Good morning!
Some profit-taking overnight... Corn futures are roughly a nickel lower as traders note some overnight rains in Iowa and Illinois and engage in some profit-taking. Soybeans are down 7 to 8 cents in most contracts. SRW and HRS wheat futures are narrowly mixed as of 6:35 a.m. CT, while HRW wheat is around a penny lower. The U.S. dollar index is down slightly, as are crude oil futures.
Heat continues, but some storms also moving across the Midwest... Rains moved across Iowa overnight, providing a bit of relief to central and western areas of the state, though accumulation was generally less than an inch. The system also brought some light rains to northern Illinois and Indiana. Several rounds of strong to severe thunderstorms are possible for the northern Plains and upper Midwest today and Iowa could see a few more showers over the weekend, though the southwest part of the state is expected to remain dry until midway through next week. Heat advisories and red flag warnings are in effect for the vast majority of the Corn Belt today. And the National Weather Service calls for heat to linger June 26-30. Much of the eastern Corn Belt and into Minnesota and northeast Iowa should see wet weather over that timeframe, with normal precip expected for other areas of the Belt.
Aussie attache cuts wheat crop estimate, saying weather has taken a toll... Reminding that the U.S. is not the only country dealing with wheat weather threats, an ag attache in Australia lowered its 2017-18 wheat crop peg to 22 MMT, which is a steep (37%) drop from last year’s record-large 35 MMT crop and 1.5 MMT below USDA’s official estimate for the country. The post cited “poor seasonal conditions across almost all cropping areas.”
Cotton and dairy aid... The Senate Appropriations Committee earlier this week approved a fiscal 2018 funding bill for USDA that includes provisions expanding farm bill support for cotton and dairy. The cotton and dairy provisions would each cost just under $500 million and in a move to avoid costs for fiscal 2018, the Senate language has the new cotton and Margin Protection Program payments go out first in fiscal 2019. The bill makes cottonseed eligible for safety the Price Loss Coverage program at a reference price of $15 per hundred pounds, 88 cents lower than the reference price House Ag Chairman Mike Conaway (R-Texas) and others pushed. Conaway says the cotton safety net language needs more money.
USDA expands CRP emergency haying and grazing... USDA will allow farmers and ranchers in areas of Montana, North Dakota and South Dakota to hay and graze Conservation Reserve Program (CRP) wetland and buffer practices. For CRP practices previously announced, including those authorized Thursday, USDA is allowing the emergency haying and grazing during and after the primary nesting season where local drought conditions have reached at least D2, or “severe,” according to the U.S. Drought Monitor. This also includes counties with any part of their border located within 150 miles of authorized counties within the three states, USDA said, and may extend into neighboring states. All emergency grazing must end Sept. 30, 2017, and emergency haying must end Aug. 31, 2017.
Minnesota investigating Dicamba complaints... Minnesota’s Department of Agriculture is investigating a number of complaints from farmers about drift of the weed killer Dicamba. This Monsanto product is meant for use on soybeans that have been genetically modified to tolerate that herbicide, specifically. But farmers in Minnesota and many across southern areas of the country allege drifting Dicamba is hurting crops that are not meant to tolerate it. This has led Arkansas, Missouri and Tennessee to ban or heavily restrict use of the herbicide. Monsanto’s chief technology officer, Robb Fraley, says most of the damage is caused by farmer error. Private crop watchers report at least a thousand acres in the state have been damaged, but that many farmers have not reported the issues because they don’t want to hurt relations with a neighbor.
CME expands delivery territory for corn futures contracts... CME Group says that the Chicago Board of Trade will expand the delivery territory of corn futures and mini-sized corn futures contracts to include the Havana-Grafton shipping district and the St. Louis-East St. Louis and Alton switching district effective Aug. 13. The exchange also said it will resume the normal listing schedule of the contracts, meaning it will list the July 2020 and December 2020 contract months that were previously suspended.
Record-setting red meat production in June... Commercial red meat production totaled 4.35 billion lbs. in June, a the second consecutive monthly record and a 3% gain from year-ago levels, according to USDA’s latest Livestock Slaughter Report. Pork production also notched a record at 2.05 billion lbs., up 2% from year-ago. Beef production stood at 2.28 billion lbs. last month, a 4% gain from year-ago.
Two big cattle reports out today... This afternoon USDA will release both its monthly Cattle on Feed (COF) and its biannual Cattle Inventory Reports. Traders expect the COF Report to show the number of cattle on feed as of July 1 stood at roughly 10.657 million head, up 2.9% from year-ago. They expect placements and marketings to rise 6.1% and 4.7% from year-ago levels, respectively. We expect the Cattle Inventory report to show the U.S. cattle herd expanded slightly from year-ago to around 101 million head as of July 1. We’ll have analysis of the data in “Evening Report” and online.
Gearing up for cattle reports... Price action today may largely revolve around preparing for USDA’s COF and Cattle Inventory Reports, both of which are expected to remind of building supplies. Active cash cattle trade may hold off until following the reports. So far, there has been just light sales mostly around $118.
Lean hogs may be too far below the cash index... Oppressive heat this week has kept cash hog prices choppy this week, though prices did soften on Thursday. While we expect seasonal weakness going forward, we feel futures may be too far below the cash hog index, especially considering recent sideways action for the index.
Overnight demand news... Iraq tendered to buy at least 50,000 MT of hard milling wheat to be sourced optionally from the U.S., Canada or Australia. Egypt bought 31,000 MT of sunflower oil and 30,000 MT of soyoil.
Today’s reports:
- 2:00 p.m., Cattle on Feed -- NASS
- 2:00 p.m., Chickens and Eggs -- NASS
- 2:00 p.m., Cattle Inventory Report -- NASS
