First Thing Today | Aug. 2, 2021
Wheat rallying to kick off August… Corn futures are choppy to a penny lower in early trade after seeing two-sided action overnight. Soybeans are down 6 to 8 cents as weather concerns have faded. Winter wheat futures are 12 to 16 cents higher, with the move through the July highs triggering buy stops. Spring wheat futures are 6 to 11 cents higher. The greenback is facing light pressure, with crude oil futures moderately lower.
Dry start to August, but temperatures not expected to be threatening… Rains fell over the weekend for some areas of the Corn Belt, with the most significant precipitation falling from southeastern South Dakota and eastern Nebraska to northern Missouri, west-central Illinois and the southwest half of Iowa, according to World Weather Inc. Net drying occurred elsewhere, despite a cooldown in temperatures. The weather watcher reports rainfall will be restricted over the next week and net drying is likely for most of the Midwest, with the exception of the Great Lakes region. “Temperatures will rise from the 70s and 80s Fahrenheit today and Monday to the 80s and lower to middle 90s Friday into Saturday,” World Weather reports. But 0.5” to 1.5” of rain are expected throughout the Midwest Aug. 9-12, with lighter accumulation likely for the Northern Plains. Drier conditions are likely to finish out the week.
The week ahead… The Senate is in session while the House is on a six-week recess through Labor Day after failing Friday to clear a five-month extension of the eviction moratorium. The Senate on Friday voted 66-28 to proceed to the legislative vehicle for a bipartisan infrastructure package, text of which was released late Sunday. The measure includes $550 billion in new spending over five years on everything from broadband to airports to highways. The Senate is expected to clear the measure assuming no last-minute glitches, with a target date of Thursday. Also of note this week, Senator John Hoeven (R-N.D.) intends to include an extension of WHIP+ and drought relief for livestock in fiscal year 2022 appropriations efforts on tap this week. The July jobs report will be released Friday.
Big slowdown in soybean crush expected; corn use for ethanol expected to surge… USDA will likely report 162.1 million bu. (4.864 million short tons) of soybeans were crushed during June, according to analysts surveyed by Reuters. That would be a big drop from the month and year prior when 173.5 million bu. and 177.3 million bu. were crushed, respectively. Tight supplies of old-crop beans and high prices have curbed processing. Soyoil stocks likely ended June at 1.994 billion lbs., which would be a 153-million-lb. decline from the end of May and a 277 million-lb. decline from year-ago. USDA will also release its Grain Crushings report today. Analysts surveyed by Bloomberg on average expect USDA to report corn use for ethanol shot 18% higher in June to 448 million bushels. Both reports will be released at 2:00 p.m. CT.
EU’s stock of rapeseed expected to tighten further, despite slight rise in production… Strategie Grains held its 2021 rapeseed production forecast for the European union at 17.03 MMT, which would be a 2.5% increase from the year prior, but the consultancy warned overall supplies of the oilseed would remain tight. Despite the rise in production, stocks of rapeseed are expected to retreat from 2020-21’s already low level given reduced import prospects and higher expected EU exports of the oilseed.
Russian wheat export prices on the rise… Several crop watchers lowered their wheat production estimates for Russia last week, with supply concerns helping to bolster export prices. The ag consultancy IKAR reports Russian wheat with 12.5% protein loading from Black Sea ports for supply in August climbed $6 from the week prior to $254 per MT, free on board, at the end of last week. The consultancy SovEcon reports prices climbed $10 to $255 per MT of wheat.
Average rains expected the latter half of India’s monsoon… India will likely receive average monsoon rains during August and September, the country’s state-run India Meteorological Department (IMD) said at a news conference yesterday. IMD defines average rainfall as between 96% and 104% of the 50-year average rainfall of 88 cm (34 inches) for the June through September rainy season.
Expansion in China’s factory sector in July hit the lowest level in nearly a year and a half… China’s official manufacturing purchasing-managers’ index dropped to 50.4 in July from 50.9 in June, according to data released by the National Bureau of Statistics on Saturday. Readings above 50 indicate activity was expanding, below 50 contracting. This is the latest sign of slackness of the world’s second-largest economy.
Republican senators seek meeting with Biden on biofuels... A group of Republican Senators wants to meet with President Joe Biden to press him to include biofuels in climate effort undertaken by the administration versus the major push on electric vehicles (EVs). “While we recognize that EVs will eventually play an increased role in America’s transportation and energy future, and that American innovation and ingenuity will overcome some of the hurdles faced by this nascent industry, we urge you to not look beyond the current generation of biofuels technology and forgo the meaningful reduction in carbon emissions they can provide,” the lawmakers said. They cited new studies that have updated the level of reduction in lifecycle emissions for ethanol and that combined with investment in carbon capture, ethanol is approaching net-zero or even net-negative emissions.” They also called for more spending on renewable fuels in the infrastructure package and urged expansion of E15 fuels. Prior letters have failed to generate action.
Growing numbers of people are getting vaccinated in areas hit hard by the Delta variant… This offers a glimmer of hope but still falls short of what is needed to fight the virus, public-health officials say. Meanwhile, Dr. Anthony Fauci told Jonathan Karl on ABC's This Week that the U.S. is unlikely to return to lockdowns, but that the Delta outbreak is likely to worsen. But Fauci said he still doesn’t expect the nation to shut down again. “I don’t think we’re gonna see lockdowns. I think we have enough of the percentage of people in the country — not enough to crush the outbreak — but I believe enough to not allow us to get into the situation we were in last winter,” Fauci said. Meanwhile, Francis Collins, the director of the National Institutes of Health, said on Sunday that the new mask guidance urging fully vaccinated people to wear a face covering indoors in coronavirus hotspots is “mostly about protecting the unvaccinated.” Requiring students under the age of 12 to wear masks is a "sacrifice worth making," Collins added.
China and India miss deadline for climate updates… China and India have missed a United Nations deadline to submit fresh plans for cutting their greenhouse gas emissions in time for the international body to include their pledges in a report at this year’s global climate summit, officials said Saturday. The world’s two most populous countries are among dozens that failed to provide an update on their targets for curbing the release of planet-warming gases to the U.N. climate change agency by Saturday. China is the country with the world’s highest emissions, while India is third. The United States, which submitted its new target in April, is the second-biggest global emitter. Just 58% of the signatories submitted new targets in time.
Boxed beef prices still tearing higher… Choice and Select boxed beef values soared $3.24 and $2.37, respectively, on Friday, with 117 loads changing hands. After several weeks of declines, product market prices have come roaring back. That has boosted packer profit margins. HedgersEdge.com reports they pushed back above $500 a head last week, estimating they surged nearly $100 over the past week to around $515 a head. Cash cattle trade last week ranged from $119 to $126, with the western Corn Belt leading gains. That was in line with last week’s action.
Last week’s hog kill well under year-ago… The pork cutout value climbed roughly a buck over the past week, including a 2-cent gain on Friday. But movement slowed notably to just 266.96 loads. Cash hog bids fell 88 cents on Friday to a weighted national average carcass price of $101.70, which is down nearly $3 for the week. That helped strengthen packer profit margins. HedgersEdge.com reports they climbed nearly $10 over the past week to $28.67 a head. Of note, last week’s kill at 2.327 million head was 8.3% lighter than year-ago.
Overnight demand news… Egypt tendered Friday to buy an unspecified amount of wheat from global suppliers; Russia is thought to have the lowest offer. Jordan’s state grains buyer issued an international tender to buy 120,000 MT of milling wheat sourced from optional origins. Algeria’s state grains agency tendered to buy a nominal 50,000 MT of milling wheat.
Today’s reports
- 10:00 a.m. Weekly Export Inspections — AMS
- 2:00 p.m. Cotton System — NASS
- 2:00 p.m. Fats & Oils — NASS
- 2:00 p.m. Flour Milling — NASS
- 2:00 p.m. Grain Crushings — NASS
- 2:00 p.m. Honey Bee Colonies — NASS
- 3:00 p.m. Crop Progress — NASS
