HOGS

First Thing Today: Gains Overnight as Traders Remain Focused on the Weather

Thu, 12 Nov 2020 04:42:07 GMT

Good morning!

Gains overnight as traders remain focused on the weather... Corn futures are up 2 to 3 cents in most contracts while soybeans are up 5 to 6 cents as rainfall was light and spotty across Iowa yesterday and more dry weather is expected as the calendar flips to August. Spring wheat futures are up 4 to 8 cents, while winter wheat is mostly around 4 cents higher. The U.S. dollar index is again extending its multi-month slide. Crude oil futures are also facing light pressure.

Export sales report on tap... USDA will release its weekly update on export sales activity at 7:30 a.m. CT. Traders expect the report to show corn sales ranging from 400,000 MT to 900,000 MT, soybean sales between 400,000 MT and 1.3 MMT, wheat sales of 350,000 MT to 550,000 MT, soymeal sales ranging from 50,000 MT to 225,000 MT and soyoil sales between 5,000 MT and 25,000 MT. These tallies include expected old- and new-crop business combined.

Day 2 of wheat tour finds average yield down 10.8 bu. per acre from average... On Day 2 of the Wheat Quality Council’s spring wheat tour through central and northwest North Dakota, scouts measured an average yield of 35.8 bu. per acre, which was down from 46.9 bu. per acre a year ago and 46.6 bu. per acre for the five-year average. The average durum yield stood at 34.4 bu. per acre versus 45.5 bu. per acre last year and 41.0 bu. per acre for the five-year average. Dave Green, the Wheat Quality Council’s executive vice president, reported that “the early-planted stuff looks the toughest,” adding that later-planted fields could still improve if temperatures don’t get too hot. Abandoned or baled wheat fields are not incorporated into the yield estimates. But Green says the tour is having each route make an estimate on the abandonment percentage, and that will be presented to everyone when the final numbers are released later today.

Trump advances WOTUS repeal... Today begins a 30-day comment period on withdrawing the Obama implemented waters of the U.S. (WOTUS) rule. The Environmental Protection Agency and Army Corps of Engineers are publishing the proposal in today’s Federal Register. It would rescind the existing WOTUS rule and reinstate the jurisdiction of the Clean Water Act the way it existed before 2015. A new WOTUS rule is expected by late this year or early in 2018. Environmental groups and lawmakers have urged a longer comment period than 30 days. The repeal rule is seen as a back stop in case the Supreme Court determines the 6th Circuit didn’t have authority over the case and the hold is lifted.

AGCO buys Monsanto’s Precision unit that Deere was nixed from buying... AGCO Corp., the third-biggest U.S. agricultural machinery maker, agreed to buy Monsanto Co.'s Precision Planting LLC equipment business less than three months after Monsanto nixed a $190-million deal with Deere & Co. for the unit. Terms of AGCO’s deal to buy the unit from Monsanto’s subsidiary agricultural technology company Climate Corp. weren’t disclosed, AGCO said in a statement.

Japan may raise tariff on frozen beef as imports rise... Tariffs on frozen beef imports from countries without an economic partnership agreement (EPA) with Japan may be raised to 50% from the current 38.5% rate, Tatsuya Haruna, deputy director at the agriculture ministry’s livestock promotion division, said Wednesday. Beef suppliers that may be affected include the U.S., Canada, New Zealand and European Union nations. Australia, the top beef supplier to Japan, has an EPA agreement with it. Tariffs will be raised if frozen beef imports in the three months through June rise by 17% from the same period last year. It would be the first time in 14 years if triggered, and will be based on Japanese trade data due out Friday.

China bans beef from some Australian processors... China has temporarily banned beef products from six Australian processors due to concerns about labeling non-compliance involving meat from Australian processors that include two facilities from Brazil’s JBS SA. Australia’s trade minister said there may be “very significant amounts of trade” involved in the ban, including shipments already on their way to China, according to ABC. But Australia is working to quickly resolve the issue.

South Korea downgrades bird flu alert status... South Korea’s ag ministry says that the risk from highly pathogenic bird flu has fallen, with no new cases reported since June 19. Therefore, on Friday it will lower its alert status by one notch from the highest level. The nation will continue to monitor the situation and disinfect farms through September. Bird flu decimated more than a fifth of the nation’s poultry flock since it was first detected in November 2016.

Cash cattle move at lower levels... Cash cattle trade picked up in Kansas and Nebraska yesterday at $117, with Iowa and Texas seeing a few hundred head trade for prices ranging from $117 to $118. This is steady to down from last week’s action that ranged from $118 to $120. The August contract opens today’s session roughly $3 below the low end of this week’s cash trade. This could spur some corrective trade in the market today.

So far, just modest declines for cash hog index... Cash hog prices softened in the western Corn Belt but strengthened in the east, lifting the national weighted average cash bid yesterday. The cash hog index has slipped a bit in recent days, but it remains well above where futures are trading, signaling they may have overdone it to the downside. The pork cutout value dropped $1.96 yesterday, but it remains just above the $100.00 per cwt. threshold. Movement was again strong at 342.46 loads.

Overnight demand news... Jordan made no purchase in its tender to buy 100,000 MT of wheat. South Korea bought around 55,000 MT of soymeal, likely from South America. Iran made no purchase in its tenders to buy 200,000 MT of barley and 200,000 MT of corn.

Today’s reports:

7:30 a.m., Drought Monitor -- USDA/NWS
7:30 a.m., Weekly Export Sales -- FAS
2:00 p.m., Livestock & Meat Domestic Data -- ERS

First Thing Today: Rains Fall, But Weather Concerns Remain

Thu, 12 Nov 2020 04:42:03 GMT

Corn starts week under pressure, but soybeans and wheat hold onto gains... Corn futures faced pressure overnight and the market is currently trading high-range and down 4 cents. Soybean futures traded in a wide range overnight, and as of 6:30 a.m. CT most contracts are up 3 to 4 cents. Winter wheat futures are fractionally higher, while spring wheat are up 3 cents. The U.S. dollar index is marginally lower, while crude oil futures are up slightly.

Rains fall, but weather concerns remain close at hand... Rain fell across most of the Midwest and Northern Plains over the weekend, but accumulation was erratic. The heaviest precip amounts were in eastern areas of the Corn Belt. Cooler temps have moved into the region, diminishing moisture needs. Two systems are expected to bring additional rainfall to the Midwest this week. But looking farther out, there is concern that a ridge of high pressure could move into the Plains and Midwest as the calendar flips to July, bringing high temps and limiting rainfall, says World Weather Inc.

China may make July announcement to buy record volume of U.S. soybeans... The U.S. Soybean Export Council says the Chinese Ministry of Commerce may make a commitment to buy a record volume of U.S. soybeans when its officials are in Iowa next month. Members of the ministry, a delegation due to sign an accord in Des Moines on July 13, have discussed the possibility with the council’s top representative in China, said spokeswoman Lisa Humphreys of the council. A record commitment would exceed the 13.4MMT it agreed to buy in February 2012, also at a ceremony in Des Moines. The delegation will also tour U.S. farms and port facilities in places including Seattle, while a U.S. agricultural-trade delegation will visit China in September, according to the council.

EPA reportedly reevaluating proposed 2018 advanced biofuel mandate... Some in the oil industry have raised concerns regarding advanced biodiesel mandates and have lobbied the Environmental Protection Agency (EPA) to also lower cellulosic ethanol targets to better match production. This apparently led to a pullback announcement on Renewable Fuel Standard (RFS) volume requirements late last week, sources signal. The Office of Management and Budget reportedly had completed vetting the RFS proposal and initially authorized EPA to release proposed mandates. However, some sources speculate the delay could allow an announcement to coincide with President Donald Trump’s planned visit June 21 to Cedar Rapids, Iowa.

Chief ag trade negotiator for USTR announced… Greg Doud, a former Senate Agriculture Committee staffer with farm bill experience, is Trump’s pick to serve as chief agricultural negotiator for the U.S. Trade Representative’s Office. Doud is currently president of the Commodity Markets Council.

Budget work a focal point this week... Some agriculture/food policy cuts could be part of a GOP leadership budget proposal that could surfaced this week. If Republicans in the House concur, it could for the first time in years be able to pass spending bills without the help of Democrats. But even if the House GOP plan is approved, Senate Democrats would have leverage on the spending bills because Republicans lack the 60 votes required in that chamber to pass spending bills. Other focal points this week will include any additional details on Trump’s trade policy agenda, his trip to Iowa and the results of a Georgia House election. The battle to replace Republican Tom Price, Trump’s Health and Human Services secretary, has been the most expensive House race in history. Get more details .

Tax overhaul speech this week... House Speaker Paul Ryan (R-Wis.) plans to make a major speech on tax overhaul to the National Association of Manufacturers in Washington on Tuesday, as Ryan and his team mark the one-year anniversary of the unveiling of the “Better Way” blueprint.

U.S. beef a hot commodity in China... U.S. beef is in high demand in China now that the 14-year ban on the product has been lifted. “The number of inquiries to our exporters number in the hundreds, if not low thousands, since the announcement of the agreement,” says Joel Haggard, senior vice president for the U.S. Meat Export Federation in Asia-Pacific. China’s total beef demand has been sharply rising, and U.S. beef is expected to be a hit both in terms of quality and price. U.S. beef is expected to hold a price advantage to similar cuts of premium Australian meat because of low grain prices in the United States. But there are still some limits on Chinese beef buys, meaning American beef shipments will roll in slowly to start.

China still working to build its hog herd... China’s central Hunan province took delivery of 1,012 American boars on Sunday, signaling producers there continue to build herds. This comes despite talk of overcapacity and slowing demand that are expected to hurt profits next year. The hog imports are meant to improve the quality of the local breeding swine, according to Wang Xinwu, deputy head of the province’s inspection and quarantine bureau.

Futures start the week below cash cattle market... Futures start the week at a discount to last week’s cash cattle trade and near oversold territory, but momentum is on bears’ side. Traders will watch showlist numbers and boxed beef action before forming cash opinions for this week.

Traders on watch for signs of a top in the cash hog market... Traders expect the cash hog market to put in a seasonal top soon, which resulted in lean hog futures slipping slightly below the cash hog index last week. Higher cash hog bids have cut into packer profit margins. Any signs of retreat for the cash market would likely garner quite a bit of attention.

Weekend demand news... Jordan issued a new tender to buy 100,000 MT of animal feed barley and 100,000 MT of hard milling wheat from optional origins. Iran exported 35,000 MT of wheat to Oman last week.

Today’s reports:

10:00 a.m., Weekly Export Inspections -- AMS
2:00 p.m., Milk Production -- NASS
3:00 p.m., Crop Progress -- NASS

First Thing Today: Spring Wheat Futures Surge on Ratings Drop

Thu, 12 Nov 2020 04:42:03 GMT

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:

None.

First Thing Today: Republicans Prevail in Special Elections

Thu, 12 Nov 2020 04:42:03 GMT

Good morning!

Quiet overnight session for corn and soybeans, wheat faces profit-taking... Corn futures are fractionally to a penny higher after holding to a narrow trading range overnight. Soybeans also saw a quiet overnight session and the market is steady to 1 cent higher of 6:30 a.m. CT. Wheat futures are down 4 to 5 cents amid some profit-taking. The U.S. dollar index is slightly lower today, while crude oil futures are chopping around unchanged.

Argentine government orders striking port employees to get back to work... Argentina’s work ministry has ordered striking workers at the country’s main Rosario shipping hub to suspend their work stoppage for 15 days and return to the negotiating table. A union spokesman said that workers had not received any official notification so the strike will continue for now. Workers have been striking for a nearly a week, halting shipments from the port system that typically ships 80% of the country’s total grain output.

Handel defeats Ossoff in Georgia special election... Final results for the House seat vacated by Health and Human Services Secretary Tom Price saw Karen Handel (R) defeating Jon Ossoff (D), with Handel receiving 51.9% of the votes to 48.1% for Ossoff. The most expensive House race in history was a toss-up coming into election day, although most polls showed a slight lead for Ossoff. Democrats said the race was a referendum on President Donald Trump and pulled out all the stops, but still fell short. Elsewhere, Republican Ralph Norman beat Democrat Archie Parnell in the race for Budget Director Mick Mulvaney’s South Carolina House seat — but by a much closer than expected 3.2%.

President visits Cedar Rapids, Iowa today... He will view and talk about precision agriculture and other farm tech during a visit to Kirkwood Community College in Cedar Rapids, Iowa, where he will announce a commitment to include rural broadband development in his promised infrastructure package. USDA Secretary Sonny Perdue and Commerce Secretary Wilbur Ross will join the president to highlight the need to expand rural broadband to give farmers access to new tools and to reiterate his “commitment to agriculture and rural America,” said Ray Starling, special assistant to the president for agriculture, trade and food assistance. U.S. Ambassador to China Terry Branstad, the former longtime Iowa governor, and Iowa Agriculture Secretary Bill Northey, Perdue’s likely pick for a key USDA undersecretary post, will also be on hand.

Iowa newspaper focuses on declining Mexico imports of U.S. farm products... The Des Moines Register’s editorial board argues that Trump’s anti-Mexico rhetoric has hurt sales of Iowa farm and agricultural products south of the border. “Perhaps the drop will be short-lived, as currencies fluctuate and other economic factors change,” the board wrote. “But Mexican officials are busy shopping for food suppliers in other countries. Uncertainty about NAFTA and future U.S. trade policies has encouraged our third-largest customer for farm goods to cultivate new partnerships. And they’re making progress.” Commerce Secretary Wilbur Ross could comment on this topic during his appearance with Trump today in Cedar Rapids.

Trade policy issues focus in and outside Washington… USDA Secretary Sonny Perdue hosted his counterparts from Canada and Mexico yesterday in Savannah, Ga., where the three officials noted the importance of keeping trade open. Next week, the Office of the U.S. Trade Representative holds three days of hearings on the 23-year-old agreement to prepare for the start of renegotiations as early as August. Meanwhile, U.S. Trade Rep Robert Lighthizer appears today before a congressional panel on the Trump trade policy agenda.

Soybean planting on hold as Indian farmers wait for monsoon to arrive... India’s monsoon has been slow to arrive in key growing states like Madhya Pradesh and Maharashtra, delaying soybean planting, reports the Solvent Extractors Association of India. Typically, monsoon showers cover most parts of Madhya Pradesh by mid-June, but this year rains have yet to arrive.

Tyson takes steps to improve animal welfare... In yet another sign than consumers’ concerns about animal welfare are impacting the industry, Tyson Foods Inc. announced it will launch a new animal well-being initiative as well as a pilot project to test using gas rather than electricity to stun chickens before they are killed as a possibly more humane solution. The company also announced a new video monitoring system that will track how live chickens are being handled. Tyson is also deploying animal well-being specialists across all of its beef, pork and poultry operations.

Cattle futures trading well below cash market... Traders have extended futures’ discount to last week’s cash trade that averaged around $130, signaling traders’ lower bias toward this week’s action. But with futures trading double-digit below last week’s average cash price, traders have likely overdone it to the downside. Plus, some live cattle futures contracts dipped into oversold territory yesterday, according to the nine-day Relative Strength Index.

Pork prices on the rise... The pork cutout value surged $2.66 yesterday on solid movement of 326.30 loads. The cutout value is now within a $1.70 of the psychologically significant $100.00 per cwt. level. Recent gains signal some buying for July Fourth and BLT season is likely underway.

Overnight demand news... Egypt tendered to buy at least 30,000 MT of soyoil. Jordan canceled its tender to buy 100,000 MT of milling wheat after receiving just one offer. Japan received no offers for feed-quality wheat or barley in its simultaneous buy and sell auction. Bangladesh tendered to import 50,000 MT of wheat.

Today’s reports:

8:00 a.m., Cost-of- Production Forecasts -- ERS
9:30 a.m., Weekly Ethanol Production -- EIA
2:00 p.m., Broiler Hatchery -- NASS

First Thing Today: Infrastructure, Waterways Focus for President Trump

Thu, 12 Nov 2020 04:37:56 GMT

Followthrough buying overnight... Corn futures enjoyed followthrough buying overnight and the market is up 2 to 3 cents as of 6:30 a.m. CT. Soybeans are 4 cents higher. Winter wheat futures are up 4 to 5 cents, while spring wheat is currently trading mixed, as early gains and the move above $6.00 for several contacts triggered profit-taking. The U.S. dollar index is higher today, while crude oil futures are down slightly.

Infrastructure, waterways focus for President Trump... President Donald Trump will deliver remarks on infrastructure with a specific focus on U.S. waterways in an appearance in Cincinnati. The remarks are part of the focus this week the White House has put on infrastructure. In the appearance, Trump will highlight some additional portions of the plan that includes federal grants to rural areas as well as to states and localities to create additional funding for projects. Given the backdrop of a barge behind him at the Port of Cincinnati, Trump is expected to talk about the thousands of miles of waterways used to move an array of products into export locations and to other users.

Lingering U.S./Mexico sugar issues but agreement in principle announced... Top officials from both countries on Tuesday announced a tentative accord. But the American Sugar Alliance has some concerns about a “major loophole” dealing with additional U.S. needs. Alliance spokesman Phillip Hayes said, “Mexico could exploit this loophole to continue to dump subsidized sugar into the U.S. market and short U.S. refineries of raw sugar inputs.” Hayes said the U.S. sugar industry wanted to work with Commerce Sec. Wilbur Ross on the provision that gives Mexico the right of first refusal to fill 100% of any additional sugar USDA determines is necessary to meet commercial demand for sugar that is used for everything from candy to beverages and processed foods. The agreement will be finalized over several days, but removes one contentious issue from the table when the U.S., Mexico and Canada begin formal talks to renegotiate the North American Free Trade Agreement.

U.S. corn industry applauds sugar accord with Mexico... John Bode, president and CEO of the Corn Refiners Association, said the agreement once finalized would protect a $500-million-a-year market in Mexico for his industry. The National Corn Growers Association also welcomed the agreement, noting that Mexico is the top export market for U.S. corn overall.

Trial that could oust Brazil’s Temer begins... A trial began Tuesday in Brazil’s Superior Electoral Court that could unseat President Michel Temer. He has been accused of involvement in illegal campaign financing during the 2014 presidential election, when Temer was a running mate to the eventual victor, Dilma Rousseff. Rousseff was since been impeached and suspended, putting Temer in charge. If the court finds that Temer was responsible for illegal fundraising of the votes he received in 2014, he would be suspended and replaced by someone who would serve the rest of the term through December 2018. The president is also dealing with allegations he condoned bribes paid as hush money for corruption cases involving his government. Temer has rejected calls for him to resign.

South Korea again dealing with bird flu... South Korea raised its bird flu alert status to its highest level on Monday after the first bird flu case since early April was detected. Since then, the country’s ag minister has ordered the cull of 186,000 farm birds to prevent the spread of bird flu as more cases of highly pathogenic H5N8 avian flu were confirmed. Since the outbreak first began in November 2016, around 38 million birds have been killed, representing more than a fifth of the country’s total poultry population, reports Ag Ministry Spokesman Lee Ju-meung. Lee also noted that a mass culling was unlikely in this latest flare up as the new cases have mostly been on small farms and the virus does not typically spread as fast during the summer.

JBS sells Argentine operations to Minerva... JBS SA has agreed to sell its Argentine operations, as well as its operations in Paraguay and Uruguay to Minerva SA, a smaller rival. The $300-million deal that is expected to close next month will be used to pay off debt. This comes as JBS’s parent company J&K Investimentos made a deal with federal prosecutors and agreed to pay a $10.3 billion real ($3.1 billion) fine for its role in crimes committed by the Batista family that controls the group.

Bearish reversals could lead to followthrough selling in cattle... A number of live cattle contracts posted bearish reversals Tuesday, setting the stage for followthrough selling today. And limits are expanded in the feeder cattle market. But while futures faced heavy selling yesterday, technical damage was limited. Today traders will zero in on the results of the online Fed Cattle Exchange Auction. Last week, sales took place at an average top price of $132.17, which eventually led to active trade on the Plains that averaged around $136.

Cash hog strength continues... Cash hog bids strengthened again across the Midwest on Tuesday, which makes traders comfortable with the June contract at a premium to the cash hog index. But the fact that the July and August contracts are below June futures signals traders expect cash prices to top out this month. Meanwhile, pork movement improved Tuesday after a light start to the week.

Overnight demand news... Taiwan tendered to buy 92,400 MT of milling wheat from the United States. Japan will buy 14,010 MT of feed wheat in its simultaneous buy and sell auction.

Today’s reports:

9:30 a.m., Weekly Ethanol Production -- EIA
9:00 a.m., Milk Cost of Production -- ERS
2:00 p.m., Broiler Hatchery -- NASS

First Thing Today: Brazilian Soybean Shipments Surge

Thu, 12 Nov 2020 04:37:56 GMT

Grain and soybean futures higher overnight... Corn futures are around a penny higher and soybeans are up fractionally to 2 cents after both markets favored the upside overnight. Wheat futures are also higher, with most contracts posting gains between 1 and 2 cents. The U.S. dollar index is slightly lower, while crude oil futures are posting solid losses.

Export sales report expectations... USDA will release its weekly update on export sales activity at 7: 30 a.m. CT. Traders expect the report to show corn sales ranging from 600,000 MT to 1.1 MMT, soybean sales between 200,000 MT and 550,000 MT, wheat sales of 250,000 MT to 650,000 MT, soymeal sales ranging from 50,000 MT to 250,000 MT and soyoil sales between 5,000 MT and 42,000 MT.

Brazilian soybean shipments surge... The corruption scandal in Brazil caused the real to tumble against the U.S. dollar, making Brazilian soybean shipments more competitive and raising prices for farmers. Plus storage has increasingly been an issue. As a result, farmer sales have surged, helping Brazilian soybean shipments to catch up with year-ago. Through May 23, Brazil has shipped 6.85 MMT of soybeans (versus 6.79 MMT last year) and Williams shipping data shows another 3.5 MMT of soybeans are scheduled to depart this month. This month’s shipments are expected to top May 2016 by nearly 2 MMT. And shipments are expected to remain strong given record production and fast selling

Thune releases another farm bill measure... Senate Agriculture Committee member John Thune (R-S.D.) has released more farm bill language, this time targeting changes to Title I crop support payments. The bill would require that Agriculture Risk Coverage-County payments be based on where the land is located and not on the administrative county for the farm and require base allocation for crop support payments to be based on planted acres from 2014-2017 instead of the historical acreage currently used. Under the current base allocation system, farms that have not planted commodity crops in years could still get crop-support payments because of the reliance on old data, Thune said, adding that the changes are “good government provisions” that could result in millions of dollars in savings.

Crushing margins slip as soymeal stocks rise to highest level in nearly five years... China’s crushing margins for soybeans dropped to a nine-month low this week, which helped push soymeal stocks to their highest level since August 2012. Soymeal prices hit their lowest level in a year. In Shandong province, a key crushing area, soy processors are losing 261 yuan ($37.98) per metric ton. Demand for soymeal is week. Liang Yong, an analyst with Galaxy futures, explains, “poultry farms are losing money and restocking of hogs is slow due to falling profits.” Crush margins are expected to remains low for at least a couple of months as sluggish demand for soymeal and large edible oils supplies are expected to continue.

Mexican sugar association asks for antidumping investigation into U.S. fructose... Last week, CNIAA, Mexico’s sugar industry association, submitted a request to the economy ministry, asking the government to investigate suspected dumping of high fructose corn syrup (HFCS) by the United States. Whereas Mexican sugar headed to the U.S. is subject to tariffs, HFCS enters Mexico tariff-free. Mexico is expected to target the sweetener if it cannot reach an agreement with the U.S. regarding a long-running sugar trade spat by June 5.

Ag consultancy cuts Russian grain crop estimate... SovEcon slashed its estimate of Russia’s grain crop by 3 MMT to 106.5 MMT. It details that the wheat crop will likely total 63 MMT, which is a 500,000-MT increase from its March estimate.

Russia/Turkey trade dispute flares back up... Yesterday, reports circulated that Turkey has introduced new limits, restricting wheat imports from Russia to about 20% to 25% of total imports. While Turkey’s economy ministry denied these reports and said that Turkey remains committed to the agreements it signed recently with Russia. But some traders are struggling to get licenses, according to Andrey Sizov Jr., managing director at SovEcon. Traders note the informal restrictions are due to Russia not following through on lifting restrictions on Turkish products, such as on Turkish tomatoes. Corn and sunflower oil have also reportedly been impacted by the latest restrictions.

Lower cash cattle trade begins... Cash cattle traded at a weighted average price of $132.54 for one to nine-day delivery at the online Fed Cattle Exchange auction yesterday, which was a drop of $2.62 from the week prior for the same delivery period. This paved the way for some light cash cattle trade in Texas and Kansas at $132, down $1 to $2 from the bulk of trade the week prior. Active trade is expected at similar price levels, which is roughly $10 above where June futures are trading.

Cash and product prices slip Wednesday, but trend remains higher... The pork cutout value fell 63 cents yesterday as all cuts except loins and butts softened. Cash hog bids also softened as needs are reduced due to Memorial Day downtime. However, traders expect cash bids to renew their uptrend after the holiday as supplies tighten seasonally. Therefore, they are comfortable with nearby futures at a premium to the cash index. The nine-day relative strength index signals the market is mildly overbought, but momentum is clearly in bulls’ favor.

Overnight demand news... Jordan tendered to buy 100,000 MT of hard milling wheat from optional origins. South Korea purchased 63,000 MT of feed wheat from optional origins, but it will likely be sourced from the Black Sea region.

Today’s reports:

7:30 a.m., Weekly Export Sales -- FAS
7:30 a.m., Drought Monitor -- USDA/NWS
8:00 a.m., Food Price Outlook -- ERS
2:00 p.m., Outlook for U.S. Agricultural Trade -- ERS
2:00 p.m., Livestock Slaughter -- NASS
2:00 p.m., Poultry Slaughter -- NASS