FIRMER TONE AHEAD OF USDA REPORTS... Grain and soy futures were firmer overnight as traders await what they expect will be bullish data from USDA this morning. December corn futures posted a new contract high overnight. As of 6:30 a.m. CT, corn futures were trading mostly 5 to 6 cents higher, soybeans mostly 7 to 12 cents higher, Chicago wheat mostly 1 to 3 cents higher, Kansas City wheat narrowly mixed and Minneapolis wheat 1 to 4 cents lower. The U.S. dollar index is firmer this morning.
AUGUST CROP REPORTS OUT THIS MORNING... USDA's long-awaited first survey-based corn and soybean crop estimates are finally here. Traders are expecting the corn crop at 10.971 billion bu. and the soybean crop at 2.786 billion bu., based on the average, pre-report guesses. But the guess ranges are very wide, so someone will be surprised. USDA will also update wheat production. How low USDA goes with its corn and soybean crop estimates will determine how aggressively they must slash new-crop usage projections to keep carryover somewhat reasonable.
CHINA TRADE DATA CONCERNING... China had a trade surplus of $25.1 billion in July compared to $31.7 billion in June and expectations of $35.2 billion. Imports rose 4.7% last month, while exports were up only 1% -- both well below expectations, especially exports. The data signals China's economy is struggling more than anticipated and has traders expecting an easing of bank reserve requirements and/or interest rates soon.
CHINESE SOY IMPORTS SURGE... China imported 5.87 MMT of soybeans in July, according to official customs data. That's a 25-month high and 4.4% higher than June and 9.7% higher than year-ago. Through the first seven months of this year, Chinese soy imports stand at 34.92 MMT -- a 20.1% increase from year-ago. China imported 730,000 MT of edible oils in July, which was up 35.2% from June and 4% higher than year-ago. China's Ministry of Commerce forecasts August soybean imports to ease to 4.37 MMT.
CHINA TO SELL STATE CORN, RICE RESERVES AHEAD OF HARVEST... The Chinese government will attempt to meet market demand for corn and rice by selling state-owned reserves ahead of harvest, according to the State Administration of Grain. No tonnages were announced, but there has been recent speculation China would sell around 2 MMT of state-owned corn reserves. Even if that's the case, that would only satisfy a fraction of China's near-term corn demand needs.
UN FAO CHIEF CALLS FOR ACTION ON US RFS MANDATES... The head of the United Nations' Food and Agricultural Organization (FAO) called on the U.S. to "lower or temporarily suspend the mandates on biofuels" to temper the impact of drought reducing U.S. corn production. In an op-ed item in the Financial Times, Jose Graziano da Silva said the move would "give some respite to the market." The FT also quoted USDA Secretary Tom Vilsack as saying that the waiver "may not do what some people think it will do" and noted there are "high" thresholds for a waiver of the Renewable Fuels Standard. The paper also reported that a formal petition will go to EPA next week on a RFS waiver request.
CLOCK TICKING ON WTO COOL CASE... Since the WTO appellate body and panel reports relative to Canada and Mexico's WTO case against U.S. cotton subsidies were adopted by the Dispute Settlement Body (DSB) on July 23, 2012, that started a 30-day deadline for the U.S. to inform the DSB on how it will implement the final findings. If that cannot happen quickly, the WTO can call for implementation of the findings in a "reasonable" period of time. Among options for the U.S. would be regulatory and/or statutory changes to COOL regulations and/or the underlying law. Should the U.S. not take action, Canada and Mexico would have the right to seek compensation or authorization to retaliate against imports from the United States. History has shown that if retaliation were to unfold, it could encompass non-ag items and that in turn could result in internal U.S. pressure from the affected sectors to resolve the issue. Canada and/or Mexico could issue preliminary retaliatory steps in order to accelerate U.S. action on this matter.
STILL WAITING ON CASH CATTLE TRADE... Bids and asking prices remained multiple dollars apart in the Plains Thursday, suggesting active cash cattle trade won't likely be seen until late today. But traders are fully expecting packers to pay at least $1 higher prices compared to last week's mostly $118 trade in the Plains.
LIMITED DEMAND FOR CASH HOGS... Packers are bought ahead on slaughter needs into next week despite some plants running increased hours on Saturday. That will limit packer demand for hogs and keep cash hog bids steady to weaker across the Midwest.
OVERNIGHT DEMAND NEWS... Taiwan bought 58,000 MT of U.S. soybeans. South Korea purchased 105,000 MT of feed wheat -- one cargo of optional origin; one cargo of Indian wheat. Pakistan sold 97,000 MT of corn to India. Japan tendered for 120,000 MT of feed wheat and 200,000 MT of feed barley. Algeria tendered for 50,000 MT of durum wheat.