Good morning!
Grain and soybean futures lower as weather concerns ease... Corn futures are down 3 cents while soybeans are 1 to 2 cents lower amid an easing of weather concerns to start the week. Winter wheat futures are 3 to 4 cents lower, while spring wheat futures are down 1 to 3 cents. The U.S. dollar index is slightly higher, while crude oil futures are posting similar losses.
Rains to return later this week... Rainfall over the weekend was light and scattered, with northern areas of Indiana and Ohio seeing the heaviest rain. This allowed many farmers to get back into the field over the long weekend. Conditions are expected to remain dry the next few days, before rains return late this week and into the weekend. The National Weather Service (NWS) forecast for June 4-8 calls for dry or normal precip for most of the Corn Belt. But wet weather is expected across the Plains, including Nebraska and southern South Dakota. NWS also calls for cool temps for all but far western areas of the Belt, where warm temps are likely.
Cordonnier takes a stab at U.S. crop yields and acreage shifts... Crop Consultant Dr. Michael Cordonnier pegs the U.S. corn crop at 169 bu. per acre and the soybean crop at 49 bu. per acre for 2017, but he notes that acreage is “somewhat uncertain” for both crops. “In general, I feel that 10% to 15% of the corn crop is in areas where the weather has been somewhat problematic,” he details. He goes on to estimate that around 500,0000 acres to 1.0 million acres of intended corn may not end up as corn, and around 500,000 acres may shift to soybeans due wet conditions. But he also acknowledges he could be “way off with these acreage estimates,” and notes this week’s drier forecast.
White House in focus with lawmakers on break... Both the House and Senate are out for a Memorial Day break, so the focus will be on the White House. There are reports that the White House is mulling a major shakeup. Meanwhile, Russia remains a key focal point, with various investigations and major media news alerts on the topic of Russia’s alleged interference with U.S. elections. The Trump administration is expected to announce more sub-Cabinet positions this week. Whether the U.S. and Mexico are able to reach a sugar trade deal by June 5 to avert tit-for-tat trade penalties is another focus. Friday’s jobs report will be the heavyweight in terms of economic data. Also of note, USDA will release its first condition update for corn and soybeans today.
Montana Ag Summit begins today... The Montana Chamber Foundation teamed up with U.S. Senator Steve Daines (R-Mont.) to host the summit in Great Falls that begins today and runs through June 1. USDA Secretary Sonny Perdue, Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) and J. Christopher Giancarlo, acting chairman of the Commodity Futures Trading Commission, will join Daines. Perdue will speak on Thursday and then heads to Idaho.
Monsoon rains hit Indian coast... Monsoon rains arrived at India’s southwest Kerala coast today, the Indian Meteorological Department reports. This marks the earliest start to the rainy season since 2011. The country’s ag economy is highly reliant on the monsoon, which brings 70% of India’s annual rainfall.
Official expects another record Argentine wheat crop... Argentina will likely produce a record 2017-18 wheat crop of around 20 MMT, Martin Moreno, the ag ministry’s chief forecaster, told Reuters. This would top this season’s record by 1.6 MMT. Moreno details that farmers’ have invested in more and better crop technology -- namely in the form of new seed varieties and fertilizers -- to take advantage of more favorable trade policies. He goes on to explain that while planting intentions have dropped a bit due to wet weather, the increased investment is expected to make up for any such losses.
Record-setting Russian wheat exports... Through May 26, Russia has exported a record 25.3 MMT of wheat, says Dmitry Rylko, general director for the Institute for Ag Market Studies (IKAR), noting that this already tops last year’s total shipments for the marketing year that ends June 30. IKAR expects Russian wheat exports to climb to 27.1 MMT by the end of 2016-17, according to Rylko.
Canadian National Railway averts strike... Canadian National Railway Co. reached a tentative agreement with Teamsters Canada Rail Conference, a union representing 3,000 conductors, averting a strike that was set to start at 3:00 a.m. CT today. The threatened strike stemmed from concerns about new work rules to replace an expired contract.. The strike would have been the first one by CN conductors in a decade.
Bearish Cattle on Feed Report... Friday’s Cattle on Feed Report was quite bearish, spurring a sharp drop in futures. But since the report was released during market hours, followthrough selling could be limited this week, especially considering the wide discount nearbys hold to the cash market. That said, the COF report did point to larger marketings down the road, so traders will likely remain comfortable with a discount structure.
Downside risk limited in hogs for now... Followthrough buying is likely in the lean hog market this week, as cash prices are expected to strengthen and momentum is clearly on bulls’ side. While market-ready supplies remain large, packers are still enjoying strong margins which has kept cash bids supported. Thus, the downside is likely to be limited to corrective selling, near-term.
Weekend demand news... Malaysian importers have bought around 60,000 MT of corn from the Black Sea region. A group of animal feed makers in the Philippines rejected offers and made no purchase in an international tender to buy 50,000 MT of soymeal from South America. But the group issued a new international tender to buy up to 200,000 MT of soymeal from South America. South Korea bought around 60,000 MT of soymeal, likely from the U.S. or South America. Jordan issued an international tender to buy 100,000 MT of animal feed barley from optional origins. Iraq tendered to buy at least 50,000 MT of hard wheat from the U.S., Canada or Australia.
Today’s reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
- 2:00 p.m., Livestock & Meat Domestic Data -- ERS
- 3:00 p.m., Crop Progress -- NASS
