FOLLOWTHROUGH BUYING OVERNIGHT... As of 6:30 a.m. CT, corn futures are trading 6 to 8 cents higher, soybeans are 17 to 19 cents higher, Chicago wheat is 4 to 7 cents higher, Kansas City wheat is 2 to 5 cents higher and Minneapolis wheat is around 4 cents higher. The U.S. dollar index is modestly firmer this morning.
CORN CCI IMPROVES... When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the corn crop improved 2 points to 375, while the soybean crop was unchanged at 367. While USDA's crop ratings and the CCI signal corn conditions are improving, traders are showing some concern with forecasts calling for potential hotter and drier conditions the second half of the month as corn will be pollinating across a good portion of the Corn Belt.
CHINESE HEADLINE INFLATION RISES, PRODUCER PRICES REMAIN WEAK... China's consumer price index (CPI) rose 2.7% over year-ago in June, up from a 2.1% rise in May. Food prices rose 4.9%, while non-food prices were 1.6% higher than year-ago last month. Meanwhile, China's producer price index declined by 2.7%, the 16th consecutive month of deflation for the price producers receive for their goods.
RUSSIAN OFFICIALS COMMENT ON WHEAT CROP... Russia will harvest no less than 50 MMT of wheat this year, according to Agriculture Minister Nikolai Fyodorov. While Russian Prime Minister Dmitry Medvedev says Russia's total grain and wheat crop forecasts may be trimmed by drought in some areas, there is no change in the official estimates for now.
AID TO EGYPT UNDER REVIEW... While a few lawmakers favor freezing U.S. aid to Egypt in the wake of the military’s ouster of the country’s president last week, most in Congress are leaning against cutting off the $1.5 billion-a-year aid package. Egyptian Ambassador Mohamed Tawfik and his staff at the embassy in Washington, D.C., continue to lobby the House and Senate to maintain the status quo and are laying out a legal rationale for the ouster of Morsi. The White House on Monday said it is not in the best interest of the U.S. to cut off hundreds of millions of dollars in aid to Egypt. Press secretary Jay Carney noted popular support for the Egyptian army’s ouster of the country’s democratically elected president and refused to label it a military coup, offering a clear indication of the administration’s reluctance to reduce aid to Egypt. U.S. allies such as Jordan and the United Arab Emirates are also making the case that the change in power was the result of a popular uprising. Under current law, foreign aid is prohibited to governments of any country "whose duly elected head of government is deposed by military coup d’état or decree or . . . a coup d’état or decree in which the military plays a decisive role." The only way to restart aid payments is by certifying a democratically elected government has taken office.
HOUSE GOP READYING SPENDING CUT LIST FOR DEBT CEILING DEBATE... House Republican leaders are working on a list of mandatory spending reductions they will propose to President Obama in exchange for varying increases in the debt ceiling. The plans range from a small increase in the debt limit that would be in exchange for reductions achieved via means-testing Social Security or ending certain agricultural subsidies, according to a report in the National Journal, to a medium-term extension of the debt limit coming in exchange for the administration agreeing to cuts for the Supplemental Nutrition Assistance Program (SNAP – formerly known as food stamps) or block-granting Medicaid or tinkering with chained CPI. The report said Republicans would agree to a debt-ceiling extension that would last the remainder of Obama’s second term if the administration would agree to privatize Social Security. However, Obama has made clear he won't negotiate on the debt ceiling issue, which could make the Republican plans an exercise in futility.
BOXED BEEF MARKET CONTINUES TO REEL... Boxed beef prices were sharply lower to open the week, with Choice cuts dropping $1.49 and Select plunging $2.60 while packers moved only 143 loads of product on the day. Until the boxed beef market shows strength, traders won't be confident cash cattle prices have bottomed.
BELLY PRICES CONTINUE TO DIRECT PORK CUTOUT... The pork cutout value was 96 cents higher Monday as belly prices firmed $10.95 to more than offset losses in most other cuts. With belly price movement largely directing the overall cutout value, traders will closely monitor that cut as BLT season hits.
OVERNIGHT DEMAND NEWS... South Korea purchased 120,000 MT of U.S., South American or eastern European corn. Taiwan bought 60,000 MT of Brazilian corn and tendered for another 60,000 MT of optional origin corn. Japan is seeking 49,954 MT of wheat in its weekly tender.