Good morning!
There was no grain or soy trade overnight due to the July Fourth holiday.
More hot, dry weather expected for the Northern Plains, western Corn Belt... .Red flag warnings are currently in effect for Montana, though thunderstorms are expected to move through the Northern Plains and upper Midwest today. The National Weather Service forecast for July 10-14 calls for hot, dry conditions across the western Corn Belt and Northern Plans, and normal temps and precip for most of the eastern Corn Belt. Trends typically accelerate or reverse coming out of the Fourth of July, so whether traders focus on today’s rain event or the forecast through mid-month will be key.
Cordonnier expects steady to lower crop condition ratings... South American Crop Consultant Dr. Michael Cordonnier expects crop condition ratings to remain steady or drop a point or two in USDA’s update this afternoon, detailing that conditions in the eastern Corn Belt may improve after recent rains, while conditions in the western Belt will likely decline. He elaborates that the areas where soil moisture is driest and therefore of most concern include: South Dakota, North Dakota, Nebraska, northwestern Iowa, and southwestern Minnesota. Cordonnier left his corn and soybean average yield estimates at 167 bu. per acre and 48 bu. per acre, respectively, but he has a neutral to lower bias toward both crops. “I feel there is more of a downside risk than upside potential for the soybean crop,” he explains.
Aggressive Chinese bean buys lead to port congestion... Ships carrying up to 700,000 MT of soybeans are waiting to discharge along China’s coast, traders report. The country has been an aggressive buyer of soybeans in recent months, plus it has toughened import customs inspections, leading to major port congestion and pushing stockpiles to their highest levels in years. There is concern that the lengthy wait times may curb the recent rally in Chinese soymeal prices and threaten demand.
Brazil shipping beans at a record clip... Brazil’s grains exporters’ association Anec says the country shipped a record 45.5 MMT of soybeans the first half of the year, and it expects shipments of 7 MMT in July. The country’s trade ministry data shows bean exports totaled roughly 10.960 MMT in May and 9.197 MMT in June. For the entire calendar year, Anec expects Brazil’s soybean exports to total between 61 MMT and 62 MMT.
Good corn yields in Argentina making up for crop losses... Argentina’s 2016-17 corn crop will likely total 39 MMT with a national average yield around 8.5 MMT per hectares, reports the Buenos Aires Grains Exchange. While floods have slowed harvest, farmers and analysts report that higher-than-expected yields have helped make up for the moisture-related crop losses. The wet weather has extended its usual May to June harvest season into July, which will also push back its export season. This could make it even tougher for the U.S. to ship its crops this fall.
FOMC minutes to be released this afternoon... At 1 p.m. CT, the minutes of the Federal Reserve’s June 13-14 monetary policy meeting will be published. Investors will look for clues as to the timing of the start of the reduction in the bank’s $4.5-trillion balance sheet. Fed officials have indicated there is a strong chance they will announce in September a decision to start shrinking the central bank’s portfolio, while putting off until December any further interest-rate increase. A shift towards more hawkish language by several major central banks has dominated the past week. The market will also search the Fed minutes for signs of more concern among policymakers about a downturn in inflation and activity in the United States.
U.S. confirms North Korea test of intercontinental ballistic missile... With North Korea’s launch on Tuesday of what the Trump administration confirmed was an intercontinental ballistic missile, experts say the North Koreans had crossed a threshold with a missile that could potentially strike Alaska. The United Nations Security Council will hold an emergency meeting later today, with Secretary of State Rex Tillerson calling North Korea’s actions a “new escalation of the threat” to the U.S. and its allies. Tillerson said the U.S. would consider nations that provide economic or military help to North Korea to be “aiding and abetting a dangerous regime.” The U.S. and South Korea fired ballistic missiles off the Korean Peninsula this morning.
European Union and Japan to announce outline of trade agreement... Leaders from both trading blocs will soon announce a broad agreement that could create a free-trade zone to rival the North American Free Trade Agreement. The deal is expected on Thursday. Japanese public broadcaster NHK said today they had mostly resolved their main differences: dairy products and autos. Japan will create a low-tariff quota for European cheese and abolish levies over 15 years, while the EU will remove auto tariffs over seven years. The EU, the world’s largest cheese exporter, predicts the deal would result in an additional 10 billion euros ($11.4 billion) in exports of processed food, including meat and dairy products, to Japan.
U.S., Mexico finalize sugar trade suspension deal... After a long process with many false starts, the U.S. and Mexico on Monday finally signed amendments to a sugar deal brokered between the two countries, the Commerce Department announced. The amendments update the ratio of quantities of refined and other sugar that Mexico can export to the U.S. and the polarity content of the two types of sugar. Get more details.
Brazil, U.S. ag officials to hold beef trade talks July 13... The officials will meet in Washington July 13 for talks on how to resume beef exports to the United States. Brazil Agriculture Minister Blairo Maggi and USDA Secretary Sonny Perdue will meet in Washington by the end of July to further discuss lifting the suspension USDA slapped on Brazilian beef imports in June, Luis Rangel, the ministry’s secretary of Animal and Plant Health and Inspections, told Bloomberg BNA. “I believe that these bilateral meetings, along with ministerial changes in slaughterhouse meat cutting procedures and also in the ministry’s command and control over meat plant operations will improve product quality and allow Brazil to resume exporting fresh beef to the U.S. as soon as possible, perhaps within 45 days,” Rangel said. The U.S. on June 16 suspended all imports of fresh beef from Brazil because of “recurring concerns about the safety of the products.”
Cash market may stabilize this week... Cattle futures faced pressure much of the day Monday, but the market pared losses at the close as traders recognize futures are at a discount to last week’s cash cattle trade that took place at an average price of $118.64, according to USDA. Showlist estimates are down a net 18,000 head this week, mainly due to a decline in Nebraska, which could help cash prices to stabilize this week. So far, there have just been some light sales in Iowa around $118.
Pork demand strength in focus as traders return.. Traders will keep an eye on the product market this week for signs of post-holiday features. If pork demand is weak, it would likely temper packer demand, despite still profitable cutting margins.
Overnight demand news... Algeria bought around 420,000 MT of optional origin milling wheat, likely from France and Argentina. The United Nations recently purchased around 40,000 MT of wheat from Ukraine for east Africa. Iraq likely made no purchase in its tender for at least 50,000 MT of of hard wheat. Egypt tendered to buy an unspecified amount of soft and/or milling wheat from global suppliers.
Today’s reports:
- 2:00 p.m., Cotton System -- NASS
- 2:00 p.m., Fats & Oils -- NASS
- 2:00 p.m., Grain Crushings -- NASS
- 3:00 p.m., Crop Progress -- NASS
