Evening Report

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Corn planting nearing completion… Ninety percent of the U.S. corn crop had been planted as of Sunday, which was a point slower than expected but well ahead of 80% at this point in the season for the five-year average. Crop emerged improved notably amid last week’s rains and warmer temperatures. USDA reports 64% of the crop was out of the ground on Sunday, which represented a 13-point advance from last week and is 10 points ahead of the five-year average for this point in the season. For the top-producing states, emergence ranges from 38% in Ohio to 77% in Minnesota and Missouri, with most states favoring the upper end of that range.

Rains have bigger drag on soybean planting than expected… Soybean planting advanced 14 percentage points over the past week to 75% complete, which was five points slower than analysts on average expected. But progress is still 21 percentage points more advanced than the five-year average for this time of year. Illinois has seeded 80% of its crop (53% on average), with Indiana at 69% (47%), Iowa at 89% (66%) Minnesota at 97% (68%), Missouri at 44% (42%), Nebraska at 85% (66%) and South Dakota at 83% (45% seeded on average).

Emergence more than doubled over the past week to 41%, which compares with 33% last year at this time and 25% for the 2016-2020 average.

Cotton planting nears half complete… As of Sunday, 49% of the U.S. cotton crop had been seeded, which is an 11-point advance for the week but three percentage points behind the five-year average. Texas has planted 40% of its crop, which lags the average pace by four percentage points.

Spring wheat crop off to a rough start… The quick seeding pace means the market is getting an earlier-than-usual update on spring wheat crop ratings. USDA’s initial 45% “good” to “excellent” rating for the crop matched the low end of the wide range of expectations stretching from 45% to 70% and fell well short of the 57% analysts on average expected. This is a historically low rating, with dryness in the Northern Plains clearly drawing down ratings. The Dakotas did receive some rain over the weekend, which could help crop ratings moving forward. But as of Sunday, USDA rated just 31% of top-producing North Dakota’s crop “good” to “excellent.” Last year, USDA in its initial June 1 rating for the spring wheat crop put 80% of it in the top two categories.

Planting of the spring wheat crop advanced nine percentage points to 94% complete as of Sunday, which was right in line with expectations and nine points ahead of the five-year average. Two-thirds of the crop has emerged versus 56% on average.

Winter wheat ratings slide, catching market off guard… USDA trimmed the amount of wheat it rates “good” to “excellent” a percentage point to 47%, which surprised traders who on average expected a two-point rise. USDA’s “poor” to “very poor” rating edged a point lower to 18%. Last year at this time, 54% of the crop was rated G/E and 16% of the crop fell in the P/VP categories.

As of May 23, 67% of the winter wheat crop was headed, which is two points behind the five-year average and a point ahead of last year at this time. That includes 84% of top-producing Kansas’ crop, which is near in line with the norm.

Egypt hopes to import less than 6 MMT of wheat this year… Egypt expects ample wheat reserves to limit its import needs to less than 6 MMT again in 2021-22. Supply Minister Ali Moselhy said the country has enough strategic reserves to cover just shy of six months of consumption. “We used to work on about 7 MMT which we imported, we got down to 6.5 MMT and last year we bought less than 6 MMT,” Moselhy said. He continued, “This year, God willing, based on the local harvest we [plan] to decrease imports to a certain extent, it will be less than 6 MMT.”

Cold Storage Report confirms strong meat demand… USDA reports there were 453.6 million lbs. of beef in frozen storage at the end of April, a 29.4-million-lb. (6.1%) month-to-month drop and a much more aggressive drawdown than the 11.4-million-lb. retreat over the past five years. Beef stocks came in 25.8 million lbs. (5.4%) lighter than last year at this time and 7.8 million lbs. (1.7%) under the five-year average.  

Frozen pork stocks climbed 4.2 million lbs. (0.9%) from March to 455.3 million lbs. at the end of April, which was just a fifth of the usual 19.9-million-lb. build during April over the past five years. Pork stocks were 25.5% (156.0 million lbs.) under year-ago levels and 163.8 million lbs. (26.5%) under the five-year average.

The pork and beef stocks numbers both speak to pent-up consumer demand as Covid-related restrictions ease. Strong export demand, particularly out of China, has also helped to draw down U.S. supplies of red meat. Total red meat stocks stood at 940.6 million lbs., a 17.3% retreat from year-ago and a 2.8% dip from March 31.

Total frozen poultry stocks of 1.089 billion lbs. as of April 30 were little changed month-over-month but down 19.7% from year-ago levels. Chicken stocks were 22.4% under year-ago levels.

State lawmakers urge USDA to conduct another Beef Checkoff vote… A new producer referendum on the Beef Checkoff is being called for by 131 state lawmakers from 11 states. In a letter to USDA Secretary Tom Vilsack, the lawmakers said the $1-per-head assessment needs to be voted on again by producers. “This tax was voted on in 1985 under the auspices that the money raised would go to promote exclusively USA beef,” the lawmakers said in their letter. “Unfortunately, that money is being funneled away from its original intent and is being used by private associations and entities that do not exclusively represent USA beef.” It is not clear whether USDA will act on the request and whether there would be enough producer support for altering the checkoff if it were put to another vote.

Biden offers lower $1.7 trillion infrastructure price tag, a big decline from $2.25 trillion... The White House proposed a $1.7 trillion infrastructure counteroffer Friday to Senate Republicans, scaling down President Joe Biden’s massive $2.25-trillion proposal “in the spirit of finding common ground.” Republicans had offered a $568-billion plan, but sources signal that tally could rise by around $250 billion. “This proposal exhibits a willingness to come down in size,” White House Press Secretary Jen Psaki said at a news briefing. The president’s team had set a soft Memorial Day deadline to determine whether a deal was within reach.

Psaki said the new proposal drops the president’s planned expenditures on broadband and bridges to meet the Republicans’ lower level. She said the administration’s proposal also involved “shifting investments in research and development, supply chains, manufacturing and small business,” on par with the Endless Frontiers Act, which is a bipartisan bill pending in the Senate. But she signaled that the president still expects to rely on raising corporate tax rates to pay for the plan, which has been a nonstarter for Republicans. One GOP senator in the talks suggested tapping unspent funds from the massive Covid-19 aid package. Other money could come from uncollected tax revenue or public-private partnerships.

Senate Republicans said the offer remained “well above the range of what can pass Congress with bipartisan support.” The two sides remained divided on every aspect of a possible deal, including its size, scope, and how to pay for it, according to a statement from a spokeswoman for the lead GOP negotiator, Senator Shelley Moore Capito of West Virginia.

Bottom line: There is no major compromise in sight. If the stalemate continues, Democrats will move on their own, using procedural rules that wouldn’t need any Republican votes. But that is a gambit since Democrats have only slim voting majorities in the House and Senate, and it suggests that earlier notions that infrastructure could bring the Democrats and Republicans together were errant. The differences run deeper than a divide over dollars, with Republicans objecting to plans such as renewable-energy tax credits. And as noted, they also remain split on how to pay for the plan, with Republicans more interested in user fees such as taxes on heavy trucks. Also, Bloomberg reports that “signs are mounting that anxiety among congressional Democrats will significantly temper any [tax] increases that manage to pass Congress.”

Major Northern California reservoirs contain only half the water they normally do in late spring… It’s a warning sign of a potentially devastating new drought. Both the State Water Project and the federal Central Valley Project have announced they intend to deliver only 5% of requested supplies this year. But Southern California is in good shape for the drought with ample water in reservoirs and robust conservation. Los Angeles is using the same amount of water it did in the 1970s, despite adding nearly 1 million people. But roughly 30% of the supply for the Metropolitan Water District of Southern California flows from Northern California — specifically the Sacramento-San Joaquin River Delta. And Northern California has been hit hard by two dry winters. During this summer and in the future California will no longer be able to rely so heavily on Sierra snowmelt to irrigate agriculture, bring life to arid urban landscapes and provide homes with water. Neither can San Joaquin Valley farmers keep over-pumping groundwater, say California observers.

California starts process to ban fracking... California has begun the process of phasing out hydraulic fracturing and two other ways of drilling for oil in the state. California’s Geologic Energy Management Division opened a public comment period on a regulation that would end new permits for fracking after January 1, 2024. The regulation is expected to face court challenges.

Report on sick workers at Wuhan Institute of Virology re-ignite concerns about Covid-19’s origins… A U.S. intelligence report said that three researchers at the Wuhan Institute of Virology were hospitalized in November 2019, reigniting concerns about Covid-19 escaping from that lab. The disclosure of the number of researchers, the timing of their illnesses and their hospital visits come as the WHO’s decision-making body meets today and is expected to discuss the next phase of an investigation into Covid-19’s origins. China continues to blast the U.S. for promoting theories Covid-19 escaped from a high-security lab in Wuhan.

‘Breyer retire’ push aims to focus liberals on Supreme Court… A far-left group has started a campaign to pressure a sitting Supreme Court justice to retire so a Democratic president can replace him, the first step in a broader effort to focus the party’s attention on the judiciary. Yet so far, few Democratic lawmakers are joining the calls for 82-year-old Justice Stephen Breyer to step down. The group, Demand Justice, is using social-media hashtags to get its point across, and also drove a truck-mounted electronic billboard around Capitol Hill last month, urging Breyer to retire.