Good morning!
Soybeans rally, but grains remain under pressure... Corn futures enjoyed gains early in the overnight session, but the market has since reversed lower and prices are down 3 to 4 cents as of 6:30 a.m. CT. Soybean futures have rallied around a bigger-than-expected drop in the amount of beans USDA rates in top shape; the market gapped higher on the open and futures are currently trading near session highs with gains around 6 to 7 cents. Winter wheat futures are down 2 to 4 cents, while spring wheat is mostly 11 to 12 cents lower. The U.S. dollar index is marginally lower, while crude oil futures are posting solid gains.
PF CCI for spring wheat little changed... When USDA’s weekly crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the spring wheat crop inched half a point lower to 283.88 points. The near steady rating signals last week’s rains were enough to stabilize the crop. Get more details.
Corn and soybean CCI ratings continue to slide... Our weighted CCI for corn dropped just over 3 points to 360.04 points, with ratings in the top producing states of Iowa, Illinois and Nebraska edging down slightly. The crop is now rated 28.6 points under year-ago levels. The soybean crop fell 4.74 points over the past week to 344.67 points, which is 27.64 points under year-ago levels. Ratings edged lower in all major producing states, with the exception of North Dakota, Wisconsin and Louisiana. See the state-by-state breakdown.
Cordonnier lowers corn and soybean crop estimates... The U.S. corn crop will likely yield an average of 163.5 bu. per acre, according to Crop Consultant Dr. Michael Cordonnier, down 1.5 bu. from his estimate last week. This translates to a 13.63 billion bu. crop estimate. He has a neutral to lower bias going forward. In explaining the cut, he noted this week’s two-point drop in condition ratings and the dryness in the western Corn Belt with pollination underway. Cordonnier also lowered his yield estimate for the soybean crop by 1.0 bu. to 46.5 bu. per acre, explaining that it remains too hot and dry in the western Corn Belt and too wet in the eastern Corn Belt. He estimates the bean crop will total 4.12 billion bushels.
Senate today takes a procedural vote on health care bill as McCain returns... The Senate is expected to take a key procedural vote on health care legislation. Although Majority Leader Mitch McConnell (R-Ky.) said he would move ahead with a bill that narrowly passed the House in May, the content of the legislation has yet to be determined. Sen. John McCain (R-Ariz.), who was diagnosed with brain cancer last week, is coming back to the Senate today for the vote and to work on defense authorization and sanctions bills. A Russia, Iran and North Korea sanctions bill is expected to be passed by the House today. The European Union said it would be prepared to retaliate against the U.S. should Washington hit Russia with new sanctions that affect EU-based energy companies, risking a trans-Atlantic split over economic and security policies.
House GOP considers omnibus spending bill instead of minibus... House Republicans on Monday night moved ahead with work on a four-bill appropriations package even as they discussed trying to complete a 12-bill omnibus before the August recess. If so, that would likely mean the House would remain in session into their normal summer recess.
FOMC meeting starts today... The two-day Federal Open Market Committee (FOMC) meeting starts today in Washington. No one expects a rate change — or at least the odds for no change in interest rates Wednesday are nearly 97%, according to the CME Fedwatch tool. The odds remain around 90% for the September and November meetings and the no-change expectation is just over 51% for December, with 43% expecting a quarter-point rise at the session.
South Korea responds to U.S. push on reopening KORUS... South Korea’s newly installed trade minister, Paik Ungyu, reacted to the Trump administration’s request to convene a meeting in Washington on possible amendments to the Korea-U.S. (KORUS) free trade agreement, writing in a letter to U.S. Trade Representative (USTR) Roberts Lighthizer on Monday that the two countries should first examine the bilateral trade deficit — and its causes — before looking to make changes to the deal. South Korean media reported Ungyu also suggested the talks be held in Seoul, not Washington, “at an appropriate date in the near future.” The letter comes after USTR recently wrote to Seoul with a formal request to make changes to the five-year-old agreement, with a focus on reducing the trade deficit.
Brazil mulls changes on foot-and-mouth disease vaccines... Brazil may change the formula of its foot-and-mouth disease (FMD) vaccines and lower the dosage as it contemplates actions to help reopen the U.S. market to fresh Brazilian beef. Veterinary product manufacturers made a formal request to reduce the dosages to 5 milliliters (ml) to a level of 2 ml and remove the compound saponin from the vaccine, according to a statement from the group Sindan sent to Reuters. Changes will be tested to make sure quality of the vaccines is maintained and the situation is still being analyzed. The planned changes would reportedly be ready for the November round of vaccinations. Meanwhile, USDA Secretary Sonny Perdue said Brazil Agriculture Minister Blairo Maggi’s suggestion that beef sales to the U.S. may resume within 60 days was “clearly aimed at a different audience,” in an interview with Bloomberg. Meeting U.S. concerns on Brazil’s inspection system is “very challenging” within Maggi’s proposed timeframe because of depth of U.S. concerns and Brazil’s lack of resources, according to Perdue.
In wake of selloff, some positive cash signals emerge... Traders responded to USDA’s bearish reports that were released Friday afternoon by pushing prices aggressively lower to start the week. Limits are expanded today. But after the selloff, traders will likely shift their attention back to market fundamentals. Showlist estimates are down a net 8,000 head this week and cattle on the Plains have been stressed by heat. Also of note, boxed beef prices strengthened 55 cents (Choice) to $3.05 (Select) on Monday, though movement was lackluster at 99 loads.
Hogs took their cue from cattle to start the week... Price action in the lean hog market was largely dictated by heavy losses in the cattle markets yesterday. If selling in that market eases, lean hogs could also enjoy some light short-covering given futures’ wide discount to the cash hog index. That said, the cash market softened to start the week, as did the product market, which would likely limit any buying enthusiasm.
Overnight demand news... Egypt tendered to buy an unspecified amount of wheat from global suppliers.
Today’s reports:
- 8:00 a.m., Food Price Outlook -- ERS
- 2:00 p.m., Poultry Slaughter-- NASS
