First Thing Today | September 7, 2021
Firmer tone in grain, soy futures to start the week… Grain and soy futures were firmer coming out of the extended holiday weekend, with soybeans leading the move higher. As of 6:30 a.m. CT, soybeans are trading mostly 7 to 8 cents higher, corn futures are steady to fractionally higher, winter wheat futures are mostly 2 to 5 cents higher and spring wheat is 1 to 2 cents higher. The U.S. dollar index is around 250 points higher this morning, while front-month crude oil futures are around 80 cents lower.
Consultant leaves U.S. corn, soybean yield forecasts unchanged… Crop Consultant Dr. Michael Cordonnier says improved weather has been beneficial for crops, especially later developing soybeans. But he opted to keep his corn and soybean yield forecasts unchanged at 175.5 bu. per acre and 50 bu., respectively, awaiting USDA’s crop condition updates this afternoon. Cordonnier projects the U.S. corn crop at 14.90 billion bu. and the soybean crop at 4.33 billion bushels. USDA will update its U.S. corn and soybean production estimates on Friday.
Chinese soybean imports up from July but down vs. year-ago… China imported nearly 9.5 MMT of soybeans in August, up 9.5% from July but down 1.1% compared with last year. In the first eight months of this year, China imported 67.1 MMT of soybeans, up 3.6% from the same period last year. Weak crush margins and ample supplies held by crushers are expected to limit Chinese soybean imports the next few months.
China August trade data better than expected… Chinese exports jumped 25.6% and imports surged 33.1% in July, both easily beating trade expectations. That pushed China’s trade surplus to $58.3 billion, up from $56.6 billion in July. China’s trade surplus with the U.S. rose to $37.7 billion, up from $35.4 billion in July.
AgRural lowers Brazilian corn crop estimate… Brazil-based AgRural cut its Brazilian corn crop estimate by 300,000 MT to 81.9 MMT as harvest of the drought-impacted safrinha crop nears completion. Cordonnier kept his Brazilian corn crop estimate at 82.0 MMT.
ABARES raises Aussie wheat crop forecast… Australia is now expected to produce its second largest wheat crop ever in 2021-22 due to “excellent growing conditions in June and July” that resulted in average to above-average rainfall in most growing regions. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) raised its Australian wheat crop estimate to 32.6 MMT, up 4.8 MMT from its June forecast.
Ida has major initial impact on Gulf oil supplies… Hurricane Ida’s initial impact on Gulf of Mexico oil supply has been greater than any other storm in history. Ida has been responsible for the loss of 16.8 million barrels of output in the ten days since the first production platforms were evacuated. That’s 32% more crude than was lost to Katrina, and 42% more than to Gustav/Ike in comparable periods. The prolonged disruption caused by the 2005 storms eventually led to the deferral of more than 160 million barrels of Gulf of Mexico production.
The week ahead in Washington… The Biden administration will push ahead with its pursuit of a proposed $3.5 trillion spending package, said White House senior adviser Cedric Richmond, despite a plea by centrist Democratic Sen. Joe Manchin (D-W.Va.) to hit "pause" on the social infrastructure package amid concerns about what he calls “runaway inflation.” The Fed will release its Beige Book highlighting economic conditions in the 12 districts on Wednesday. For agriculture, the focal point will be Friday’s Crop Production and Supply & Demand Reports on Friday. This will feature USDA’s first objective yield survey data for corn and soybeans.
Rep. Suozzi: ‘No SALT, no deal’… Rep. Thomas Suozzi (D-N.Y.) is warning that he and a group of blue state Democrats won’t support any legislation that fails to restore the full deduction for state and local taxes (SALT) eliminated by the 2017 GOP tax bill. “No SALT, no deal,” Suozzi said in an interview. Suozzi serves on the House Ways and Means Committee, which writes tax policy. The issue is how long any repeal would cover or will Democrats seek to phase it in by raising the deduction from its current $10,000 cap? Some sources signal the now likely deduction will be limited to those making $400,000 or less, to adhere to President Biden’s pledge to not raises taxes on those earning below that level.
Brazil confirms two cases of atypical BSE… Brazil’s ag ministry confirmed two cases of atypical bovine spongiform encephalopathy (BSE), one in Mato Grosso and the other in Minas Gerais. As a result, the country has suspended beef exports. But importers in China, Brazil’s top customer, hope the suspension is short-term since the cases were atypical.
China meat imports slow in August… China imported 758,000 MT of meat (including offal) in August. That was down 11.2% from July and 8.9% compared with August 2020. In the first eight months of this year, Chinese meat imports totaled nearly 6.7 MMT, up 1.7% versus the same period last year.
Boxed beef prices continue to slide… Packers continue to cut wholesale beef prices as retailer demand dried up once purchases for Labor Day were completed. Post-holiday demand will be watched closely to see if retailers return in force or if there is just fill-in buying to restock meatcases. For the boxed beef market to find a bottom, retailers must actively buy beef for fall features.
Hog traders focusing on cash prices… The CME lean hog index is weakening seasonally but remains well above fall- and winter-month contracts. While cash prices typically soften during the second half of the year as market hog supplies build, it’s not uncommon to see the cash market firm in September. If that happens this year, futures should also strengthen given their big discounts, so traders will be closely monitoring cash hog prices coming out of the Labor Day holiday.
Weekend demand news… South Korea purchased 72,430 MT of U.S. milling wheat and around 50,000 MT of Australian milling wheat. Bangladesh tendered to buy 50,000 MT of optional origin milling wheat.
Today’s reports
- 10:00 a.m. Weekly Export Inspections — AMS
- 3:00 p.m. Crop Progress — NASS
