Good morning!
Short-covering leads to modest rebound overnight... Corn futures saw a mix of followthrough selling and short-covering overnight, but as of 6:30 a.m. CT most corn contracts are steady to a penny higher. Soybeans also saw two-sided trade overnight but most contracts are currently around a penny higher. Winter wheat futures are up 3 to 4 cents thanks to some corrective trade, but spring wheat is mixed, with nearbys firmer and deferred months under pressure. The U.S. dollar index and crude oil futures are slightly higher.
Scouts measure sub-par spring wheat yield potential... Scouts on Day 1 of the Wheat Quality Council Tour through North Dakota and neighboring areas of Minnesota and South Dakota measured an average yield of 37.9 bu. per acre, which is down from last year’s first-day yield of 43.1 bu. per acre and the five-year average of 45.7 bu. per acre for Day 1. Routes favor central and southeast North Dakota on the first day, and conditions are expected to worsen as scouts get into western areas of the state. Scouts reported that the poorest crops they saw yesterday were in southwest areas of North Dakota, where fields had already been cut for hay.
Russian ag ministry hopes to export some of its grain stockpile... Russia’s ag ministry hopes to receive government approval to export 532,800 MT of grain stockpiles from the 2008 to 2013 crop years to free up storage space and lessen federal budget spent caring for the stocks. The ministry hopes to have a decision by September. Exporters are opposed to the proposed sales as their margins are thin due in part to recent big crops.
Senate healthcare reform debate continues... Republicans voted to begin debate on health care Tuesday, but then their first vote rejected a provision that would have rolled back parts of ObamaCare. There were several provisions in the package, including ones that would have allowed insurers to offer plans that don’t meet ObamaCare standards and one that would have helped low-income people transition from Medicaid to private insurance. The chamber is expected today to vote on a plan to largely repeal ObamaCare with a two-year expiration deadline, the idea being to give lawmakers more time to come up with a replacement plan. The GOP also has a “skinny repeal” fall-back plan that would rescind ObamaCare’s requirement that many employers provide health insurance and would strike down a mandate penalizing those who don’t have health insurance. Get more details.
Biofuel programs at USDA targeted for defunding... The Bioenergy Program for Advanced Biofuels and Biomass Crop Assistance Program would be defunded under a bill to be offered today by Rep. Andy Biggs (R-Ariz.) as he maintains the programs disregard market signals and cost taxpayers money. However, the legislation would certainly run into opposition in the Senate.
Reuters: Brazil trade chamber postpones decision on taxing U.S. ethanol... Brazil’s foreign trade chamber, Camex, has put off for 30 days a decision on whether to impose a tariff on ethanol to curb a surge in imports from the U.S., a senior government official who attended the meeting told Reuters on Tuesday. The official said the chamber could not agree on applying a tariff and may consider quotas for imported ethanol at its next meeting. The quota proposal to be discussed would allow in 500,000 MT a year of ethanol and apply a 20% tariff on any imports beyond that quota. Brazilian ethanol imports jumped 330% in the first half of 2017 compared to the same period a year earlier to around 1.3 million cubic meters, mostly from the United States.
FOMC meeting concludes today... The Federal Open Market Committee (FOMC) meeting will wrap up today, and without a post-meeting press conference, the attention will solely be on the statement released at the conclusion of the confab. The market will look for any signals the Fed sends on the next rate action, on any timing hints on when the initial phase of the reduction in the Fed’s massive $4.5 trillion balance sheet will start and on how the Fed characterizes recent economic data which has been less than stellar. Another key will be on inflation as that has emerged as a factor mentioned or talked about by global central bankers in recent weeks. Expectations are the Fed will retain its guidance that it expects only “gradual” rate increases ahead.
Clovis officially nominated for key USDA post... President Donald Trump officially nominated Sam Clovis for USDA undersecretary for research, education and economics on Tuesday. His nomination has been controversial although many farm and commodity groups recently noted their support. Senate Agriculture Chairman Pat Roberts (R-Kan.) said a nominee who regarded crop insurance as unconstitutional “might as well not show up” to his committee hearing. In a 2013 interview with an Iowa talk radio host, Clovis listed crop insurance subsidies as spending that he said was unconstitutional. Roberts later said “it’s too early” to say whether Clovis’ expected nomination should be withdrawn. Clovis should have the opportunity to talk with the Agriculture Committee leaders and explain “why in the hell he said that,” Roberts said.
Food inspectors on strike in Brazil... Federal food inspectors in Brazil resumed their protest this week, slowing oversight at meatpacking companies, ports and airports. The Anffa Sindical union says inspectors lack sufficient staff to ensure the safety of the country’s meat shipments and are demanding the government hire 1,600 more inspectors. The union is also asking the government to add veterinarians to more efficiently handle food inspections. The first day of the strike last week lasted 24 hours. This week’s protest is slated to last 48 hours and more stoppages are planned. This comes in the wake of a bribery scandal involving the country’s food inspectors as well as a U.S. decision to cut off fresh beef imports from Brazil due to food safety concerns.
Uzbekistan lifts ban on U.S. pork... Uzbekistan has lifted a ban on U.S. pork put in place in 2014 after an outbreak of porcine epidemic diarrhea virus (PEDV), according to the U.S. Meat Export Federation (USMEF). “The suspension was very unfortunate because initial shipments of U.S. pork had just reached Uzbekistan a short time before the ban, and the product was quite well-received,” said Yuri Barutkin, a USMEF representative in the region. The lifting of the ban “did not happen as soon as we would have liked, but we never gave up,” he said.
Beef prices working on a low?... On Tuesday, Choice and Select boxed beef prices again strengthened, signaling beef prices may have put in a low. Movement was decent at 113 loads. So far there has been some light cash market tests at $116 in Iowa and $118 in Nebraska, steady to down a bit from trade ranging from $118 to $120 in these areas last week. But sales volume has not been enough to set a trend. Today’s online Fed Cattle Exchange auction should provide additional cash market insight.
Strong pork movement... Pork movement surged to 424.78 loads on a 70-cent rise in the pork cutout value on Tuesday. This was a dramatic improvement from load counts ranging from roughly 251 to 287 the prior three business days. This could help cash hog prices to stabilize after softening the first two days of the week.
Overnight demand news... Egypt purchased 300,000 MT of wheat from Russia, 60,000 MT of wheat from Romania and 60,000 MT of wheat from Ukraine. Algeria bought up to 500,000 MT of milling wheat from optional origins, with traders saying the wheat will likely come mainly from France. Japan received no offers in its simultaneous buy and sell auction at which it was seeking 120,000 MT of feed quality wheat and 200,000 MT of feed barley.
*Correction... In “Evening Report” we reported that USDA in June forecast grocery store prices would rise 1% to 2% in 2017. It actually forecast prices would hold steady to rise 1% this year in its update last month.
Today’s reports:
- 9:30 a.m., Weekly Ethanol Production -- EIA
- 1:00 p.m., FOMC meeting concludes -- Fed
- 2:00 p.m., Broiler Hatchery-- NASS
