Good morning!
Grains weaker overnight... Soybeans eased from Monday’s strong gains overnight, while corn and wheat also weakened, with contract lows posted in all three wheat markets. As of 6:30 a.m. CT, corn futures are trading 2 to 4 cents lower, soybeans are 1 to 2 cents lower and wheat futures are 5 to 8 cents lower. The U.S. dollar index is down more than 200 points and front-month crude oil futures are about 50 cents higher.
U.S./China trade truce leads to slashing of ‘de minimis’ tariff, halting of Boeing ban... A White House executive order on Monday said the U.S. would cut the “de minimis” tariff on shipments from China and Hong Kong to 54% from 120%, with a flat fee of $100 to remain starting from May 14. China has removed a month-long ban on airlines taking delivery of Boeing planes, people familiar with the matter told Bloomberg.
Greer to talk with India, fly to South Korea today... In a CNBC interview, U.S. Trade Representative Jamieson Greer confirmed he will first speak with an Indian official and then travel to Jeju Island for the APEC trade ministers meeting. His agenda includes meetings with Trade Minister Cheong In-kyo and Industry Minister Ahn Duk-geun to negotiate the “July Package” that could eliminate U.S. tariffs of up to 25% on Korean steel, autos and parts before the three-month pause expires on July 8.
HRW wheat tour starts today... The Wheat Quality Council’s annual HRW tour through Kansas and remote areas of surrounding states kicks off this morning in Manhattan, Kansas. Scouts will sample fields today across central and far northwestern areas of Kansas enroute to Colby, including some areas of far southern Nebraska. Day 1 results will be released this evening.
HRW, SRW ratings improve despite declines in top producing states... USDA rated the winter wheat crop 54% “good” to “excellent” and 11% “poor” to “very poor.” On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 1.3 points to 328.6, despite a decline in top producer Kansas. The SRW crop improved 5.6 points to 374.9, despite a decline in top producer Illinois. Click here for full details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of May 11:
- Winter wheat: 54% good/excellent (51% last week); 53% headed (45% average).
- Corn: 62% planted (56% average); 28% emerged (21% average).
- Soybeans: 48% planted (37% average); 17% emerged (11% average).
- Spring wheat: 66% planted (49% average); 27% emerged (19% average).
- Cotton: 28% planted (31% average).
Cordonnier raises Brazilian, Argentine corn production forecasts... South American crop consultant Dr. Michael Cordonnier raised his Brazilian corn production forecast 1 MMT to 127 MMT, noting favorable yields and increased harvested area. Cordonnier also raised his Argentine corn crop estimate 1 MMT to 50 MMT. He left his soybean estimates at 169 MMT in Brazil and 50 MMT in Argentina.
House GOP reconciliation plan targets SNAP for reform... House Republicans unveiled a sweeping farm bill and budget reconciliation proposal that would slash $290 billion from nutrition assistance programs over the next decade via reform, redirecting a portion of those savings to expand commodity support, crop insurance subsidies, and conservation spending. The markup of the bill is scheduled to begin at 7:30 p.m. ET today. The proposal — part of a broader budget package aimed at reducing federal spending by $230 billion — would: Increase commodity program payments, raising Price Loss Coverage (PLC) reference prices by 10% to 20%, in line with the farm bill the committee approved a year ago, and raising the payment cap from $125,000 to $155,000, indexed to inflation; expand Agriculture Risk Coverage (ARC) guarantees to 90% and add 30 million new base acres eligible for ARC/PLC coverage; boost crop insurance by increasing the Supplemental Coverage Option subsidy from 65% to 80%; and fold Inflation Reduction Act conservation funds into the farm bill baseline, but strip out “climate-smart” restrictions. Reconciliation rules enable the GOP to advance the plan without Democratic support in the Senate. Click here for more details.
House GOP tax plan expands small business deduction, extends biofuel credit... Section 199A of the House GOP tax plan would increase small business/farm income deductions from 20% to 23%, raise the estate tax exemption to $15 million per person and extend the 45Z Clean Fuel Tax Credit from 2027 to 2031 and restrict eligibility to feedstocks produced in the U.S., Canada or Mexico, though 45Z transferability would end after 2027. The House Ways and Means Committee will begin markup today of the plan, with the legislation forming a key plank in the broader budget reconciliation package tied to extending the 2017 Trump tax cuts.
Egypt slashes Suez Canal fees following Trump/Houthi truce... In a bid to revive shipping traffic through the Suez Canal, Egypt will reduce fees by 15% for large container vessels starting May 15, following President Donald Trump’s brokered deal to end Houthi attacks on Red Sea shipping. The fee cut will apply to container ships of at least 130,000 MT, laden or empty, for a 90-day period, the Suez Canal Authority (SCA) announced. The move seeks to capitalize on “relative stability” in the region to draw back operators like Maersk and Hapag-Lloyd, which had rerouted vessels due to attacks by Yemen’s Iran-backed Houthis.
Euro zone economic sentiment surges... The ZEW Indicator of Economic Sentiment for the euro zone surged 30.1 points from the prior month to 11.6 in May. Some 55.8% of the surveyed analysts expected no changes in economic activity, 27.9% saw an improvement and 16.3% anticipated a deterioration. The indicator of the current economic situation increased by 8.5 points to -42.4 and inflation expectations fell by 18.1 points to -15.
Mexico calls for 15-day U.S. suspension of cattle imports... Mexico has stated the recent U.S. suspension of live cattle, horse and bison imports from Mexico in response to the spread of the New World screwworm (NWS) should only last for 15 days and is not expected to have a significant economic impact on the country. Mexican Agriculture Minister Julio Berdegué emphasized the suspension is intended to be temporary. Mexican President Claudia Sheinbaum characterized the suspension as “unjust” and maintained that Mexico has been proactive and cooperative in addressing the NWS threat. Mexico and the U.S. will review the imports suspension in two weeks, though the measure will continue monthly until there is significant containment, USDA said.
Beef margins worsen as wholesale prices can’t keep up with cash... Cash cattle prices jumped another $3.83 to a record $224.80 last week and have surged $17.10 the past four weeks. Wholesale Choice beef prices have risen nearly $14.00 during that span but haven’t kept pace with the cash market, driving packer margins even deeper into the red. While packers purchased a large number of cattle again last week, sources expect the cash strength to persist as feedlots likely aren’t willing to sell at lower prices.
Cash hog index, pork cutout weaken... The CME lean hog index is down 7 cents to $89.92 as of May 9, the third straight daily decline, though those losses total only 24 cents. Pork cutout fell $1.32 to $96.51 on Monday amid declines in all cuts except bellies and remain in the extended sideways price range.
Overnight demand news... South Korea purchased 52,123 MT of rice – 41,450 MT to be sourced from the U.S., 4,680 MT from Vietnam and 5,993 MT from Thailand.
Today’s reports
- 1:00 p.m. Dairy Monthly Tables and Dairy Quarterly Data — ERS
- 1:00 p.m. Meat Price Spreads — ERS
- 1:00 p.m. Season Average Price Forecasts — ERS
- 1:00 p.m. Wheat Data — ERS
- 2:00 p.m. North American Flour Milling Products Summary — NASS