First Thing Today | June 22, 2022

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Good morning!

Wheat futures bounce, soybeans face followthrough selling... Wheat futures were supported by corrective buying overnight though the market is well off its highs this morning. Soybeans faced active followthrough selling. As of 6:30 a.m. CT, corn futures are trading fractionally to 4 cents higher, soybeans are 10 to 19 cents lower, SRW wheat is 18 to 20 cents higher, HRW wheat is 13 to 15 cents higher and HRS wheat is 4 to 8 cents higher. Front-month U.S. crude oil futures are down nearly $5 and the U.S. dollar index is around 100 points higher this morning.

Corn, soybean CCI ratings decline, spring wheat improves... 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 fell 3.5 points to 376.2, though that was still 4.4 points above the five-year average. The soybean crop dropped 4.9 points to 366.0, though that was still 5.5 points above average for the date. The spring wheat crop improved 10.8 points to 364.21, which was 17.3 points above the five-year average. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended June 19.

  • Corn: 95% emerged (95% average), 70% rated good/excellent (72% last week)
  • Soybeans: 94% planted (93% average), 83% emerged (84% average), 68% rated good/excellent (70% last week)
  • Spring wheat: 98% planted (100% average), 89% emerged (97% average), 59% rated good/excellent (54% last week)
  • Winter wheat: 95% headed (91% average), 25% harvested (22% average)
  • Cotton: 96% planted (95% average), 22% squaring (23% average), 6% setting bolls (4% average), 40% rated good/excellent (46% last week)

Russia, Turkey agree to more talks on restarting Ukraine grain exports... Russian and Turkish delegations have agreed to continue consultations on the safe exit of Turkish merchant vessels and grain exports from Ukrainian ports,” Russia’s defense ministry said. Turkey’s TRT Haber broadcaster said talks between the Turkish and Russian military officials were “positive and constructive.” A Turkish dry cargo ship stuck at the Ukrainian port of Mariupol safely departed from the port hours after the meeting, it said. Meanwhile, Russia’s foreign ministry says the country could export about 25 MMT of grain and at least 22 MMT of fertilizers by the endof the year.

Biden will ask Congress to suspend gas, diesel tax for three months... President Joe Biden will call on Congress to suspend the federal gas and diesel taxes for the next three months, the latest effort by the White House to provide relief to Americans struggling with record fuel prices. The move is contingent on legislative action, which would temporarily lift the tax of 18.3 cents per gallon on gasoline and 24 cents on diesel during the summer months. The three-month timeframe was specifically to address surging gas demand during the summer travel season. In the longer term, however, a Biden administration official acknowledged revenues from the tax are a vital source of infrastructure funding. Biden will lay out the proposal in a speech from the White House this afternoon when he will also call on states to suspend their gas taxes or provide rebates or other forms of relief, the official said. When some states have opted to suspend their own fuel taxes in the past, sometimes prices came back higher, according to a study released last week from the Wharton School at the University of Pennsylvania. Additionally, Biden is expected to call on oil refinery companies to take steps to boost production. He will also ask Congress to replenish the Highway Trust Fund, which is supported by gas taxes, with other revenue to make it “whole” amid a gas tax suspension. The White House estimates it would take about $10 billion to do so. That may be a way to garner some additional Democratic votes for the gas and diesel tax suspension. Energy Secretary Jennifer Granholm is separately holding a meeting with oil executives on Thursday to discuss ways to reduce gasoline and diesel prices, after Biden sent a letter to seven major companies demanding they take action to help lower costs for consumers.

American drivers buying less gas... American drivers are starting to buy less gasoline as they feel the economic burden of record prices that continue to hover near $5 a gallon. In the first full week of June, gasoline sales at U.S. stations were down about 8.2% compared with the same week last year — the 14th consecutive week sales have lagged 2021 levels, according to surveys by energy-data provider OPIS. In the week ended June 10, the Energy Information Administration’s measure of implied demand — an estimate of products supplied to consumers — declined by roughly 110,000 barrels a day from the prior week, to about 9.1 million barrels a day. That figure is down from about 9.4 million barrels a day the same week last year. The Wall Street Journal reports drivers have begun consolidating trips or filling up their tanks with only as much fuel as they need to get by for a few days. Some are carpooling or taking mass transit, while others are working from the office fewer days each week.

One item heading lower: China-to-U.S. shipping rates... Shipping prices have cooled in recent months as some U.S. importers temper merchandise orders amid concerns about elevated levels of inventory and uncertainty about continued strength in consumer spending. Freight rates from China to the U.S. West Coast stood at $9,585 a box last week, down 34% from the start of the year and 50% lower than last year.

Grassley: Votes in Senate Ag panel and in full chamber to clear two livestock measures... Up for votes in the Senate Ag Committee today are the Meat and Poultry Special Investigator Act of 2022 and the Cattle Price Discovery and Transparency Act of 2022. Sen. Chuck Grassley says he is confident the panel and full Senate will have the votes to clear the two bills. The Cattle Price Discovery and Transparency Act includes several reforms aimed at improving transparency and price discovery in cattle markets. It would establish a cattle contract library and require the USDA secretary to set a minimum threshold for negotiated trade volumes. Grassley noted that Sen. Mike Rounds (R-S.D.) has agreed to cosponsor the Price Discovery and Transparency bill, which means it now has 10 Republican and 10 Democratic cosponsors. The Meat and Poultry Special Investigator Act would create a new USDA office dedicated to enforcing competition rules under the Packers and Stockyards Act.

Grassley calls EPA’s roundtables on WOTUS ‘dog and pony shows’... Grassley and other senators met with EPA Administrator Michael Regan in the office of Sen. Mike Braun (R-Ind.) last week to discuss EPA’s Waters of the U.S. (WOTUS). Grassley showed Regan a map that indicated 90% of the land in Iowa would come under WOTUS and noted that several courts have ruled against the Obama-era water policy. Regan said EPA is going to be careful to write a policy the agency can defend in the courts. Grassley urged Regan not to finalize WOTUS policy until the Supreme Court acts on such cases.

EPA will stay with court timeline for 2023 RFS proposal... EPA will release its proposed rule on the 2023 volume standards for biofuel under the Renewable Fuel Standard (RFS) in September, the same timeline the agency negotiated in a court decision. The agency committed specifically to Sept. 16, but a regulatory agenda from the Biden administration lists the proposed plan as coming in September 2022 with a finalized rule in April 2023.

British inflation hits 40-year high... Soaring food and gasoline costs pushed Britain’s consumer inflation to 9.1% above year-ago in May, the highest level since March 1982. The cost of raw materials also “leapt at their fastest rate on record,” according to the Office of National Statistics. Last week, the Bank of England warned annual inflation could hit 11% this year.

SCOTUS rejects Bayer in Roundup bid... A Supreme Court ruling rejected a multibillion-dollar appeal from Bayer, refusing to shield the company from potentially tens of thousands of claims that its top-selling Roundup weedkiller causes cancer.

China continues pork buys for state reserves... China will buy another 40,000 MT of frozen pork for state reserves on June 24. Beijing continues to stockpile pork via weekly purchases to boost hog margins.

Cash cattle trade starts early... Cash cattle traded rather actively around $138 in the Southern Plains on Tuesday, about steady with last week’s weighted average in the region. The northern market, where market-ready supplies are tighter and prices have been sharply higher, remained quiet. Based on the initial activity, prices are likely to be steady to firmer compared with last week’s average of $143.67.

Big jump in cash hog index... The CME lean hog index is up $1.29 today (as of June 20) to $110.45, the highest level since last August. July futures finished Tuesday more than $2 above today’s cash quote, while the August contract narrowed to a modest discount.

Overnight demand news... Exporters reported no tenders or sales.

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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