Good morning!
Futures favoring the upside after a choppy overnight session... Corn futures saw two-sided trade overnight and as of 6:30 a.m. CT the market is around a penny higher. Soybeans are narrowly mixed after holding to a narrow, choppy range overnight. Winter wheat futures are 2 to 3 cents higher, while spring wheat is again mixed. The U.S. dollar index is under light pressure, while crude oil futures are posting slight gains.
PF CCI: Corn and bean ratings fall... When USDA’s crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the corn crop the corn crop fell 1.61 points to 357.01 points. Soybean ratings fell 2.24 points over the past week to 346.67 points. Get details here.
Cordonnier leaves crop pegs unchanged... Crop Consultant Dr. Michael Cordonnier made no change to his U.S. corn or soybean yield estimates which stand at 166 bu. per acre and 48 bu. per acre, respectively. He said late-summer heat is helping the corn crop, though maturity still lags. But he adds dryness is a concern for the central Corn Belt for both crops. Soybean development is running pretty lose to normal, so he says further rains will have limited benefit. He has a neutral bias going forward toward both corn and soybeans.
Hot and dry weather delays soybean planting in Brazil... While the soybean-free period has passed in Brazil, Cordonnier reports planting efforts are on hold across central Brazil as temperatures have been in the upper 90s to low 100s and there has been virtually no rain over the past month. Farmers in this region typically like to wait until they receive between 2 and 3 inches of rainfall to insure germination and emergence, he explains. Conditions have also been warm and dry in southern Brazil, and what few fields have been planted there are having germination problems. In his first forecast for 2017-18, Cordonnier estimates soybean acreage will climb 2.5%, but a return to normal yields will result in a 4.3% reduction in crop size to 109 MMT. He expects the Brazilian corn crop to fall both in terms of yields and acreage, resulting in an 88.0 MMT crop for 2017-18, down 10% from the year prior.
Wet weather raising some acreage concerns in Argentina... In stark contrast, Cordonnier reports that wet weather in Buenos Aires and La Pampa has raised concerns that these areas may not dry out in time for normal spring planting, especially for corn. Cordonnier took an initial stab at the Argentine 2017-18 crop size, cautioning that these are just “educated guesses at this point” that will likely change. He pegged the Argentine soybean crop at 55.0 MMT, down 4.8% from year-ago, with the corn crop expected to total 42.0 MMT, up 2.4% from 2016-17.
Stretch of Illinois River closed due to low water. A one-mile stretch of the Illinois River near the La Grange Lock and Dam has been closed after three vessels became grounded in the area due to low water, according to the U.S. Army Corps of Engineers. The area could be closed for several days as a dredging vessel is not expected to arrive until late Wednesday or early Thursday, according to Corps spokeswoman Sue Casseau. There were six downriver-bound and four upriver-bound vessels waiting to pass as of Monday afternoon.
Trump to focus on sovereignty and accountability at his first U.N address... President Donald Trump is expected to stress “sovereignty and accountability” rather than joint action on global crises in his address to the United Nations General Assembly this morning. He is also expected to focus on the Iran nuclear deal and the nuclear standoff with North Korea. In brief remarks on Monday, Trump said the U.N. had grown too bureaucratic and ineffective and should overhaul itself, but gave no clue as to whether he would cut U.S. funding. Trump called for management and budget reform of the U.N., as well as greater burden sharing among its members for peacekeeping duties.
Slow Chinese corn sales could lead to a supply crunch... Concerns about a short-term supply shortage in China have sparked an aseasonal rally in its corn market, as farmers there are changing their marketing patterns due to the elimination of its price support program for the grain. Previously, farmers would sell their corn crop at a minimum price to the government who stockpiled the grain. But now they are paying more attention to price fluctuations and those with storage options are opting to delays sales as they feel prices will be better later. Concerns about a tight supply are heightened by drought early in the season that delayed planting for some areas.
Lighthizer: China an unprecedented threat to trading system... China’s economic model represents an “unprecedented” threat to the world trading system that can’t be addressed under current global rules, U.S. Trade Representative (USTR) Robert Lighthizer said Monday in a speech in Washington. “There is one challenge on the current scene that is substantially more difficult than those faced in the past, and that is China,” he continued. “The sheer scale of their coordinated effort to develop their economy, to subsidize, to create national champions, to force technology transfers and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented.” The World Trade Organization (WTO) and the rules that underlie the international trade arbitrator weren’t designed to deal with China’s current approach to its economy, he said.
NAFTA talks moving at ‘warp speed’... Regarding NAFTA 2.0 talks with Canada and Mexico, whose third meeting to revise the deal will take place from Sept. 23-27 in Ottawa, Lighthizer has said the U.S. is seeking a major overhaul of the deal that will benefit American workers. “We’re moving at warp speed, but we don’t know if we’ll get to a conclusion,” Lighthizer said. He declined to answer questions about the United States’ proposal to add a “sunset” provision to a revised NAFTA deal, which would require the agreement to be terminated after five years unless all three countries agree to continue.
EU to cut import tariffs on Argentine biodiesel tomorrow... The European Union will lower its import duties on biodiesel from Argentina from a range of 22.0% to 25.7% to 4.5% to 8.1% on Wednesday, the bloc confirmed. This comes after the World Trade Organization ruled against the duties. Prior to the tariff hike in 2013, the EU had been Argentina’s top customer, and its return as a buyer is especially timely since the U.S. recently hiked tariffs on the Argentine biofuel.
Friendly cash signals... Early cash signals are promising for another week of gains for the cash cattle market as showlist are down a net 18,000 head, packers continue to enjoy strong profit margins and the boxed beef market posted solid gains to start the week, though movement was fairly light. But negotiations have extended late into the week of late, which could lead to more choppy futures price action, especially since they are already trading at a premium to last week’s average cash price of $105.97.
Cash hog market concerns linger... Some lean hog contracts faced profit-taking to start the week, as traders were unable to sustain early gains above near-term levels of resistance. Plus traders remain concerned that the ongoing slide in the cash hog market limits upside potential for futures. Cash hog bids softened to start the week.
Overnight demand news... South Korea purchased around 69,000 MT of corn to be sourced from optional origins. Japan tendered to buy 127,427 MT of food-quality wheat from the U.S., Canada and Australia in its regular tender. Egypt tendered to buy an unspecified amount of wheat from global suppliers. Jordan made no purchase in its tender to buy 100,000 MT of feed barley.
Today’s reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
- 11:00 a.m., Livestock, Dairy, & Poultry Outlook: September 2017-- ERS
- 3:00 p.m., Crop Progress-- NASS
