Precision Planting LLC equipment business less than three months after Monsanto nixed a $190-million deal with Deere & Co. for the unit. Terms of AGCO’s deal to buy the unit from Monsanto’s subsidiary agricultural technology company Climate Corp. weren’t disclosed, AGCO said in a statement.
Japan may raise tariff on frozen beef as imports rise... Tariffs on frozen beef imports from countries without an economic partnership agreement (EPA) with Japan may be raised to 50% from the current 38.5% rate, Tatsuya Haruna, deputy director at the agriculture ministry’s livestock promotion division, said Wednesday. Beef suppliers that may be affected include the U.S., Canada, New Zealand and European Union nations. Australia, the top beef supplier to Japan, has an EPA agreement with it. Tariffs will be raised if frozen beef imports in the three months through June rise by 17% from the same period last year. It would be the first time in 14 years if triggered, and will be based on Japanese trade data due out Friday.
China bans beef from some Australian processors... China has temporarily banned beef products from six Australian processors due to concerns about labeling non-compliance involving meat from Australian processors that include two facilities from Brazil’s JBS SA. Australia’s trade minister said there may be “very significant amounts of trade” involved in the ban, including shipments already on their way to China, according to ABC. But Australia is working to quickly resolve the issue.
South Korea downgrades bird flu alert status... South Korea’s ag ministry says that the risk from highly pathogenic bird flu has fallen, with no new cases reported since June 19. Therefore, on Friday it will lower its alert status by one notch from the highest level. The nation will continue to monitor the situation and disinfect farms through September. Bird flu decimated more than a fifth of the nation’s poultry flock since it was first detected in November 2016.
Cash cattle move at lower levels... Cash cattle trade picked up in Kansas and Nebraska yesterday at $117, with Iowa and Texas seeing a few hundred head trade for prices ranging from $117 to $118. This is steady to down from last week’s action that ranged from $118 to $120. The August contract opens today’s session roughly $3 below the low end of this week’s cash trade. This could spur some corrective trade in the market today.
So far, just modest declines for cash hog index... Cash hog prices softened in the western Corn Belt but strengthened in the east, lifting the national weighted average cash bid yesterday. The cash hog index has slipped a bit in recent days, but it remains well above where futures are trading, signaling they may have overdone it to the downside. The pork cutout value dropped $1.96 yesterday, but it remains just above the $100.00 per cwt. threshold. Movement was again strong at 342.46 loads.
Overnight demand news... Jordan made no purchase in its tender to buy 100,000 MT of wheat. South Korea bought around 55,000 MT of soymeal, likely from South America. Iran made no purchase in its tenders to buy 200,000 MT of barley and 200,000 MT of corn.
Today’s reports:
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 7:30 a.m., Weekly Export Sales-- FAS
- 2:00 p.m., Livestock & Meat Domestic Data-- ERS
