FOLLOWTHROUGH SELLING OVERNIGHT... Soybean futures led price declines again overnight on pressure from the weather. Scattered rains were seen overnight in areas of the northern and eastern Corn Belt. More rain is forecast the next couple of days. As of 6:30 a.m. CT, soybean futures were trading 20 to 31 cents lower, corn futures 6 to 13 cents lower, Chicago wheat mostly 10 to 18 cents lower, Kansas City wheat mostly 15 to 18 cents lower and Minneapolis wheat 10 to 12 cents lower. Despite the followthrough selling, grain and soy futures are trading well off the overnight lows. The U.S. dollar index is modestly firmer this morning, but off the overnight highs.
CORN, SOYBEAN CCI RATINGS CONTINUE TO PLUNGE... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale), the corn crop plummeted another 17 points to 263, while the soybean crop plunged another 12 points to 280. Nearly every Corn Belt state showed declines in the corn and soybean crops over the past week, but the most noted deterioration was in the top two production states of Iowa and Illinois.
BRAZIL THREATENS TRADE RETALIATION IF PROPOSED US FARM BILL DOES NOT END COTTON EXPORT SUBSIDIES... Brazil threatened to levy tariffs on goods imported from the United States, if the US fails to comply with a World Trade Organization (WTO) ruling that demands the end of cotton export subsidies. The proposed 2012 farm bill being debated in Congress would result in an increase in trade-distorting agricultural subsidies and "substantially" boost government support for cotton if adopted in its current form, Brazil told the WTO. Brazil is the fifth largest cotton producer and the third biggest cotton exporter in the world, behind the United States. Roberto Carvalho de Azevedo, Brazil's representative at the WTO, said an inter-ministerial group is already discussing on the ways to apply economic sanctions approved by the WTO in case the US fails to meet its obligations as per the WTO’s 2004 ruling.
CHINESE FLASH PMI STRONGER THAN EXPECTED... China's HSBC flash purchasing managers' index (PMI) rose to 49.5 in July from 48.2 in June amid an increase in the output sub-index. While that still reflects contraction in China's manufacturing sector, it signals pro-growth monetary policy measures by the Chinese government are taking hold.
KAZAKHSTAN TO SCRAP GRAIN TRANSPORT SUBSIDY... Kazakhstan will end the government subsidy for the transport of grain for export to Black Sea and Baltic ports as of Aug. 1, according to the country's ag ministry. Due to rising prices, the ag ministry says the subsidy is no longer economically feasible.
CHINA COTTON OUTPUT TO FALL 9.1%... Chinese cotton production is forecast to fall 9.1% to 6.86 MMT due to a nearly 10% reduction in planted acres this year, according to China National Cotton Reserves Corp. The agency also says the Chinese government will start stockpiling cotton for state reserves as soon as new-crop supplies are available.
STRONG BOXED BEEF MOVEMENT... Boxed beef prices were mildly weaker Monday, but packers moved a strong 290 loads of product on the day. That's the first sign the product market may be starting to bottom. But the boxed beef market likely needs to exhibit strength in prices and movement before packers are convinced to raise cash cattle bids.
SLUGGISH START IN PORK PRODUCT MARKET... The pork cutout value was 26 cents lower and packers moved only 39 loads of product Monday. Given the sluggish start in the product market and negative margins, packers are unlikely to aggressively bid for cash hogs -- even in areas where supplies are very tight. Instead, pork plants are likely to reduce late-week slaughter runs if margins don't improve.
OVERNIGHT DEMAND NEWS... Exporters reported no tenders or purchases.