First Thing Today | Aug. 4, 2021
Light short-covering after yesterday’s selloff… Corn futures saw choppy overnight action but the market is currently trading high-range and up a penny or two. Soybean futures are 3 to 7 cents higher after yesterday’s heavy selling. Winter wheat futures are up 3 to 6 cents in most contracts, while spring wheat futures are narrowly mixed. The U.S. dollar index is just below unchanged. Crude oil futures are under pressure as Covid-19 concerns weigh.
Diminished rain chances for the Corn Belt over the weekend, but rain possible mid-month… “The evening GFS model run in the United States decreased rainfall in eastern Iowa, northwestern Illinois, southern Wisconsin, Ohio, North Carolina, and Virginia Sunday into next Tuesday,” reports World Weather Inc., detailing that the forecast for an unusually cool air mass to come down into the Corn Belt and HRW wheat regions and stall was overdone. But there are rain chances across the corn Belt and northern HRW wheat areas Aug. 13-15.
StoneX’s U.S. corn crop forecast well under USDA’s… The commodity brokerage StoneX estimates the U.S. corn crop will yield an average of 176.9 bu. per acre for a 14.945 billion bu. crop, based on customer surveys and the firm’s analysis. This is well under USDA’s latest forecast. In July, the department issued a trendline U.S. corn yield projection of 179.5 bu. per acre for a 15.165 billion bu. crop. StoneX expects the U.S. soybean crop to total 4.332 billion bu. on an average yield of 50 bu. per acre. USDA is forecasting a trendline yield of 50.8 bu. per acre and a 4.405 billion bu. crop. USDA’s first survey-based estimates will come Aug. 12.
ANEC expects Brazil’s corn exports to pick up as soybean shipments slow… Brazil will likely export 6.5 MMT of soybeans during August as well as 1.1 MMT of soymeal, forecasts the association of grain exporters known as ANEC. That would be a slowdown in soybean exports from the 8.4 MMT the association expected to be shipped during July. On the other hand, ANEC is calling for corn exports to rise from 3.2 MMT in July to 4.0 MMT in August.
French farm ministry trims soft wheat crop estimate… France’s farm ministry has lowered its soft wheat crop estimate from 37.10 MMT to 36.69 MMT, which would still be a 25.8% jump from last year’s weather-battered crop and a 10.0% rise vs. the five-year average. Heavy summer rains have raised concern about grain quality and pared crop prospects. France is the European Union’s biggest wheat producer.
China to probe fertilizer firms… China’s State Administration for Market Regulation announced it will launch an investigation into fertilizer producers and distributors suspected of driving up prices. The regulator detailed it would continue to pay close attention to fertilizer prices, increase supervision and punish illegal acts like hoarding or hiking prices or colluding on prices.
State regulators to bar thousands of farmers in California from using surface water supplies… Attempting to deal with intensifying drought, California state water regulators voted Tuesday to enact a drastic emergency order that will bar thousands of Californians — primarily farmers — from using stream and river water. The scope of Tuesday’s order, which will apply to thousands of senior water rights across a wide swath of the state, is unprecedented, officials said. California Department of Food and Agriculture Secretary Karen Ross called the decision “a necessary step,” saying the fact that senior water rights holders were included “speaks to the severity of the hydrology and what climate change has presented this year … It is a painful moment. We know the impacts are real,” Ross said during a meeting Tuesday.
Colorado mulls water measuring for agriculture… Colorado is proposing to ramp up requirements that agricultural water users, ranging from big companies to small mom-and-pop farms, measure the amount of water they divert from streams, rivers and waterways. The state engineer says a statewide rule is necessary to prepare Colorado for a water-scarce future. Some water users, however, accuse the state of taking a heavy-handed and overly expensive approach that will force landowners to install devices in areas that don’t need them.
U.S. household debt surged $313 billion in the second quarter, the biggest jump since 2007… Mortgage, credit card and auto loan balances all rose, the Federal Reserve Bank of New York said in a quarterly report.
China suspends meat imports from a BRF plant… China has banned meat imports from the food processor BRF SA’s Lucas Rio Verde plant located in central Brazil, the company said in a statement yesterday. The plant processes pork and chicken. The company said it would take steps to reverse the ban, working in conjunction with Chinese and Brazilian authorities, but it did not disclose what the holdup was. BRF did say that it was not officially notified of the ban and only learned of the suspension when it appeared on China’s customs website.
Mexico bans pork imports from the Dominican Republic… Mexico’s ag ministry has banned pork and derived products from the Dominican Republic and other countries dealing with African swine fever. The country is also increasing its scans of baggage coming into the country from the Dominican Republic for “product risk,” the ag ministry said in a statement. The U.S. already had bans in place against pork from the Dominican Republic.
Early cash cattle action at steady prices… Cash cattle trade picked up in the Iowa market around $125 on Tuesday, with Nebraska seeing trade at $124. So far, just a handful of cattle traded at $120 in Texas. Early cash prices are steady with week-ago, but action has yet to pick up in earnest. Choice and Select boxed beef values surged $4.84 and $4.11, respectively on Tuesday, with movement holding strong at 130 loads. So far, the impressive price rebound off the mid-July lows has shown no sign of faltering. Packer profit margins have climbed over $559 a head, reports HedgersEdge.com. Tuesday’s kill picked up to 122,000 head, which topped last week by 3,000 head and year-ago by 6,000 head.
Hog processing margins climbing… Some pork plants give workers a day off the first Monday in August, which resulted in slow processing to start the week. But production ramped back up Tuesday. This week’s kill is now running 8,000 head behind year-ago and 54,000 head behind last week at this point. Packer profit margins have more than doubled over the past week to $41.35 a head, according to HedgersEdge.com. The pork cutout value fell $1.04 on Tuesday after a strong gain to start the week. Movement improved to 308.57 loads after light showings in recent days. Hams tumbled nearly $19. The CME lean hog index projected at $111.59, down 63 cents from the day prior and roughly $1.50 above August futures. National average cash hog bids edged 60 cents lower on Tuesday.
Overnight demand news… Pakistan tendered to buy 400,000 MT of wheat from optional origins. Turkey canceled its tender to buy around 515,000 MT of animal feed barley. But the country has bought an initial 150,000 MT of wheat out of the 395,000 MT it was seeking. Algeria’s state grains agency reportedly bought around 150,000 MT to 200,000 MT of optional origin milling wheat in an international tender; it’s unclear whether more will be purchased. Japan’s ag ministry is seeking 80,000 MT of feed wheat and 100,000 MT of feed barley via a simultaneous buy and sell auction. Egypt’s state grain buyer cancelled its international tender to buy 30,000 MT of soyoil and 10,000 MT of sunflower oil after limited participation. Jordan has not yet made any purchases in its tender for 120,000 MT of wheat.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Dairy Products — NASS
