First Thing Today

Good morning!

Corn and soybeans favoring the upside leading up to USDA reports… Corn futures are up 1 to 4 cents, with the July contract coming within ½ cent of the $7.00 level. Soybeans are trading midrange and up 5 to 8 cents. Spring wheat futures are steady to a penny higher. SRW wheat is down 6 cents and HRW wheat is 1 to 2 cents lower. The U.S. dollar index and crude oil futures are marginally higher.

More rain coming for the Northern Plains, but not a shift in the dry pattern… Another round of “meaningful” rain is likely for the Northern Plains and Canada’s eastern Prairies Thursday into early Friday, according to World Weather Inc. Some damaging winds and locally large hail may accompany the line of thunderstorms. Drew Learner, meteorologist with World Weather, emphasizes this is not the start of a long-term trend change, with another dry stretch expected to follow. Net drying is expected to continue in the western Corn Belt, but a shift in the high pressure brings at least the chance of some showers for some parts of the region, according to Lerner. No soaking rains are expected. Temperatures above the 100-degree mark are expected for the southwestern Plains, including west Texas.

USDA’s S&D, Crop Production Reports out today… USDA is expected to trim its old-crop corn carryover estimate by 50 million bu. to 1.207 billion bu. and its new-crop carryover forecast by 84 million bu. to 1.423 billion bu. in its 11:00 a.m. CT Supply & Demand Report today, according to analysts polled by Reuters. Old-crop soybeans carryover is expected to inch higher to 122 million bu. while new-crop carryover is expected to rise 6 million bu. to a still-tight 146 million bushels. USDA is expected to peg old-crop wheat carryover is at 869 million bu., down 3 million bu. from its May forecast. New-crop carryover is expected to rise 9 million bu. to 783 million bushels. The market expects another drop in USDA’s new-crop cotton ending stocks projection to 2.99 million bales. USDA’s winter wheat crop estimate is expected to climb 20 million bu. from May. Another major focal point tomorrow is how much USDA lowers its Brazilian corn crop forecast—on average, analysts expect it to come in around 97.3 MMT. Find more expectations here.

Expectations for today’s Weekly Export Sales Report… The report is for the week ending June 3. 

Consultancy hikes soft wheat crop and export forecast for the EU… Strategie Grains now estimates the EU’s 2021 soft wheat crop at 131.1 MMT, a 500,000-MT increase from its May forecast and well above last year’s 119.4 MMT crop. The consultancy expects the country to export 28.6 MMT of soft wheat in 2021-22, a 1.6-MMT hike from its forecast last month and well above last season’s 26.9 MMT in shipments. Strategie says the higher export forecast reflects “the very good competitiveness of Bulgarian and Romanian wheats and, to a lesser extent, Baltic, German and Polish wheats on early 2021-22 contracts.”

FAO: World food import bill to surge 12% from last year’s high... The Food and Agriculture Organization of the United Nations (FAO) released a new biannual Food Outlook report that shows the world food import bill in 2021 is likely to total $1.72 trillion in 2021, a 12% surge from its previous high of $1.53 trillion in 2020. FAO says, “Global food trade is poised for a resilient year ahead even as international food commodity prices are set to remain high amid supply and demand uncertainties,” adding that trade flows continued to reach new highs in the midst of the Covid-19 pandemic. “Trade in agricultural products — particularly less-perishable foods — performed more robustly than the broader merchandise sectors,” FAO reports. The organization found that the average global price of protein in May 2021 was up 23% from year-ago levels, while calories as measured in prices were up 34% from year-ago and the highest level since February 2013. FAO’s Food Outlook uses import values that capture what countries actually pay when they import food, including freight costs.

China passes anti-sanctions law, providing means to counter foreign measures... China has issued counter-sanctions in response to sanctions against it from the U.S., the EU, Britain and Canada over Beijing’s political crackdown in Hong Kong and treatment of ethnic minorities in Xinjiang. Chinese foreign ministry spokesman Wang Wenbin said that the passage of the new law showed China’s determination to protect its sovereignty and core interests and would not affect its relations with other countries.

Keystone pipeline canceled after Biden had blocked permit... Calgary-based TC Energy said it would work with government agencies “to ensure a safe termination of and exit from” the partially built line, which was to transport crude from the oil sand fields of western Canada to Steele City, Nebraska. Construction on the 1,200-mile pipeline began last year when former President Donald Trump revived the long-delayed project after it had stalled under the Obama administration. It would have moved up to 830,000 barrels (35 million gallons) of crude daily, connecting in Nebraska to other pipelines that feed oil refineries on the U.S. Gulf Coast. Alberta officials said Wednesday they reached an agreement with TC Energy, formerly known as TransCanada, to exit their partnership. Alberta invested more than $1 billion in the project last year.

Biden’s G7 agenda... Speaking to U.S. military personnel after landing in England, President Joe Biden said he would use the summit to urge allied nations to play a larger role in addressing the coronavirus and other problems like climate change. Biden will meet with Prime Minister Boris Johnson and Queen Elizabeth II. On Sunday, he will travel to Belgium to meet at the European Commission in Brussels. He will also participate in a summit of the North Atlantic Treaty Organization and meet with Turkish President Recep Tayyip Erdogan. He’ll then travel to Geneva to sit down June 16 with President Vladimir Putin of Russia, which is not part of the G7. Russia designated Aleksei Navalny’s political group as extremist, a warning to Biden before his meeting with Putin.

El Salvador is the first nation to make bitcoin legal tender, a move championed by its president… El Salvador’s Legislative Assembly has approved a bill making the cryptocurrency bitcoin legal tender in the country, the first nation to do so, just days after President Nayib Bukele made the proposal at a Bitcoin conference. The digital currency, originally created to be money out of the control of governments, can be used in any transaction, and any business will have to accept payment in bitcoin, with the exception of those lacking the technology to do so. The U.S. dollar will also continue to be El Salvador’s currency, and no one will be forced to pay in bitcoin, according to the legislation approved late Tuesday.

JBS paid $11 million in ransom… JBS USA paid the equivalent of $11 million in ransom after a Russia-linked cyberattack disrupted its operations in North America and Australia, Andre Nogueira, CEO of JBS USA said in a statement. The company says, “At the time of payment, the vast majority of the company’s facilities were operational. In consultation with internal IT professionals and third-party cybersecurity experts, the company made the decision to mitigate any unforeseen issues related to the attack and ensure no data was exfiltrated.” Also of note, JBS says that a preliminary investigation confirms no company, customer or employee data was compromised. Ransomware payments are typically in the form of cryptocurrency payments, and the Wall Street Journal earlier this week reported the payment was made in bitcoin. A cyberattack on Colonial Pipeline last month also resulted in the payment of $2.3 million in cryptocurrency ransom, though the U.S. government has since recouped some of those funds.

NPPC policy agenda: line speed lawsuit, California Prop 12, labor reform and China tariffs... National Pork Producers Council (NPPC) officials said convincing the Biden administration to appeal a court decision curbing line speeds at several pork processing plants and a legal challenge to California’s Prop 12 animal welfare rules remain the group’s top priorities. Find more in “Policy Updates.”

Another week of mostly steady cash trade… Live cattle futures settled narrowly mixed at midweek and feeders reversed early gains after nearby corn contracts turned higher. USDA estimates average steer weights just marginally under year-ago levels when supplies were backed up due to processing-related closures and cutbacks. That signals marketings are not current and does not bode well for breaking the trend of steady cash prices. So far this week, cash trade has ranged from $119.50 to $122, with the bulk of trade occurring near the lower end of that range. Meanwhile, Choice beef edged 4 cents higher at midweek and Select gained $1.69. August feeder cattle futures are trading at a more than $8 premium to the cash index.

Cash hog prices jump, but so do weights… Hogs settled mixed through the summer contracts and slightly deferred in deferred months on Wednesday. The pork cutout value edged 56 cents lower yesterday and movement slowed to 262.73 loads. June lean hog futures are more than $4 above the CME lean hog index with expiration looming next Monday. Cash hog bids climbed an average of $2.66 nationally on Wednesday, according to USDA’s National Daily Hogs and Pork Summary. Average hog weights in the Iowa/southern Minnesota/South Dakota market jumped 1.3 lbs. the week ending June 5 to 284.4 lbs., as JBS processing disruptions and the Memorial Day holiday slowed marketings.

Overnight demand news… Tunisia’s state grain agency issued an international tender to buy around 50,000 MT of soft wheat. Japan purchased 94,890 MT of food-quality wheat from the U.S., as well as 37,000 MT of the grain from Canada and 49,465 MT from Australia.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 11:00 a.m. Meat Price Spreads — ERS
• 11:00 a.m. WASDE — ERS
• 11:00 a.m. Crop Production — NASS
• 11:00 a.m. Cotton: World Markets and Trade — FAS
• 11:15 a.m. Grains: World Markets and Trade — FAS
• 11:15 a.m. Oilseeds: World Markets and Trade — FAS
• 11:15 a.m. World Agricultural Production — FAS