Wheat futures rally on drop in spring wheat ratings... Corn futures are steady to a penny higher after a quiet overnight session. Soybeans are narrowly mixed as of 6:30 a.m. CT. Spring wheat futures are up 10 to 13 cents in 2017 contracts thanks to an unexpected decline in condition ratings. Winter wheat futures are up 2 to 4 cents. The U.S. dollar index is marginally higher, while crude oil futures re sharply lower.
PF CCI: Another big drop for spring wheat... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the spring wheat crop dropped another 9.53 points to 317.36 points, signaling weekend rains provided little relief. Traders had anticipated an uptick in ratings, so the ongoing slide in conditions lifted HRS wheat overnight. Of the six major producing states, only Minnesota saw any improvement. Montana led the decline. Get more details.
PF CCI: Corn and soybean conditions improve slightly... The corn CCI climbed 3.57 points over the past week to 370.99 points, signaling rain helped the corn crop. Corn ratings are still down roughly 15 points from year-ago levels, however. Soybean condition ratings also climbed 1.25 points over the past week to 361.82 points. That crop is down 10.8 points from year-ago. Find more details here.
Consultant leaning down on corn and soybean estimates, but makes no official change... Crop Consultant Dr. Michael Cordonnier left his corn yield estimate at 167 bu. per acre, but he has a neutral to lower bias going forward. He notes that showers last week stabilized the crop for the time being, though more rains are needed. He also left his soybean yield estimate at 48 bu. per acre, with a neutral to lower bias. He explains that he thinks “it is a little too early to be really concerned about the soybean crop. Soybeans can experience adverse conditions during the month of June, but still do OK if the weather during July and August is beneficial.”
Replacement workers quit, meaning more disruptions for Argentine grain shipments... Yesterday we reported that the arrival of replacement workers got grain shipments back underway at Argentina’s main Rosario shipping hub, but those workers have now quit due to threats and intimidation from striking workers. This has again halted grain cargo ships. The strike is now entering its sixth day, with the head of the San Lorenzo delegation of the CGT saying the strike will continue and pledging to block access to port terminals. Also of note, Argentine farmers have been slow to sell soybeans to exporters due to low prices. Sales to exporters are down 22.6% from year-ago levels according to the latest official data.
Georgia special election eyed; South Carolina contest as well... The runoff election between Republican Karen Handel and Democrat Jon Ossoff has already become the most expensive House race in U.S. history – some $60 million plopped down by both parties as the GOP seeks to keep the seat vacated by Tom Price as he joined the Trump administration. The race remains close in the polls – a WSB TV/Landmark Communications poll June 15 showed Ossoff with 49.7% of the vote and Handel with 48% (3.5% margin of error). Cook Political Report House Editor David Wasserman forecasts a one-point victory for Ossoff. There is also a special race in South Carolina, where most expect Republican Ralph Norman to prevail over Democrat Archie Parnell.
Senators push for poultry policy focus in NAFTA 2.0 talks... A group of senators is pushing for poultry issues to be addressed via the upcoming NAFTA 2.09 talks. “We write to urge strong consideration for American poultry farmers, processors and exporters in the negotiation process, both in eliminating trade barriers imposed by Canada against American poultry and in ensuring that our poultry trade with Mexico remains robust,” the lawmakers said. While NAFTA was to have resulted in a goal of eliminating tariffs in goods traded between the three countries, the lawmakers said, “Unfortunately, in practice, this goal has proven difficult to achieve. This has been particularly true for American poultry, which continues to face trade barriers in North America more than 20 years after NAFTA’s enactment.” Meanwhile, Commerce Secretary Wilbur Ross is downplaying the potential for the NAFTA 2.0 talks to be wrapped up yet this year.
Smaller grain crop forecast for Kazakhstan... Kazakhstan will likely produce a grain crop totaling between 17 MMT and 18 MMT in 2017, the country’s ag minister said in its first forecast of the season today. This would be down from last year’s 20.6 MMT. The minister expects Kazakhstan to export between 8 MMT and 8.5 MMT of grain in the 2017-18 marketing year that kicks off July 1.
Big increase in Chinese farmer subsidies... China will issue around 2.56 billion yuan ($374.95 million) in subsidies aimed at encouraging farmers to rotate their corn plantings with other crops and to leave some land fallow this year, the Ministry of Finance announced today. This is a 78% increase in funding from last year, and the acreage targeted by the subsidies is also up sharply at around 800,000 hectares -- 133,000 hectares that must lie fallow and 667,000 hectares where producers must rotate corn with other crops. Chinese farmers also get “producer” subsidies for major crops.
Japan’s use of corn in feed rations down slightly from year-ago... The ratio of Japan’s use of corn in animal feed climbed to 46.4% in April, up 0.7 percentage points from March but 0.1 points down from year-ago levels, according to preliminary data from Japan’s ag ministry. Wheat made up 1.9% of its feed rations in April, steady with March but up 0.3 points from last year.
Drop in pork sales for China comes much sooner than expected... Chinese pork sales have fallen for the past three years and they are likely to drop again in 2017, according to data from the research firm Euromonitor. This peak in pork demand came much earlier than anticipated; many producers and experts had expected growth in pork demand to continue at least until 2026. Since the late 1970s, pork demand had expanded by an average of 5.7% per year until 2014. Young urbanites and white collar workers are increasingly focused on reducing fat in diets, swapping out meat for vegetables. And with childhood obesity on the rise, the Chinese government is pushing a nationwide shift in eating habits.
Futures signal bearish bias toward cash market... Traders appear to have a lower bias toward this week’s cash cattle action, extending rather than narrowing futures’ discount to last week’s trade that took place in a wide range from $125 to $135. Showlist estimates are up a net 12,000 head this week, with numbers up at at all major states. Boxed beef prices were mixed on Monday and movement failed to impress at 94 loads.
Cash hog bids continue to climb... A strong start to the week for the cash hog market eased concerns the market may be working on a top, giving traders incentive to push prices sharply higher. But while the pork cutout value firmed to start the week, movement was lackluster at 227.01 loads. Traders are hopeful buying for Independence Day will eventually improve product movement.
Overnight demand news... Japan hopes to buy a total of 135,747 MT of food-quality wheat from the U.S., Canada and Australia in its regular tender.
Today’s reports:
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