Good morning!
Corn down slightly, soybeans up slightly... Corn and soybean futures saw two-sided trade overnight but as of 6:30 a.m. CT corn futures are fractionally lower while soybeans are posting similar gains. Wheat futures are down 3 to 5 cents, with the SRW wheat market leading to the downside. The U.S. dollar index is under pressure, as are crude oil futures.
Hurricane Harvey wreaks havoc... A monumental disaster is taking place in parts of Texas. President Donald Trump slated to visit the flood-devastated region on Tuesday. Texas has the second-largest economy in the nation after California and accounts for about 9% of U.S. gross domestic product. Texas Governor Greg Abbott (R) said in a news conference that relentless rain and dire flash flooding of Hurricane Harvey have produced the strongest storm the state has seen in at least 50 years. Expectations are now that Harvey will move just offshore of the Texas coast today, then turn northward and move inland over northeastern Texas by 72 hours.
Ag impacts of the storm... Michael Klein, a spokesman for the USA Rice Federation, told CNBC that the cotton crop “in this area of Texas is the biggest and most beautiful that anyone can remember in years, and probably two-thirds of it is still in the fields. It’s going to be disastrous for them.” Texas is the U.S.'s largest cotton producer. Livestock are being evacuated to higher ground. Much of the Texas’ rice crop has been harvested, and the state’s wheat area is expected to escape damage. Ports at the Texas Gulf account for about 24% of U.S. wheat exports, 3% of corn shipments and 2% of soybeans, according to the Soy Transportation Coalition. The bigger threat to shipments of corn and soybeans comes from Harvey’s possible impact in Louisiana and the Gulf of Mexico. About 60% of American soybean exports depart from that region, as do 59% of corn shipments, says Mike Steenhoek, the group’s executive director. Get more details.
Harvey causes energy sector problems... Energy distribution capabilities and infrastructure issues will be closely watched topics. With rain expected to continue until at least Tuesday, it is unclear how long plants will stay closed. That could raise concerns about fuel shortages and price spikes. Roughly a million barrels a day of refining capacity were shut down on the Gulf Coast, and nearly a quarter of gulf offshore production has been shut. The Corpus Christi shipping terminals responsible for importing and exporting oil and refined products are also closed. And if the ship channel between Port Arkansas and Arkansas Pass is badly damaged, observers say it could take weeks for products to leave South Texas refineries, even if the plants are not much impacted. While the East Coast has high levels of fuel in storage, international repercussions could be evident. Some 17% of gasoline and 39% of the diesel fuel produced by Gulf Coast refiners has been exported this year, according to consultancy Turner, Mason & Co.
Cool temps and varied precip expected for the Midwest... Rains ranging from 0.3 to 1.0 inches fell in the western Corn Belt and Wisconsin over the weekend. Looking ahead, the National Weather Service forecast for Sept. 2-6 calls for cool conditions across the Corn Belt, with the exception of the Dakotas and Nebraska where normal temps are likely. The crops could use some heat and sunshine. The precip outlook is more of a mixed bag. The western Corn Belt is expected to be dry. Normal rainfall is likely for much of Wisconsin, Illinois and Missouri, and wet weather is likely for the rest of the eastern Belt.
Trump comments on taxes, NAFTA and the wall... President Donald Trump will be in Springfield, Mo., on Wednesday, where he will deliver remarks touting his plans to revamp the tax system. “Tax reform and tax relief for the middle class certainly will be a big priority for the administration” this fall, White House Press Secretary Sarah Sanders said. Also of note, on Sunday Trump tweeted that the North American Free Trade Agreement is the “worst trade deal ever made” and that the U.S. might have to just “terminate” the pact because Mexico and Canada were being difficult in renegotiation talks. He also commented on his determination to build a wall along the U.S.'s southern border and to make Mexico pay for it eventually. He didn’t elaborate on how he would do so, but he did accuse Mexico of being one of the highest crime nations in the world.
Rise in Brazilian soybean area expected... Brazil’s soybean acreage will likely climb 2.3% in 2017-18 as bean acres take over ground previously planted to corn, according to analysts polled by Reuters. But the survey participants expect production to fall shy of the record-setting 2016-17 season as yields return to more normal levels. On average, survey participants projected a 2017-18 bean crop of 110.6 MMT (down 3% from the year prior) on plantings of 34.7 million hectares (85.7 million acres). The 2016-17 crop is estimated at 114 MMT.
U.S. embassy pledges to “work together” with Argentina on biodiesel tariffs... Tom Cooney, charge d’affaires at the U.S. embassy in Argentina, said he had a “very collaborative dialogue about biodiesel and ag trade” with Foreign Minister Jorge Faurie and Production Minister Francisco Cabera, adding, “We will work together!” This comes after the U.S. hit Argentine biodiesel with tariffs of up to 64.17%. Argentina has said it plans to take legal action regarding the steep duties that it says violates World Trade Organization rules.
German wheat crop has quality issues... Germany’s wheat crop will likely climb just 0.3% this year to 24.54 MMT, according to its ag ministry. Also of note, this year’s crop has poor Hagberg falling numbers, signaling it may only reach feed wheat quality. But protein levels have been decent. Germany is the second largest wheat producer in the European Union.
Friendly cattle on Feed data... Preceding USDA’s Cattle on Feed Report, cash cattle trade took place largely in a range between $106 and $107, though some locations held off on moving cattle until after the report. The report came in on the friendly side of expectations and futures start the week in line with last week’s cash cattle action, though we are still awaiting word on any post-report trade.
Pork and cash hog prices remain weights on lean hogs... The hog market came under heavy pressure last week amid the ongoing slide in the product and cash market as belly demand fades and cash supplies build. These factors are unlikely to change, signaling more pressure on futures could lie ahead. On the other hand, futures continue to trade sharply below the cash hog index.
Weekend demand news... Russia will supply Bangladesh with 200,000 MT of milling wheat. Tunisia purchased around 75,000 MT of soft milling wheat from optional origins.
Today’s reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
- 3:00 p.m., Crop Progress-- NASS
