Good morning!
More pressure overnight... Despite the lack of an expected uptick in corn crop condition ratings, corn futures faced followthrough selling overnight that took prices to new contract lows. The market is down 2 cents as of 6:30 a.m. CT. Soybean futures are trading near session lows with losses of 4 to 6 cents. Wheat futures are down 2 to 4 cents across all three flavors. The U.S. dollar index is again posting solid losses, while crude oil futures are slightly lower.
PF CCI: Corn ratings slip as bean ratings rise... When USDA’s crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the corn crop slipped nearly a point to 358.96 points, which is down 28.21 points from year-ago. On the other hand, soybean condition ratings climbed 2.17 points to 351.31 points, signaling last week’s rains and cool temps benefited the crop. The crop is rated nearly 24 points under year-ago levels. Get details here.
Cordonnier raises corn and soybean yield pegs... Crop Consultant Dr. Michael Cordonnier raised his national average U.S. corn yield estimate by 1 bu. to 166 bu. per acre, resulting in a crop peg of 13.85 billion bushels. He has a neutral to slightly higher bias going forward. He explains that August weather stabilized the crop, though it “would have been better if the temperatures had been a little warmer.” The cool temps have slowed development. Cordonnier also raised his soybean yield estimate by half a bushel to 48 bu. per acre, and again he has a neutral to slightly higher bias going forward. This puts his bean crop peg at 4.25 billion bushels. He points out the Corn Belt has seen a “reversal of fortunes,” with the western Belt now receiving rainfall and eastern states turning dry.
North Korea fires ballistic missile over Japan... North Korea launched a missile toward the northern end of Japan, the Japanese government announced Monday afternoon. It was an aggressive step the country has rarely taken in the past 20 years and which observers said will undermine U.S. efforts to bring the nuclear aspirant to the negotiating table. The test was the first North Korean missile to fly over Japan’s main islands since 2009, and is the 18th missile test this year by Pyongyang. The launch took place as the U.S. and South Korea are conducting annual joint military drills. Prime Minister Shinzo Abe said that he had spoken with President Donald Trump and that the two countries’ stances “are completely matched.”
Rainfall totals in some parts of southeast Texas could top 50 inches by week’s end... Officials continue to grapple with the effects of Harvey, one of the most destructive storms in U.S. history. Louisiana is Harvey’s next target. “The flood threat is spreading farther east into Louisiana,” the National Hurricane Center says. “Additional rainfall amounts of 15 to 25 inches are expected in southwestern Louisiana, with rainfall amounts of 5 to 15 inches expected in south-central Louisiana and 5 to 10 inches in southeastern Louisiana.”
Texas cotton industry may lose $150 million from Harvey: Commissioner... While the majority of Texas’s cotton crop was harvested along the southern Texas coast, modules storing crops in fields have “pretty much been destroyed” by Hurricane Harvey, Sid Miller, state’s agriculture commissioner, says in a telephone interview with Bloomberg. “If they didn’t have the cotton to the gin, they probably lost it, even though it had been harvested.” The best estimate to date is around $150 million damage in the coastal plains region, he said.
Unica: Brazilian mills putting a bit more focus on ethanol production... Brazilian mills increased the amount of sugarcane they process into ethanol during the first half of August, according to data from the cane industry group Unica. Mills in Brazil’s center-south region earmarked 50.04% of cane in the first half of August to sugar production, the smallest share in the last two months, according to reports. Taxation changes are making hydrous ethanol (used in flex fuel vehicles) more competitive with gasoline. This comes as Brazil has decided to put import duties on ethanol beyond a level of 600 million liters (159 million gallons).
India takes steps to limit risk of sugar price hikes during upcoming festive season... In an attempt to prevent price spikes ahead of the coming festive season, India put inventory limits in place for sugar mills. They won’t be allowed to hold more than 21% of their production in stock by the end of month, and they have to lower stock levels to 8% of production by the end of October, the country’s food minister detailed via Twitter. Since India’s sugar production for 2016-17 is expected to fall short of consumption levels, there is concern that the world’s No. 1 sugar consumer could run into shortages for the coming festive season. Earlier this month, India announced it would allow an additional 200,000 MT of duty-free sugar imports.
Delay on lumber duty decision... The U.S. Department of Commerce will postpone its final determination for anti-dumping and countervailing duties on Canadian softwood lumber until Nov. 14, the department said. The decision was initially expected the first week of September, but the two nations remain at an impasse in the lengthy dispute. “I remain hopeful that we can reach a negotiated solution that satisfies the concerns of all parties,” Commerce Secretary Wilbur Ross said in a statement. “This extension could provide the time needed to address the complex issues at hand and to reach an equitable and durable suspension agreement.” Tensions escalated in April when the Trump administration imposed preliminary countervailing duties of as much as 24% on Canadian imports. Additional duties of as much as 7.7% followed in June.
Futures trading in line with to above the cash market for a change... Cattle futures surged to start the week, but by the close the live cattle market had backed well off its highs. This signals followthrough buying could be limited today, especially with deferred months already at a premium to last week’s cash cattle trade, which according to USDA took place at a weighted average price of $106.71. Showlist estimates are down a net 8,000 head this week, which could boost feedlots’ bargaining power.
Product market in focus for lean hogs... Pork movement has been light of late and that trend continued to start the week, with just 226.28 loads changing hands, despite a 44-cent drop in the pork cutout value. As the unofficial end of summer grilling season nears, traders are hopeful the product market will get a as retailers prep for fall features. Meanwhile, this week’s kill got off to a strong start.
Overnight demand news... Jordan tendered to buy 100,00 MT of animal feed barley from optional origins. Egypt tendered to buy an unspecified amount of wheat from global suppliers.
Today’s reports:
- 2:00 p.m., Livestock & Meat Domestic Data-- ERS
- 2:00 p.m., Outlook for U.S. Agricultural Trade-- ERS
