Weaker tone overnight... As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are steady to 2 cents lower and wheat futures are 1 to 4 cents lower with winter wheat markets leading declines. The U.S. dollar index is under pressure this morning.
HRW crop continues to deteriorate... USDA delayed its national crop condition ratings until this afternoon. But individual states released crop ratings Monday afternoon, which showed continued deterioration of the HRW crop. In Kansas, 27% of the crop is now rated "poor" to "very poor," up two percentage points, while the portion of crop rated "good" to "excellent" dropped three points to 29%. In Oklahoma, 48% of the crop is now rated "poor" to "very poor," which is up four percentage points from last week while 15% is rated "good" to "excellent," down two points. In Texas, 61% of the crop is now rated "poor" to "very poor" and 13% is rated "good" to "excellent," each up two points from week-ago. Click here for a more detailed report.
Aussie meteorologists: Odds of El Nino build... The Australian Bureau of Meteorology now says there are greater than 70% odds El Nino will develop this summer. In its latest update the bureau says, "Although the El Niño–Southern Oscillation (ENSO) is currently neutral, surface and sub-surface ocean temperatures have warmed considerably in recent weeks, consistent with a state of rapid transition. International climate models surveyed by the Bureau indicate continued warming of the central Pacific Ocean in coming months."
EPA's McCarthy signals upward revision for 2014 RFS corn ethanol mandate... Final biofuel targets for 2014, EPA Gina McCarthy said Monday, will take into account increases in gasoline demand since the agency proposed the mandates last year. Increases in gasoline demand slightly raise the ethanol blend wall. "Every year we set these standards, we’re litigated. When we go to court, we need to be able to defend it," McCarthy said, speaking to the North American Agricultural Journalists. EPA's proposed 2014 Renewable Fuel Standard (RFS) was based on the Energy Information Administration's (EIA) projection last year that 131.67 billion gallons of gasoline would be consumed this year. But EIA's latest forecast is for consumption of 134.6 billion gallons. The initial EPA proposal for corn-based ethanol was 13.01 billion gallons.
China officially clears way for Brazilian corn imports... China has given final clearance for large-scale Brazilian corn imports as of March 31, according to China's quarantine authorities. This deal has been in the works for some time, but China just gave final approval. Meanwhile, the U.S. ag attache in Beijing estimates China will import 4 MMT of corn in 2013-14, 1 MMT lower than USDA's forecast last month due to "biotech-related trade disruptions." The attache sees China importing 3 MMT of corn in 2014-15 amid bulging domestic supplies.
Australia, Japan trade agreement could impact U.S. beef exports to Japan... Australia and Japan announced they will sign a bilateral economic agreement that is expected to take effect early in 2015. Japan will reduce but not eliminate some of its agricultural tariffs, while Australia will eliminate some of its tariffs on Japanese cars. Under the accord, Japan would lower its tariffs on Australian beef, now at 38.5%, to 19.5% for frozen beef and to 23.5% for chilled beef. The tariff reductions for frozen beef would be phased in over 18 years while the reductions on chilled beef would be phased in over 15 years. Japan can return beef tariffs to 38.5% if imports from Australia exceed certain limits. The ceiling for Australian frozen beef was set at 195,000 tons for the initial year of the agreement, which will be raised to 210,000 tons over a decade. The limit for Australian chilled beef was set at 130,000 tons for the initial year, which will be expanded to 145,000 tons. U.S. beef exporters could lose as much as 80% of their sales in Japan unless the U.S. government reaches a similar agreement, according to Japan's ag ministry. Japan imported 535,495 tons of beef last year, of which 286,946 tons or 54% was from Australia, 186,164 tons was from the U.S., and 29,459 tons came from New Zealand, according to data from the ministry. Frozen beef represented 58% of the meat from Australia and was used mainly for processed food including hamburgers.
Sluggish start for boxed beef market... Boxed beef prices extended last Friday's sharp losses yesterday, with Choice cuts dropping 81 cents and Select falling $1.38. Meanwhile, packers moved only 110 loads of product despite the weaker prices. Given bigger showlist estimates in the Plains and pressure on the wholesale beef market, traders are expecting lower cash cattle trade again this week.
Hams, picnics pressure pork cutout... The pork cutout value dropped $1.11 Monday, but that was due mostly to sharp declines in hams (down $5.52) and picnics (down $5.08). Still, with the pork cutout value historically high, traders are closely monitoring wholesale prices to see if there's retailer resistance that would signal at least a short-term top is in place.
Overnight demand news... Japan is seeking 119,718 MT of milling-quality wheat in its weekly tender.