First Thing Today: U.S. Farm Exports Rise 8% in FY 2017
Good morning!
Corrective trade lifts corn, beans and wheat overnight... Corn futures enjoyed some corrective short-covering overnight and the market is fractionally to 1 cent higher as of 6:30 a.m. CT. Soybean futures are up 2 cents, while wheat futures are fractionally to 2 cents higher thanks to some similar corrective action. Also encouraging, the U.S. dollar index is softer today, while crude oil futures are posting solid gains.
Quick summary of House tax bill... The measure the chamber passed yesterday would usher in the most far-reaching overhaul of the U.S. tax system in 31 years, a plan that would reduce the corporate tax rate to its lowest point since 1939 and cut individual taxes for most households in 2018. The measure would repeal the alternative minimum tax, increase the child tax credit, abolish the estate tax by 2025 and transform the U.S. system for taxing multinational corporations. The plan also would raise taxes on some people by removing personal exemptions and deductions for state and local income taxes, medical expenses and student loan interest. The bill would reduce federal taxes by $1.4 trillion over the next decade. But the measure still has to be reconciled with any Senate-passed measure. If the Senate is able to clear its version, GOP leaders will form a conference committee to reconcile the differences.
French wheat crop off to a strong start... FranceAgriMer rates 97% of the French soft wheat crop in good to excellent condition as of Nov. 13. Planting of the crop is in the final stages, with sowing at 95% complete, according to weekly data from the French farm office.
EPA seeks delay on WOTUS in case Supreme Court lifts stay... The Environmental Protection Agency (EPA) and the Army Corps of Engineers proposed delaying the effective date for the waters of the U.S. (WOTUS) regulation pending the upcoming Supreme Court decision on the proper venue for litigation. The rule, also known as the Clean Water Rule, was originally supposed to take effect on Aug. 28, 2015, although it was stayed by the 6th Circuit Court of Appeals in October 2015. That stay could be impacted by the Supreme Court, which is expected to rule on whether WOTUS-related legal challenges must first go through district courts or should jump straight to the appellate level.
Will there be changes to dairy and cotton farm programs in FY 2018 budget?... Farm-state lawmakers closely watching coming fiscal year (FY) 2018 budget debate for possible cotton and dairy program funding. Anyone familiar with the coming new farm bill debate agrees that if the eventual fiscal year 2018 funding bill includes changes to the cotton and dairy farm programs, it would free up funding for other provisions in a tight-funded omnibus farm bill package. Such funding is included in the Senate version of the bill. Get more details here.
U.S. farm exports rise 8% in fiscal 2017... Hefty sales to China, Canada and Mexico helped boost U.S. agricultural exports 8% higher in fiscal 2017, from nearly $129.6 billion last year to $140.5 billion, the third-highest level on record, USDA said Thursday. The U.S. agricultural sector posted an annual trade surplus, which reached $21.3 billion, up almost 30% from last year's $16.6 billion — U.S. ag imports set a record at $119.14 billion in FY 2017, up from $113.037 billion in fiscal 2016.
FSIS audit highlights problems with Brazil's meat inspection system... USDA's Food Safety and Inspection Service (FSIS) conducted an onsite audit of Brazil's meat inspection system between May 15 and June 2 to determine its ability to export products that were safe, wholesome, unadulterated and correctly labeled and packaged. At the time Brazil was approved to export meat to the U.S., but that privilege has since been revoked. In the recently released report, FSIS identified a number of systemic issues ranging from a lack of oversight of in-plant inspectors to inadequate enforcement of sanitation requirements to chemical analysis that does not align with the requirements of FSIS. At the audit exit meeting, Brazil's Central Competent Authority promised to address the findings.
Brazil denies problems with its meat shipments to Russia... Earlier this week, there were reports Brazil was considering a ban on all pork and beef imports from Brazil after finding the feed additive ractopamine in shipments. The country has banned the additive, though many countries say it is safe. In the past, Russia has used ractopamine as a reason to halt shipments. Brazil's meat industry has denied there have been any problems with its beef and pork shipments to Russia. The head of Brazil's Abiec says that the country ships between 7,000 and 9,000 MT of beef to Russia each month and he says companies are "comfortable" regarding the health status of its shipments to Russia. ABPA, an association representing pork producers, also denied the possibility of shipments containing ractopamine Russia accounts for around 40% of Brazil's total pork exports, according to the group.
Gearing up for Cattle on Feed Report... Today's Cattle on Feed Report is expected to confirm that while marketings are current, feedlot supplies continue to build relative to year-ago levels. Placements are again expected to be the wild card category, as there is a 9.5-point spread on the range of guesses. With the bulk of this week's cash trade complete earlier in the week, attention will be on readying for today's report. Some additional cash cattle trade occurred yesterday between $119 and $120.50 after more active trade in that range on Wednesday.
Cash hog prices continue to bleed lower... Cash hog bids fell another 59 cents on a national basis on Thursday and more weakness is likely today as demand is reduced ahead of holiday downtime. The cash market's steady march lower has dragged down futures, but losses on the board have outpaced those of the cash market, signaling some corrective trade is likely warranted. But for now, momentum remains to the downside.
Overnight demand news... Egypt purchased 240,000 MT of wheat from Russia. Jordan issued an international tender to buy 100,000 MT of animal feed barley from optional origins.
Today's reports:
- 1:00 p.m., Weekly Red Meat Production Report -- AMS
- 2:00 p.m., Cattle on Feed -- NASS