Good morning!
Profit-taking weighs overnight... Corn futures are fractionally to a penny lower as of 6:30 a.m. CT after a quiet overnight session. Soybeans are trading near session lows with losses around 6 cents as traders took advantage of yesterday’s gains with some profit-taking. Winter wheat futures are down roughly 2 cents, while spring wheat is up a nickel. The U.S. dollar index is holding near unchanged after yesterday’s Federal Reserve-inspired surge.
Weekly Export Sales Report expectations...
| Commodity | 2016-17 | 2017-18 |
|---|---|---|
| Corn | NA | 700,000 to 1,000,000 |
| Wheat | NA | 300,000 to 500,000 |
| Soybeans | NA | 1,200,000 to 1,500,000 |
| Soymeal | 25,000 to 100,000 | 50,000 to 150,000 |
| Soyoil | 0 to 10,0000 | 0 to 20,000 |
High Australian wheat prices could shift some business to the U.S.... Australian wheat producers have been slow sellers of their smallest crop in eight years, lifting its wheat prices above the international market. Traders report that new-crop Australian standard white wheat is quoted at $245 per MT, including cost and freight (C&F), into southeast Asia. Similar-quality wheat from the U.S. is being offered at $235 per MT including C&F and Black Sea region supplies that are going for around $215 per MT. It’s pretty unusual for U.S. prices to be lower than Australia’s at this time of year. The situation could send some Asian business to the U.S.
Cocereal trims EU wheat and corn crop pegs... The European Union’s soft wheat crop likely totals 142.1 MMT, estimates the grain industry lobby Cocereal. This is up 100,000 MT from its estimate at the end of May and well above last year’s crop of 135.5 MMT. The lobby group also trimmed its estimate of the bloc’s corn crop by 700,000 MT to 59.3 MMT, which is also down 1.5 MMT from year-ago.
Cofco optimistic about pig feed demand... China’s hog and sow herds have recovered, an executive with Cofco International said at a conference today, so its pig feed demand forecast is “optimistic.” Therefore, the state-owned food processing company expects China’s soymeal demand to climb 6.5% in 2017-18 to 72.1 MMT. On the other hand, feed demand for broiler chickens will likely decline the latter half of the year as tough environmental inspections have damaged production, the executive explained. China’s broiler breeding stock continues to decline as bird flu has limited imports.
Brazilian mills may boost ethanol production at the expense of sugar... Mills in Brazil’s center-south region may cut sugar output by 500,000 MT to 1 MMT and boost ethanol production by 1 billion liters to 24.8 million liters, according to Luiz Carlos Correa Carvalho, head of the Canaplan consultancy. He explained that profit margins for ethanol have climbed to levels that rival those for sugar, resulting in a trend reversal. Ethanol use is on the rise in Brazil after its government made taxation changes that favored ethanol over gasoline in July.
NAFTA a big deal for Cargill... Around 10% of Cargill’s revenues are related to the North American Free Trade Agreement (NAFTA), the company’s Chief Executive David MacLennan said yesterday. Therefore, he says the worst-case scenario for the company would be if the pact was “torn up,” adding that a “significant portion of our corn sweetener business is NAFTA-related.” MacLennan also noted that while the deal has provided “significant benefits” to agriculture, improvements could be made.
Congressional delegation and USDA’s Perdue heading to Texas to assess impacts of Hurricane Harvey... The congressional delegation is heading to Houston for a briefing and to view infrastructure damages. Lawmakers including Texas GOP Sens. John Cornyn and Ted Cruz, House Speaker Paul Ryan (R-Wis.), Appropriations Chairman Rodney Frelinghuysen (R-N.J.), Homeland Security Appropriations Chairman John Carter (R-Texas) and members of the Houston congressional delegation will be briefed on Hurricane Harvey recovery efforts. The group will take an aerial tour of storm damage and infrastructure to mitigate flooding. They are also scheduled to “help local residents clean out damaged homes,” according to Ryan’s office. USDA Secretary Sonny Perdue will also be in Texas for the next two days, and will be joined by House Agriculture Chairman Mike Conaway (R-Texas) in holding a roundtable with producers in El Campo, southwest of Houston.
Futures still signaling a bias for higher cash cattle trade... A total of 636 head of cattle sold at the online Fed Cattle Exchange auction Wednesday at an average price of $106.67, up nearly $2 from last week’s sales at the auction. A similar increase for cash trade in the traditional market would point to cash action around $108 this week. So far, a few hundred head have sold in Kansas and Texas mostly around $107. Futures have an even bigger increase factored in, with the October contract settling just shy of $111 yesterday.
Hog bids still slipping despite record-setting kill numbers... The past two days of hog slaughter have matched the 455,000 head daily record, but packers have still been able to lower cash hog bids and add to wide profit margins since supplies are abundant. In fact, weight data for the Iowa/southern Minnesota market shows marketings are still backed up. Until supplies and demand become more balanced, the upside for futures will remain limited. Cash hog bids strengthened on a national basis yesterday, but several days of improvement will be needed to shift attitudes.
Overnight demand news... Egypt purchased 60,000 MT of soyoil and 31,000 MT of sunflower oil.
Today’s reports:
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 7:30 a.m., Extended Weather Outlook -- NWS
- 7:30 a.m., Weekly Export Sales-- FAS
- 2:00 p.m., Livestock Slaughter-- NASS
