PRICE SURGE CONTINUES... Traders actively built weather premium into the market overnight as scattered weekend rainfall wasn't nearly widespread or heavy enough to slow crop deterioration. Traders are anticipating another significant drop in crop condition ratings this afternoon. And forecasts call for hot temps and very limited rainfall through at least the 10-day window. As of 6:30 a.m. CT, corn futures were trading 15 to 30 cents higher, soybeans 32 to 39 cents higher, Chicago wheat 15 to 39 cents higher, Kansas City wheat 12 to 26 cents higher and Minneapolis wheat 17 to 19 cents higher. The U.S. dollar index is firmer this morning.
NEBRASKA ORDERS IRRIGATORS TO STOP PUMPING WATER... More than 1,000 irrigators across Nebraska were ordered by the state to stop pumping from rivers and streams until drought conditions improve. As of Friday, the Nebraska Department of Natural Resources issued 1,106 shut-off notices to farmers and ranchers in every river basin in the state with the exception of the Little Blue in southeast Nebraska and smaller tributaries along the Missouri River. Keith Paulsen, head of the Natural Resources Lincoln field office, said the agency's order affects about 500 surface water right permits in the Big Blue River basin, or about 300 individual farmers. The area includes the following: Gage, Saline, Seward, Butler, Polk, York, Hamilton and Adams counties. "The Little Blue is not closed. It's got plenty of flows," Paulsen said. "It's going to take significant rainfall before we will open it up again," Paulsen said. "It's a critical time for farmers right now. They are not happy."
VILSACK: DROUGHT TO HAVE 'MARGINAL IMPACT ON FOOD PRICES'... USDA Secretary Tom Vilsack says reports of a 30% increase in food costs seen at some grocery stores should not be related to the current drought. "The prices and the impact of a drought will not likely be seen in the grocery aisles until later next year, 2013. If folks are using this opportunity to raise prices inappropriately, shame on them. It takes a long time for the prices to basically work itself through the system," he says. Even with a reduction in the food supply -- which he said will not impact meeting the food demands of the country -- prices should not skyrocket. "Fourteen cents of every food dollar that goes through a grocery store goes in the pocket of a farmer or rancher," Vilsack said. "So while these commodity prices will likely increase, it will have a marginal impact on food prices. What really drives food prices more significantly are energy costs."
RUSSIA LEAVES CROP FORECAST UNCHANGED, MAY LOWER EXPORTS... Russia still expects its grain crop to total around 85 MMT (46 MMT to 49 MMT of wheat) this year despite unfavorable weather, according to the country's ag minister. He also kept his grain export forecast at 18 MMT to 20 MMT, but says that could be reduced by 2 MMT on both ends of the range if unfavorable weather continues.
FED CHAIRMAN BERNANKE TO TESTIFY TWICE BEFORE CONGRESS THIS WEEK... The focus in Congress this week is Federal Reserve Chairman Ben Bernanke giving his semi-annual testimony on the economy and monetary policy to Congress and whether or not he will give any hints about additional quantitative easing. Bernanke will appear before the Senate Banking, Housing, and Urban Affairs Committee Tuesday morning to give the Fed's "Semiannual Monetary Policy Report to the Congress," commonly referred to as the Humphrey-Hawkins report. Bernanke returns to Capitol Hill Wednesday morning to present the monetary policy report and economic outlook to the House Financial Services Committee.
CRUSH PACE LIKELY SLOWED IN JUNE... Traders expect NOPA members to report June soybean crush at 132.8 million bu., based on the average trade guess. That would be down from 138.3 million bu. in May as some plants took seasonal downtime for maintenance. Soyoil stocks are guessed at 2.285 billion pounds.
WAITING FOR A LOW IN THE BOXED BEEF MARKET... Until there are signs of a short-term low in the boxed beef market, it will be hard to drum up sustained buying interest in the cattle market as August live cattle are trading at a $2 to $3 premium to last week's cash trade. While some weather premium is justified given the persistent hot weather, there aren't any reasons for traders to pump money into the long side of the market.
CASH HOGS SEEN STEADY/WEAKER... While market-ready hog supplies are tight, some plants are cutting back on kill hours in an attempt to get margins out of the red. As a result, packer demand for cash hogs is expected to be limited to open the week. Cash hog bids are called steady to lower across the Midwest.
WEEKEND DEMAND NEWS... Vietnam purchased 300,000 MT of Indian corn.