First Thing Today | July 11, 2023

First Thing Today
First Thing Today
(Pro Farmer)

Good morning!

Grains strengthen overnight... Corn, soybean and spring wheat futures firmed amid followthrough buying overnight, while the winter wheat markets posted corrective gains. As of 6:30 a.m. CT, corn futures are trading mostly a nickel higher, soybeans are 15 to 22 cents higher, winter wheat futures are 11 to 14 cents higher and spring wheat is mostly 17 cents higher. Front-month crude oil futures are modestly firmer and the U.S. dollar index is more than 200 points lower.

Consultant leaves U.S. crop estimates unchanged... Recent rains have generally stabilized crops for now. As a result, crop consultant Dr. Michael Cordonnier left his corn and soybean yield and production forecasts unchanged this week. He forecasts the U.S. corn crop at 15.10 billion bu. on a yield of 175 bu. per acre. Cordonnier forecasts the soybean crop at 4.17 billion bu. on a yield of 50.5 bu. per acre.

Corn, soybean CCI ratings improve... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 5.1 points to 344.6, though that was still 20.5 points (5.6%) below last year at this time. The soybean crop improved 3.3 points to 331.7, which was still 24.7 points (6.9%) below year-ago. Improvements in Nebraska led both crops. The spring wheat CCI rating dropped another 5.1 points to 328.4, which was 47.2 points (12.6%) below last year at this time. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of July 9.

  • Corn: 22% silking (21% average); 3% dough (2% average); 55% good/excellent (51% last week).
  • Soybeans: 39% blooming (35% average); 10% setting pods (7% average); 51% good/excellent (50% last week).
  • Cotton: 55% squaring (55% average); 17% setting bolls (18% average); 48% good/excellent (48% last week).
  • Spring wheat: 72% headed (67% average); 47% good/excellent (48% last week).
  • Winter wheat: 46% harvested (59% average).

Russia attacks Odessa port grain terminal... Russian drone attacks on the Ukrainian region of Odessa resulted in fires at two port terminals, including one grain facility. Oleg Kiper, head of the Odessa Oblast (province) Military Administration, said Ukrainian anti-aircraft defenses foiled “the enemy’s plan to attack the grain terminal.”

Update on China’s change to soybean inspections... On Monday we reported China’s customs agency will require importers to stage imported soybeans at specific warehouses before they get quarantine permission for the shipments to enter the domestic market. That will only pertain to imported soybeans at the Qianhai Mercantile Exchange, according to Reuters. Under the new rules, Qianhai will draw up a list of importers qualified to carry out offshore spot transactions of soybeans through the exchange and submit it to the customs authority.

ERP 2 payments top $2 million... The Emergency Relief Program (ERP) Phase 2 has dispersed $2.015 million among 1,065 recipients as of July 9. However, these disbursements are significantly lower than what had been projected by USDA for this program. ERP Phase 1 payments remain fairly constant, adding up to a cumulative total of $7.43 billion, comprised of $6.30 billion for non-specialty crops and $1.14 billion for specialty crops. Meanwhile, USDA reduced the payment amounts under the Coronavirus Food Assistance Program 2 (CFAP 2). Latest reported figures indicate $19.43 billion total disbursements, a slight drop from the initially reported $19.48 billion. The breakdown now consists of initial CFAP 2 payments of $14.50 billion (lowered from $14.55 billion) and top-up payments of $0.92 billion, which show a significant reduction from the previous $4.93 billion. Note: USDA has not extended the due date for ERP Phase 2 and PARP. They are both due July 14. As for 2022 ERP, a USDA official told us: “It certainly helps us get to the end goal but there are other policies that are area based that need to be finalized prior to 2022 ERP going live; not to mention that we still will be required to publish a NOFA announcing 2022 provisions in the Federal Register before sign up is announced.”

Canadian port strikes causing severe disruptions, including potash... The strike at Canada’s busiest ports, including the Port of Vancouver and Port of Prince Rupert, is causing severe disruption to the nation’s economy and shows no signs of a quick resolution. The strike has now entered its second week and is causing daily trade disruptions estimated at around C$500 million ($376 million). Implications of the strike have already led to decreased arrivals of container ships, port congestion and diversions to U.S. facilities. The backlog at ports, responsible for handling a quarter of Canada’s total traded goods, is hampering both exports and imports. The strike threatens a substantial portion of the potash trade, already disturbed by sanctions on Russian and Belarusian supplies. Nutrien disclosed a reduction in output from its Cory potash mine due to the strike and warned further disruptions may affect operations at its other potash mines in Saskatchewan. This impact could hit Southern Hemisphere farmers the hardest.

Cut to rates spurs jump in new Chinese bank loans... China’s banks provided CNY 3.05 trillion ($420 billion) in new yuan loans in June, more than double the CNY 1.36 trillion during the previous month and well above market expectations of CNY 2.34 trillion. It was also the largest amount of new bank loans for June since at least 2004, as demand for credit increased after the People’s Bank of China (PBOC) reduced its key lending rates on June 20 for the first time since August.

Cash cattle end three-week slide... The average cash cattle price firmed 73 cents to $182.06 last week, as stronger prices in the northern market offset weaker values in the Southern Plains. This week’s cash tone is likely to be mixed again given the supply discrepancies, which means the number of head traded in each region will determine the overall price trend.  

Hog traders signaling they sense the cash rally is nearing an end... The CME lean hog index is up another 72 cents to $98.15 (as of July 7). After Monday’s modest losses, the premium to today’s cash index in July lean hog futures was down to 65 cents, while the discount in August hogs widened to $3.975. That suggests traders sense the seasonal cash rally is nearing an end even though the index has shown some of its strongest gains the past three days.

Overnight demand news... Japan is seeking 123,770 MT of milling wheat in its weekly tender.

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

  • No reports scheduled.
 

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