First Thing Today | August 8, 2023

Good morning!

Grains lower overnight... Corn and soybeans faced followthrough selling overnight, while wheat futures pulled back from Monday’s gains. As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents lower, soybeans are 13 to 14 cents lower, SRW wheat is mostly 3 to 6 cents lower, HRW wheat is 2 to 3 cents lower and HRS wheat is 1 to 2 cents lower. Front-month crude oil futures are around $1.50 lower and the U.S. dollar index is more than 600 points higher.

Consultant’s yield estimates unchanged but bias improves... Crop consultant Dr. Michael Cordonnier kept his corn and soybean yield estimates at 174 bu. and 50.5 bu. per acre, respectively, but he now has a neutral to higher bias toward both crops as recent rains and moderate temps are favorable for crop development. Cordonnier estimates production at 15.01 billion bu. for corn and 4.17 billion bu. for soybeans.

Corn, soybean CCI ratings improve, spring wheat deteriorates... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the corn crop improved 4.4 points to 348.7, which was only 3.3 points (0.9%) below last year at this time. The soybean crop improved 4.3 points to 340.1, though still 11.1 points (3.2%) below last year. Illinois led gains in both corn and soybeans, rising 2.8 points and 3.8 points, respectively. The spring wheat CCI rating fell another 5.2 points to 321.6, which was 46.2 points (12.6%) below year-ago. Top producer North Dakota accounted for 2.6 points of the decline. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of Aug. 6.

• Corn: 93% silking (91% average); 47% dough (46% average); 8% dented (9% average); 57% good/excellent (55% last week).
• Soybeans: 90% blooming (87% average); 66% setting pods (63% average); 54% good/excellent (52% last week).
• Cotton: 92% squaring (93% average); 63% setting bolls (63% average); 8% bolls opening (9% average); 41% good/excellent (41% last week).
• Spring wheat: 11% harvested (14% average); 41% good/excellent (42% last week).
• Winter wheat: 87% harvested (88% average).

China’s soybean imports sharply above year-ago... China imported 9.73 MMT of soybeans in July, down 5.3% from June but 23.4% more than last year. Chinese crush margins turned positive in mid-June, driven by stronger demand for soymeal and soyoil, while some cargoes that were delayed by tightened port inspections were offloaded. Through the first seven months of this year, China imported 62.3 MMT of soybeans, up 15.0% from the same period last year.

China’s trade data slumps amid weak demand domestically and aboard... China’s imports dropped 12.4% from last year to $201.16 billion in July, the steepest decline since January amid weak domestic demand. Exports fell 14.5% to $281.76 billion, the steepest drop since February 2020 amid slowing global demand. That increased China’s trade surplus to $80.6 billion from $70.62 billion in June, though it was sharply below $102.7 billion in July 2022. The trade surplus with the U.S. widened to $30.3 billion from $28.72 billion in June.  

Increases in USDA aid payments... There were several small increases in USDA aid payouts during the past week, with the Emergency Relief Program (ERP) payments totaling $7.44 billion as of Aug. 6, up from $7.43 billion the prior week. Payments under Phase 1 are shown at $7.44 billion, up from $7.43 billion the prior week, while ERP Phase 2 payments have reached $4.41 million to 2,514 recipients, up from $3.79 million the prior week. Increases in Coronavirus Food Assistance Program (CFAP) payouts were also reported, with total CFAP 2 payments now at $19.47 billion ($19.43 billion prior), which included $14.54 billion in original CFAP 2 payments ($14.51 billion prior) with top-up payments little changed at $4.93 billion. CFAP 1 payments now total $11.84 billion, up from $11.83 billion the prior week, with original CFAP payments shown at $10.65 billion ($10.64 billion prior) and top-up payments little changed at $1.19 billion.

China’s meat imports inch up... China imported 679,000 MT of meat during July, a 2.1% increase from June and 5.6% more than last year. China doesn’t break down meat imports by category, though the increase was driven by stronger pork arrivals. China imported 4.49 MMT of meat in the first seven months of the year, up 9.5% from the same period last year.

Packers likely to slow play cash cattle negotiations... The average cash cattle price firmed $1.89 to $186.70 last week, the second highest ever behind the record of $188.75 for the week ended June 9. Packers bought a stronger-than-expected 83,000 head amid the higher cash prices, which along with slowing slaughter rates, will likely encourage them to drag out cash negotiations as long as possible in hopes feedlots will accept steady to lower prices. Expect another week of delayed cash negotiations.

More weakness in cash hogs... The CME lean hog index is down 43 cents, marking the biggest daily decline since what appears to be the seasonal peak and the fifth decline in the last seven days. But hog futures posted gains on Monday, suggesting traders may look to further narrow the hefty discount contracts hold to the cash index.

Overnight demand news... Japan is seeking 93,972 MT of milling wheat in its weekly tender. Syria tendered to buy 200,000 MT of soft milling wheat.

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

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