Firmer tone ahead of reports... Grain traders are favoring the upside as they prepare for the onslaught of USDA data today. Corn and soybean futures are both mostly 3 to 4 cents higher. Wheat futures are up 12 to 16 cents, with the HRS market again leading the charge. The U.S. dollar index is up slightly, as are crude oil futures.
All eyes on USDA... USDA’s much-anticipated Acreage and Grain Stocks Reports arrive at 11:00 a.m. CT today. Traders expect USDA to report corn plantings fell slightly while soybean plantings climbed a bit from March intentions to 89.903 million acres and 89.750 million acres, respectively. All wheat plantings are expected to come in around 46.070 million acres, up marginally from March. Cotton acres are also expected to climb slightly to 12.233 million acres. June 1 corn and soybean stocks are expected to come in at their third highest level on record at 5.123 billion bu. and 983 million bu., respectively. Quarterly wheat stocks are expected to come in around 1.137 billion bu., Their highest level since 1988.
Hot, dry forecast for spring wheat country... The National Weather Service forecast for July 5-9 calls for heat across the country, with western areas of the Northern Plains expected to see some of the highest temps. Adding to worries, NWS also anticipates the weather will be dry for the Northern Plains and into Minnesota, as well as in Texas. This is concerning for an already-battered spring wheat crop that will be in its key grain filling stage, as well as for the corn crop that will be nearing pollination. Above-normal precip is likely for southern and eastern areas of the Corn Belt.
Heat wave pulls French wheat crop ratings lower... As expected, French soft wheat crop ratings fell the week ended June 26 as a heat wave took a toll on the crop. FranceAgriMer lowered the amount of soft wheat rated good to excellent by 3 percentage points to 65%, which is equal to year-ago at this point. The hot, dry conditions have also accelerated crop development, leading to an early start to harvest. Four percent of the crop was harvested as of Monday, the French farm office reports. The recent heatwave also prompted the European Commission to lower its estimate of common wheat usable production (excluding durum) by 2.4 MMT to 138.9 MMT.
Conaway reaches deal on ag budget cuts... House Ag Chairman Mike Conaway (R-Texas) late Thursday said he reached agreement with the Budget Committee on a cut to food stamp spending. “As far as Ag Committee and Budget, we’re done,” he said. Conaway did not provide details of his agreement but said he agreed to specific cuts the House ag panel would have to abide by in the fiscal 2018 budget. He indicated that the cut would be small enough to make it politically feasible to move forward later this year with developing a new farm bill. Conaway also said he still plans to act on a farm bill through regular order late this year or early in 2018.
New CBO baseline signals 2018 farm bill spending levels... The Congressional Budget Office (CBO) on Thursday released an updated 10-year baseline of federal revenue and spending that includes projected costs of mandatory farm and nutrition programs. CBO estimates spending on agriculture will amount to $137 billion between fiscal 2018 and 2027, while the Supplemental Nutrition Assistance Program (SNAP/food stamps) will cost $679 billion over the same decade. The shifts in the baseline put even more pressure on farm-state lawmakers to determine how to divvy up what appears to be a smaller pie. Get more details.
Trade talks between the U.K. and U.S. ahead... The U.K. and U.S. will begin “actual discussions” over a post-Brexit trade agreement on July 24, U.K. Trade Secretary Liam Fox told BBC TV’s Question Time. Britain cannot formally sign trade deals with other countries until it leaves the EU in March 2019, but it can lay the groundwork for them so they can be ratified soon after.
Uptick in Chinese manufacturing for June... China’s manufacturing activity accelerated more than expected in June, as the world’s second-largest economy continues to confound expectations for a slowdown. The official manufacturing Purchasing Managers’ Index rose to 51.7, compared to a reading of 51.2 in May. Investors also digested economic data out of Japan, but local equities sold off following the fall in tech stocks overnight.
U.S. and Mexico expected to officially sign a deal on sugar trade as soon as today... The suspension trade agreement reduces the amount of refined sugar Mexico can export to the U.S. The deal will be implemented on Oct. 1 for the start of the 2018 fiscal year. President Donald Trump commented on the deal on Thursday, saying it “is a very good one for both Mexico and the U.S.” Officials with both the Corn Refiners Association and the American Sugar Alliance agree.
Perdue in China to mark return of U.S. beef... USDA Secretary Sonny Perdue is in China to mark the official return of U.S. beef to the Asian nation. He’ll meet with China’s Minister of Agriculture Han Changfu and Chinese Vice Premier Wang Yang. Perdue also will join U.S. Ambassador to China Terry Branstad and cut prime rib from Nebraska to celebrate the move. China has rapidly become a major importer of beef. USDA said the first shipment of U.S. beef arrived in China on June 19. Han told Perdue and Branstad that agriculture deals between China and the U.S. would improve the well-being of the two peoples, and would aid in particular the farm industry of the U.S.
Ranchers in Brazil say a FMD vaccination overhaul is needed... Cattle ranchers in Brazil are pushing for an overhaul of the country’s vaccination program against Foot and Mouth Disease (FMD), which was one of the issues that led to the U.S. banning imports of fresh beef from the country. CNPC, a national council of cattle ranchers, asked the government to cut doses in half, change the location where the vaccine is administered from the muscle to just under the skin and to remove a substance called saponin from the vaccine. The group also believes the mandatory, twice annual vaccination should be eliminated in 12 states that have not reported a case of FMD in 20 years.
More lower cash cattle trade... Cash cattle trade picked up between $118 and $120 across the Plains yesterday, which was down from week-ago, as expected. The June contract that expires at noon today is trading in line with the upper end of this week’s action, while the August contract holds around a $1.50 discount to the low end of that range.
Neutral H&P Report... Yesterday’s Quarterly Hogs & Pigs Report show the U.S. hog herd stands at a record-level, but that was not surprising. All Hogs & Pigs, Kept for Breeding and Kept for Marketing all came in basically in line with expectations. This means traders will likely quickly shift their attention back to the cash hog market and whether it is working on a top. Yesterday, cash bids strengthened across much of Midwest, with the exception of the eastern Corn Belt.
Overnight demand news... Jordan bought 50,000 MT of hard wheat from optional origins. It also issued a new tender to buy 100,000 MT of feed barley from optional origins.
Today’s reports:
- 11:00 a.m., Acreage -- ERS
- 11:00 a.m., Grain Stocks -- ERS
- 2:00 p.m., International Food Security Assessment -- ERS
