First Thing Today | June 20, 2023

Good morning!

Grains weaker to open the week... Corn, soybean and wheat futures traded higher early in the overnight session but faded and are lower this morning. As of 6:30 a.m. CT, corn futures are trading 1 to 6 cents lower, soybeans are 1 to 11 cents lower and wheat futures are 8 to 10 cents lower. Front-month crude oil futures and the U.S. dollar index are near unchanged.

Some weekend rains but more needed... Rains fell on areas of the western and southern Corn Belt during the holiday weekend, while eastern portions of the region remained dry. Rain is expected from the Ohio River valley into the Southeast this week. Rains will be scattered and light across other areas of the Corn Belt. Temps are expected to be seasonably warm but not excessively hot.

Consultant lowers U.S. corn, soybean yields... Due to persistently dry weather and forecasts for ongoing drought in the Corn Belt, crop consultant Dr. Michael Cordonnier cut his corn yield by 1 bu. to 177 bu. per acre. He now projects the corn crop at 14.77 billion bushels. Cordonnier trimmed his soybean yield by 0.5 bu. to 51 bu. per acre, lowering his production forecast to 4.44 billion bushels.

Brazil corn crop raised, Argentine soybean crop lowered... Recent rains in Brazil will help later developing safrinha corn. As a result, Cordonnier raised his Brazilian corn crop estimate by 1 MMT to 130 MMT. He cut his Argentine soybean crop estimate 1 MMT to 21 MMT, noting double-crop soybean yields were especially disappointing.

Russia: If grain deal ends, UN will still assist with its exports... Russia’s deputy foreign minister said on Monday that even if a deal allowing shipments of Ukrainian grain via the Black Sea ends, Russia’s agreement with the United Nations to ease restrictions on its exports will stay in force, Russian state news agency RIA reported. Moscow has repeatedly complained that Western continue to create financial, logistical and insurance obstacles to its agricultural shipments.

Mexico to prioritize domestic non-GMO white corn... Mexican President Andres Manuel Lopez Obrador said on Monday he would sign an agreement this week with tortilla makers that ensures they only use non-GMO white corn. The agreement will include tariffs on imported white corn to promote the purchase from domestic producers. Mexico is in a trade dispute with the U.S. over a decree to limit the use of GMO corn, particularly for human consumption. The U.S. and Canada requested trade dispute settlement consultations under the U.S.-Mexico-Canada Agreement, arguing Mexico’s policies are not science-based and will harm U.S. farmers that export corn to the country. Mexico defends its actions, stating that its self-sufficiency in white corn production means this ban does not qualify as a trade barrier.

China to auction more state-owned soybean reserves... China will auction another 306,700 MT of state-owned imported soybeans on June 27. Results of today’s initial auction of 315,000 MT of state-owned soybeans are not yet known.

The week ahead in Washington... The Senate Appropriations Committee will meet Thursday to debate its version of the fiscal year 2024 agriculture bill as well as the Military Construction-Veterans Affairs measure. The committee will meet to officially set the toplines for each of the 12 appropriations bills. The debt limit deal set spending caps that Senate appropriators are planning to write to. But House appropriators are writing their bills below the caps. EPA will decide by June 21 on its RFS mandates for 2023, 2024 and 2025. The deadline is for EPA to decide, not necessarily to announce – on that date. Fed Chair Jerome Powell delivers his semi-annual monetary policy testimony to the House Financial Services Committee on Wednesday and the Senate Banking panel on Thursday. USDA on Friday will update its food price outlook, along with issuing the monthly Cattle on Feed and Cold Storage Reports.

China cuts benchmark lending rates... China cut its benchmark lending rates for the first time in 10 months to boost its slowing economy. The People’s Bank of China cut the one-year loan prime rate (LPR), used for corporate and household loans, by 10 basis points to 3.55%. The five-year LPR, a reference for mortgages, was reduced by the same amount to 4.20%. However, the cuts weren’t as much as expected.

Blinken meets with Xi... Chinese President Xi Jinping and U.S. Secretary of State Antony Blinken held a long-awaited meeting, signaling progress in stabilizing the strained bilateral relations between the U.S. and China. The meeting in Beijing was the first of its kind since 2018. Xi emphasized the importance of the relationship between the two countries and highlighted some specific points of agreement reached during the two-day visit. Blinken stressed the U.S. did not want to jeopardize the enormous bilateral trade relationship between the countries.

Extended cash cattle negotiations likely again this week... Cash cattle prices averaged $184.92 last week, down $3.83 from the previous week and the first decline in a month and a half. Extended cash cattle negotiations are expected this week as packers will seek another decline, while feedlots will be hesitant to move cattle at lower prices since they are current on marketings.

Hog futures supported by firming cash fundamentals... The CME lean hog index continues its methodical seasonal climb, rising another 77 cents to $87.64 (as of June 15). The pork cutout value firmed $3.73 on Monday amid strong gains in all cuts. At $96.06, the pork cutout jumped to the highest level since mid-November of last year. Lean hog futures are rising amid the strengthening cash fundamentals, though the premium in the July contract could limit buyer interest.

Holiday weekend demand news... Algeria purchased around 630,000 MT of milling wheat, largely expected to be sourced from Russia. Saudi Arabia purchased 355,000 MT of wheat from unspecified origins. Taiwan tendered to buy up to 65,000 MT of corn from the U.S., Brazil, Argentina or South Africa. Japan is seeking 92,529 MT of milling wheat in its weekly tender. Japan received no offers in its tender to buy 60,000 MT of feed wheat and 20,000 MT of feed barley. Iran passed on tenders to buy 120,000 MT of corn and 120,000 MT of soymeal.

See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.

Today’s reports

• 8:00 a.m. Food Expenditure Series — ERS
• 10:00 a.m. Export Inspections — AMS
• 3:00 p.m. Crop Progress — NASS