Good morning!
Corn and soybean futures face more pressure overnight... Corn futures faced followthrough selling overnight as traders are more focused on removing weather premium than yesterday’s slight dip in crop condition ratings. Most contracts are 2 to 3 cents lower. Soybeans are down 13 to 14 cents as of 6:30 a.m. CT after USDA reported crop conditions improved slightly last week. Spring wheat futures are up 3 cents, while winter wheat is narrowly mixed. The U.S. dollar index is slightly higher, while crude oil futures are down slightly.
Corn crop declines marginally, soybeans improve... When USDA’s weekly crop condition ratings are plugged into Pro Farmer’s weighted Crop Condition Index (CCI; 0 to 500 point scale, with 500 representing perfect), the corn crop declined by 0.62 points from last week to 359.42 points, which is 29.94 points lower than year-ago. The condition of the soybean crop improved by 2.38 points to 347.05 points, but the crop is still rated 27.03 points lower than year-ago. The spring wheat crop fell another 6.46 points from last week to 277.43 points, which is down 89.05 points from last year at this point. Click here for more.
Cordonnier says western Corn Belt struggling with dryness... Crop Consultant Dr. Michael Cordonnier traveled through Iowa, Minnesota and North Dakota last week, and he concluded that the “entire western Corn Belt was a disappointment” and with just three to four weeks left in the growing season “there is little time to ‘right the ship.’” He detailed that Iowa is the state to watch going forward and it is unlikely to produce trendline yields unless it starts receiving “good and sustained rains very quickly.” Cordonnier also noted that soybeans have been impacted by drought more so than corn. Nevertheless, he maintained his corn and soybean yield estimates of 163.5 bu. per acre and 46.5 bu. per acre, respectively. He has a neutral to lower bias going forward.
IKAR raises Russian wheat crop peg... The Russian ag consultancy IKAR now estimates the country’s wheat crop will fall somewhere between 74 MMT and 77 MMT, up from its previous projected range of 72 MMT to 75 MMT. It also raised its forecast for wheat exports in 2017-18 to 29.5 MMT to 31.5 MMT, up 500,000 MT on either side of the range.
Private Chinese PMI data tops expectations... China’s Caixin Purchasing Managers’ Index (PMI) surged to a four-month high of 51.1 points in July, up from a reading of 50.4 points in June. Analysts had expected no change in this survey of small and medium-sized firms from June. Readings above 50.0 points signal expansion in manufacturing.
Tax reform timeline... The White House expects tax reform legislation to move through Congress this fall, advancing through the House in October and clearing the Senate in November, legislative director Marc Short said Monday -- an optimistic timeline to many veteran congressional analysts. Markups also will begin in September, Short said. “So that, I think, is an aggressive schedule, but that is our timetable,” Short said. Some Democrats might get on board, particularly those up for reelection next year in states President Donald Trump carried, he said. Meanwhile, if Republicans still want to use reconciliation to push a tax code overhaul, they first must pass a fiscal 2018 budget resolution to authorize it -- and that could take some time.
House ag panel leader comments on new farm bill timeline... House Agriculture Chairman Mike Conaway (R-Texas) during the panel’s field hearing in San Angelo, Texas on Monday said hat he wants to get a farm bill on the House floor by the end of this year, in line with his Senate counterpart, Pat Roberts (R-Kan.). “The drama associated with expiration and short-term extensions and permanent law threats... I hope you need to go to a different theater to experience that this time, because we’re going to get it done,” Conaway said. As expected, key topics during the field hearing were requests returning cotton to the Title I safety net program, improving livestock disaster assistance and strengthening conservation programs.
Perdue to start farm bill tour on Thursday... USDA Secretary Sonny Perdue on Thursday will begin a five-state farm bill tour via RV, beginning Thursday at the Wisconsin State Fair. Labeled “Back to Our Roots”, the tour will also see him in Minnesota, Iowa, Illinois and Indiana. Listening sessions in those states will allow him to hear from producers and consumers across the country who are “on the front lines of American agriculture and … know best what the current issues are,” Perdue said in a statement. “USDA will be intimately involved as Congress deliberates and formulates the 2018 Farm Bill,” Perdue said. A second RV tour is planned for later this summer.
Fed’s Fischer signals now it’s up to fiscal and government policy re: U.S. economy... Monetary policy needs to take a backseat now in the policy arena, with Fed Vice Chair Stanley Fischer telling a Brazilian audience fiscal policy and government policy need to move to the forefront. Plus, he noted uncertainties on the policy side are holding the U.S. economy back. “Uncertainty about the outlook for government policy in health care, regulation, taxes and trade can cause firms to delay projects until the policy environment clarifies,” Fischer said. “Policies to boost productivity growth and the longer-run potential of the economy are more likely to be found in effective fiscal and regulatory measures than in central bank actions.”
Japan says tax on frozen beef imports will be a topic at bilateral economic talks with Washington... Japan’s finance minister says that the country will raise the issue of tariffs on frozen beef imports from the U.S. and others when it begins a second round of bilateral economic talks with the U.S. later this year. Effective today, Japan’s taxes on frozen beef from the U.S. and others will climb from 38.5% to 50.0%. Also of note, the minister acknowledged there has been some discussion about extending the span of time used to trigger the safeguard tariffs from the current three-month span.
Early signals point to lower cash cattle trade... Showlist estimates are up a net 10,000 head this week after more limited cash action in some locations last week. Slaughter numbers and weight data also signals feedlots are not as current as they once were. That said, futures are already at a $5 or greater discount to the cash market, which should limit pressure.
Cash hog bids drop to start the week... Cash hog prices dropped on Monday, with values falling more than $2 in the Iowa/Minnesota and western Corn Belt markets. But traders have a big drop in cash prices factored into futures prices. Meanwhile, the pork cutout value climbed $1.04 on Monday, though movement was light at 234.65 loads.
Overnight demand news... Japan tendered to buy a total of 132,925 MT of food-quality wheat from the U.S., Canada and Australia.
Today’s reports:
- 2:00 p.m., Cotton System -- NASS
- 2:00 p.m., Fats & Oils -- NASS
- 2:00 p.m., Flour Milling -- NASS
- 2:00 p.m., Grain Crushings -- NASS
