Good morning!
Two-sided trade to start the week... Corn futures are fractionally lower to start the week, while soybeans are up 3 to 4 cents. Winter wheat futures are down 1 to 3 cents, while spring wheat futures are mostly 1 to 4 cents higher. The U.S. dollar index is just above unchanged, while crude oil futures are marginally lower.
Rains to provide some relief later this week... As expected, conditions remained dry across the bulk of the Midwest and Northern Plains over the weekend, with temperatures climbing into the upper 90s to 100-degree range for the far western Corn Belt and Northern Plains. A cold front is expected to bring some needed rains to the Corn Belt and the Dakotas later this week, but elevated temps are expected to continue and Montana will likely miss out on rains. The National Weather Service forecast for July 22-26 calls for heat across the Plains and Midwest and dry weather over key spring wheat producing states. Rains are expected to favor the eastern Corn Belt over that timeframe.
NOPA members expected to report second highest June crush on record... Members of the National Oilseeds Processors Association (NOPA) will likely report they crushed 143.093 million bu. of soybeans in June, the second highest figure on record for the month, according to traders surveyed by Reuters. In May, NOPA members reported a crush of 149.246 million bu., which topped expectations. Analysts expect members to report soyoil stocks around 1.714 billion lbs. at the end of June, down 35 million bu. from the month prior. The report will be released at 11:00 a.m. CT.
Budget markup this week... The House Budget Committee this week should finally hold a markup session on the budget resolution, a key link for other must-have issues like tax reform. The measure would also have farm bill implications if as expected the measure includes mandatory spending cuts relative to the food stamp (SNAP) program. Cuts of $8 billion to $10 billion have been mentioned, along with worker requirements, with some sources saying some or all of any such “cuts” could be moved back into the program come farm bill time to aid existing food stamp participants. House GOP leaders are eying putting all the annual appropriations packages together in one big omnibus spending plan after all the bills get completed next week.
Senate again delays action on health-care reform bill... On the Senate side, health-care reform will no longer be an attention point in the wake of Sen. John McCain (R-Ariz.) having surgery to remove a blood clot and he will not be in Washington this week as he recovers. Senate Majority Leader Mitch McConnell (R-Ky.) said the chamber would “defer” action on health care as a result.
NAFTA 2.0 focus... A House Ways & Means subcommittee on Tuesday will look at the coming NAFTA 2.0 negotiations. The negotiating objectives for the North American Free Trade Agreement will be laid out by the Trump administration, likely released today by U.S. Trade Representative Robert Lighthizer.
Dry weather curbing Australian wheat crop prospects... Between April 1 and June 30, Australia’s west and east coast regions that grow the bulk of the country’s wheat have received less than half their normal rainfall, according to data from the Australian Bureau of Meteorology. And the forecast is expected to remain dry through September. As a result, some crop watchers are calling for Australia’s wheat crop to fall more than 20% shy of official forecasts for a crop of 24.1 MMT. Dry weather has also raised crop concerns in China, Russia, Europe and the U.S.
Speculation more high-quality Chinese wheat could trim its imports of the grain... Good weather during the growing season and harvest helped boost the quality of China’s wheat crop, according to Wang Ping, deputy director of the market department at the country’s ag ministry. But he said that while the increase in good-quality wheat in China could trim imports a bit, supplies of such wheat are still tight in China. Earlier this month, China National Grain and Oils Information Center estimated the country would bring in 3 MMT of wheat in 2017-18, a 38% drop from year-ago.
Steady Q2 economic growth for China... China’s economy maintained its momentum last quarter, matching the 6.9% growth rate in the first quarter. Consumer spending, factory output and investment were all strong, while retail sales recorded their fastest expansion since December 2015. Local markets stayed in the red, however, weighed down as a major once-in-five-years government work meeting indicated Beijing was looking to increase control over the economy.
China approves two more GMO crops for import... China has approved two more genetically modified (GMO) crops for import, the country’s ag ministry announced today -- the second such move in the past month. As part of its 100-day trade talks with the United States, China promised to speed up biotech approvals. Beijing gave the green light to Syngenta’s 5307 insect-resistant corn sold under the Agrisure Duracade brand and Monsanto’s 87427 glyphosate-resistant corn, which is sold under the Roundup Ready brand. Four other products owned by Monsanto, Dupont and Dow are still awaiting approval. The decision took effect July 16 and will last three years.
CFTC data confirms aggressive short-covering last week... For the first time this growing season, hedge funds and other money managers turned bullish on the corn, wheat and soybean markets. The latest data from the Commodity Futures Trading Commission shows speculators aggressively covered short positions amid weather concerns last week. Corn saw the most dramatic shift, and speculators now have an all-time record long position in HRW wheat. Last week’s short-covering in soybeans and soybean meal also set new records.
Cash cattle prospects in focus... Cash cattle prices strengthened last week, catching some market watchers off guard. Strong gains in response helped futures to settle in line with the low end of last week’s $118 to $121 cash action. Whether showlist estimates and boxed beef action points to additional cash gains will be key to price action this week.
Lean hogs well below cash market... Cash hog prices slipped much of last week, fueling ideas the cash market has put in a seasonal top. But with August futures at a double-digit discount to the cash hog index, followthrough selling in futures could be limited.
Weekend demand news... Jordan tendered to buy 100,000 MT of hard milling wheat from optional origins. Taiwan issued an international tender to purchase 105,150 MT of grade 1 milling wheat from the United States.
Today’s reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
- 2:00 p.m., Feed Grains Yearbook tables-- ERS
- 3:00 p.m., Crop Progress-- NASS
