Good morning!
Soybeans and wheat futures surge to start the week... Soybean futures are around 20 cents higher as of 6:30 a.m. CT thanks to followthrough buying in the wake of USDA’s lower-than-expected planted soybean acreage estimate Friday. Spring wheat futures are up 21 to 28 cents, while winter wheat is 11 to 14 cents higher. Corn futures are also enjoying gains, with most contracts up 4 to 6 cents. The U.S. dollar index is posting solid gains. Crude oil futures are also slightly higher.
July Fourth schedule update... The markets close around noon CT today in observance of Independence Day. Therefore, we will run a 10:30 a.m. CT Snapshot, rather than a 10:00 and Noon Snapshot. While the export inspections report is still scheduled to be released at 10:00 a.m. CT today, USDA’s Crop Progress and Condition Report will be pushed back to July 5. Markets and government offices will be closed tomorrow, and they will reopen for normal hours on Wednesday.
More threatening weather for spring wheat... While much of the Corn Belt is expected to receive rain this week, the Northern Plains and southwest Canadian Plains are expected to remain dry. The National Weather Service forecast for July 8-12 calls for dry conditions across the Corn Belt with a mix of temperatures. Heat is expected for the western Belt, including Iowa, Minnesota and northwest Wisconsin. Cool temps are expected for the remainder of the Midwest. This will maintain concerns about dry conditions on the Northern Plains and northwest areas of the Corn Belt.
Congress is on recess this week... When lawmakers return the week of July 10, several major issues linger, including health-care reform and a new budget. Congress will have a work period of only three weeks before the month-long August recess begins. President Donald Trump leaves Wednesday for the G20 summit where on the sidelines he will have a face-to-face meeting with Russia President Vladimir Putin and other world leaders. On the economic front, the key report comes Friday with the employment update.
Brazil, Argentina reasons EPA pulled back RFS announcement... Concerns that refiners will import ethanol from Brazil and biodiesel from Argentina to fulfill Renewable Fuel Standard (RFS) volume requirements helped lead U.S. EPA Administrator Scott Pruitt to reconsider quotas for those fuels, according to several reports and sources. A coming announcement may include lowering the targets so refiners can rely mostly on U.S.-made biodiesel and corn ethanol. Until the pullback, EPA had sent the White House Office of Management and Budget (OMB) proposed quotas that would have required the use of 15 billion gallons of conventional corn-based renewable fuel. Get more details.
China accuses U.S. of ‘serious provocation’ as warship sails near disputed island... China’s Ministry of Foreign Affairs said a U.S. destroyer that sailed within 12 nautical miles of an island in the South China Sea had “trespassed” and entered the waters without permission. Meanwhile, China’s leader Xi Jinping said that ties with the U.S. have been strained by “some negative factors;" the comments came in a telephone conversation with Trump Sunday. “Xi Jinping stressed that since his meeting with Trump, important results have been achieved in China/U.S. relations,” reported Chinese state media outlet CCTV.
PMI signals a recovery in Chinese manufacturing last month... China’s Caixin/Markit Purchasing Managers’ Index (PMI) showed manufacturing picked up last month, climbing from 49.6 points in May to 50.4 points in June, the highest level in three months and well above expectations for a reading of 49.5 points. The private index was above the 50.0-point threshold that separates expansion in the industry from contraction.
German crop prospects up marginally from year-ago... Germany will likely harvest around 24.51 MMT of winter wheat this year, up 1.8% from year-ago, despite adverse weather, reports the German association of farmers DBV. It also expects the country’s rapeseed harvest to climb 1.8% from year-ago to 4.65 MMT.
Perdue: Breakthrough within weeks for U.S. rice, poultry into China... U.S. rice and poultry may be the next commodities approved for import into China, with a breakthrough expected within weeks. “We are very close to a rice protocol where rice can come back in,” USDA Secretary Sonny Perdue said in an interview in Shanghai on Saturday. Poultry is also being discussed and the U.S. will host a team from China this month to demonstrate quality and safety controls, he said. China has restarted imports of U.S. beef, lifting a ban that had been in place since 2003. China has banned poultry imports from the U.S. due to avian influenza, and is the world’s biggest rice importer. “While they’re not quite ready to certify that at this point, we think both rice and poultry are very close,” Perdue said. “I’m hoping it’s going to be weeks. Those are my expectations: weeks. Certainly not years, and hopefully not months.”
Wheat, oat producers will get PLC payment in October... Eligible wheat and oats producers in the Price Loss Coverage (PLC) program for 2016 crops will receive a payment in October as the marketing year average price for both commodities came in under the reference price for the program, according to USDA. Eligible wheat producers will receive a payment of $1.61 per bushel on wheat and 34 cents per bushel on oats. Barley producers won’t receive a payment. Get more details.
More downside possible for cattle futures... Packers’ needs will be reduced due to holiday downtime this week. Plus, with buying for the major “beef” summer holidays wrapped up, beef prices plunged last week and more declines are likely. This could weigh on both the cash and futures markets this week.
Watching for a top in the cash hog market... Traders ended the week focused on narrowing the discount futures hold to the cash hog index. But cash prices slipped on Friday, so traders will remain attentive to signs cash prices have put in a top.
Overnight demand news... Egypt bought 20,000 MT of soyoil in a tender. Jordan issued an international tender to buy 100,000 MT of hard milling wheat from optional origins.
Today’s reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
