Good morning!
More profit-taking overnight... Corn futures are around a penny lower as of 6:30 a.m. CT. Soybeans are down 2 cents after seeing two-sided trade overnight. Spring wheat futures just climbed back into positive territory, while winter wheat contracts are mostly down 6 to 7 cents on some followthrough selling. The U.S. dollar index is modestly firmer today, while crude oil futures are sharply lower.
Export sales out today... Traders expect USDA to report corn sales ranging from 350,000 MT to 550,000 MT, soybeans sales between 250,000 MT and 650,000 MT, wheat sales of 300,000 MT to 500,000 MT, soymeal sales between 25,000 MT and 250,000 MT and soyoil sales ranging from 8,000 MT to 27,000 MT. The report will be released at 7:30 a.m. CT.
June jobs report this morning... The Labor Department releases its June employment report this morning. Economists expect employers added 174,000 jobs and an unemployment rate of 4.3%. Key topics within the report to watch are the rate of employment gains, any factors driving the unemployment rate, the underemployment rate, and whether hourly earnings growth picks up steam.
Rain slowing wheat planting, corn and bean harvest in Argentina... Recent heavy rainfall with more in store over the next few days prompted the Buenos Aires Grains Exchange to warn that it may reduce its estimate that around 5.5 million hectares will be planted to wheat for 2017-18. Heavy storms in the country’s Pampas grains belt have also slowed harvest of both corn and soybeans.
Drought and flooding taking a bite out of Chinese production... Weather is increasingly a concern for producers in China. Nearly 1 million acres of farmland in China’s northeastern Liaoing province are dealing with drought, which has slowed planting and damaged developing crops in this area of China’s corn belt. On the other hand, excessive rains in southern China have damaged around 1.85 million acres of crops, according to its ministry of civic affairs. The rain has also raised river levels, disrupting the transport of grains from north to south and lifting freight rates and corn prices.
CNGOIC raises Chinese wheat crop peg... China National Grains and Oil Information Center raised its wheat production forecast for 2017 by around 700,000 MT to 129.9 MMT, which would be a slight rise from last year’s crop. The think tank made no change to its corn or soybean output projections, which stand at 211.5 MMT and 14.3 MMT, respectively.
French wheat ratings improve after rains... FranceAgriMer ranks 66% of its soft wheat crop in good to excellent shape as of July 3, which is a one-point gain from week-ago. This signals the crop benefited from recent rain. The French farm office also notes that harvest of the crop got off to an early start, with harvest 6% complete as of Monday versus 4% on average.
Another weather watcher scales back El Nino odds... There are around 35% to 45% odds of El Nino weather conditions developing in the Pacific Ocean the remainder of 2017, the United Nations’ World Meteorological Agency said today. This is down notably from the 50% to 60% chance the group called for in April. The most likely scenario is neutral weather, according to the agency, with very low chances for La Nina.
Mexico no longer top U.S. corn buyer... Mexico is no longer the biggest buyer of corn from the U.S., a development that shows trade tensions are pushing American grain toward other markets while Mexico lines up new suppliers. Sales to Mexico through May were $1.04 billion, down 6.7% from a year earlier, USDA said Thursday in a monthly update, according to Bloomberg. That contrasts with the 32% increase for the overall value of U.S. corn exports in the period. Japan boosted its purchases 53% to $1.19 billion to become the largest importer of American corn. In recent weeks, Mexican purchases were rebounding as the peso recovered. Of note, U.S. dairy-product exports to Mexico are up 23% year-over-year.
U.S. commodity groups fret growing number of trade agreements sans U.S.... “We have been falling behind for too many years, and our farmers and exporters are finding themselves having to compete with higher tariffs in key markets,” said Jaime Castaneda, senior vice president at the National Milk Producers Federation. In the new EU/Japan trade accord, Japan committed to eliminate a 4.3% tariff on high-quality cuts of pork over a 10-year period. Over the same period, the duty on low-quality cuts would drop from $4.33 per kilogram to roughly $0.45 per kilogram. That deal nearly matches what U.S. pork producers would have had under the Trans-Pacific Partnership (TPP) agreement that was pulled back by President Donald Trump. Regarding beef, the EU/Japan deal will eventually reduce Japan’s import tariff on beef from 38.5% to 9%. Australia and Japan reached a deal in 2015 that now gives Australian beef a 12% tariff advantage, which is growing by the year.
EU mulling U.S. trade retaliation list... EU officials have started assembling a list of U.S. goods, including Kentucky bourbon, orange juice and dairy products, to target for retaliation over Trump’s threat to limit steel imports due to national security concerns, the Financial Times reports.
More cash cattle trade at slightly lower prices... Cash cattle trade picked up between $117 and $118 across the Plains yesterday, in line with light sales earlier in the week and steady to $2 below last week’s action. Futures responded positively to the cash action, signaling they feared an even bigger drop. The August contract is $2 below the low end of yesterday’s trade, which could lead to some followthrough buying today.
All eyes still on the cash hog market... Traders remain on edge that cash hog prices will slump soon, bringing down futures as well. The national average cash hog price slipped yesterday, signaling declines in the eastern Corn Belt more than offset gains in the Iowa/Minnesota market and the western Belt. Product prices are also likely to slide sometime this month, though that typically does not occur until closer to the end of July.
Overnight demand news... There is no business to report.
Today’s reports:
- 7:30 a.m., Weekly Export Sales -- FAS
- 7:30 a.m., Monthly employment summary -- Labor
- 10:00 a.m., Livestock and Meat International Trade Data -- ERS
- 2:00 p.m., U.S. Agricultural Trade Data Update -- ERS
