First Thing Today | August 10, 2021
Corn under pressure, as soybeans climb… Corn futures are down 4 to 5 cents, while soybean futures are up 20 cents in the front month and 7 to 9 cents in deferreds. Winter wheat futures are up 1 to 2 cents, while spring wheat is choppy to down 2 cents. The U.S. dollar index is slightly higher. Crude oil futures are working to retrace yesterday’s losses.
Crop Progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Aug. 8. Find more details here.
- Corn: 95% silking, 56% in dough, 8% dented, 64% “good” to “excellent” (G/E)
- Soybeans: 91% blooming, 72% setting pods, 60% G/E
- Spring wheat: 11% G/E, 38% harvested
- Winter wheat: 95% harvested
- Cotton: 88% squaring, 63% setting bolls, 5% bolls open, 65% G/E
Corn, soybean CCI ratings virtually unchanged… When USDA's weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn and soybean crops were virtually unchanged over the past week. The corn CCI rating held at 363.8 points, while the soybean rating ticked down 0.1 point to 352.8 points. The corn crop is 7.5 points below the five-year average, with the soybean crop 7.6 points below average. The spring wheat CCI rating improved 2.9 points to 224.7 points, though that’s still 132.2 points below the five-year average.
Cordonnier holds U.S. corn and soybean yield projections steady after recent rain… Crop Consultant Dr. Michael Cordonnier left his U.S. corn yield projection at 175.5 bu. per acre and his bias is neutral going forward. “With the improved corn rating and more rainfall over the weekend and early this week, I am a little more confident about the U.S. corn crop,” Cordonnier said. He also maintained his U.S. soybean yield projection of 50.0 bu. per acre and again, his bias is neutral going forward. He commented recent rains benefitted soybeans in drier areas, but more rain will be needed going forward. Rains are possible for the central and eastern Corn Belt later this week, but the 6 to 10-day outlook is drier. Cordonnier made no change to his Brazilian corn crop projection of 84 MMT, and his bias is neutral to lower going forward. He also maintained his Argentine corn crop estimate of 48 MMT.
Late-season rains result in slow start to France’s wheat export season… Ships have been waiting for up to a month in France’s largest grain port waiting to load wheat for Algeria. Rain has slowed harvest and raised crop quality concerns, necessitating stepped up quality checks for milling wheat. The rain has resulted in weak test weights and Hagberg falling numbers. France’s top buyer of wheat, Algeria, has strict requirements for both criteria. Shipping data from Refinitiv and others shows just two vessels of French wheat were loaded for Algeria in July. But the backlog should ease soon, as eight ships were either just loaded and will soon load with wheat for Algeria and the dry forecast the remainder of the week should help farmers finish harvest.
China’s consumer price index rose 1.0% from a year earlier in July, down from June’s 1.1% gain… The rise was kept in check by food prices that fell 3.7% in July from a year earlier, compared with June’s 1.7% drop.
Senate today expected to clear the $550 billion physical infrastructure measure… The vote is expected at 10:00 a.m. CT. The bill would then go to the House. Seventy senators appear poised to carry the bipartisan package to passage. The House is expected to consider both Biden infrastructure packages when it returns from recess in September. House Speaker Nancy Pelosi (D-Calif.) has said the two bills will be considered together.
Senate Democrats on Monday unveiled a $3.5 trillion spending plan… The so-called human infrastructure plan would represents a massive redefinition and expansion of the U.S. government, if approved. It will take months for the House and Senate to negotiate the details. The Senate is expected to begin voting on the framework of the budget resolution today. The committees will then hold virtual meetings during the August recess and start drafting their pieces of the reconciliation bill, which likely wouldn’t clear Congress until fall at the earliest. Senate Majority Leader Chuck Schumer (D-N.Y.) instructed committees to finish drafting their separate pieces of legislation by Sept. 15. The proposed reconciliation instructions are “not final and not exclusive,” according to the documents. The Ag Committee would be directed to focus on several issues related to climate change, including farmland forestry conservation, reducing carbon emissions and preventing wildfires. It includes $135 billion for agriculture and child nutrition programs. Find many more details in “Policy Updates.”
Pay fors… The Democratic plan gives the Senate Finance Committee wide latitude to draft policies to raise taxes and asks the committee to find additional revenue to fund the $3.5 trillion in spending from health care savings and a new fee on carbon polluters — President Joe Biden has called on Congress to raise the corporate tax rate from 21% to 28%. Democrats say tax hikes will provide the primary source of funding for their resolution's spending, though they would also include increased funding for the IRS to boost tax enforcement. Democrats have said they’ll undo or modify the limit on federal deductions for state and local taxes (SALT), a provision that targeted wealthy households in blue states like New York and California. Democrats say their proposed tax hikes won’t impact middle-class families. Their plans would prohibit new taxes on small businesses, family farms and families making less than $400,000 annually, fulfilling a Biden campaign promise.
Yellen: Debt ceiling should be raised ‘on a bipartisan basis’… Treasury Secretary Janet Yellen on Monday urged Congress to pass a bipartisan resolution to raise the amount of money the U.S. government can borrow, saying failing to increase the debt ceiling so would “cause irreparable harm” to the economy. Republican lawmakers, led by Senate Minority Leader Mitch McConnell (R-Ky.), have threatened to refuse to vote for raising the debt ceiling, which came back into force on Aug. 1. They’ve instead called on Democrats to do so in their multitrillion-dollar budget reconciliation package, which can’t be filibustered and requires only a simple majority to pass. The package blueprint does not raise the debt ceiling.
Information regarding aid for contract hog producers could come soon… USDA has sent forward a final rule to the Office of Management and Budget (OMB) on CFAP, additional assistance and flexibilities related to the Consolidated Appropriations Act of 2021 that was approved in December. It is not clear what the scope of the regulation entails and whether it includes aid to contract hog producers that so far have not received help despite being made eligible for aid in the legislation. Reliable sources say the coming announcement will include payment information to contract hog producers.
Iowa and Minnesota senators press USDA on contract hog grower aid, top-up CFAP hog aid… A bipartisan group of senators are urging USDA Secretary Tom Vilsack to deliver not only aid to contract hog growers that was authorized in the Consolidated Appropriations Act of 2021 approved in December but also top-up payments to hog producers that were announced in January under the Coronavirus Food Assistance Program (CFAP). As for the contract grower aid, the lawmakers said in a letter to Vilsack they were concerned that USDA’s June 15 announcement that it would finalize the program within 60 days “only focused on poultry growers and made no mention of providing assistance to swine growers.” Congress has authorized payments to contract producers, but the payments appear to be lingering in the wait for new regulations. As for the top-up swine payments under CFAP, they acknowledged there can be delays under a change of administration. “However, over the past eight months, USDA has given no indication as to how it plants to put these funds to use,” the lawmakers said.
Reports Canadian Pacific Railway is planning to make a new, higher offer for Kansas City Southern… This would reignite a takeover battle with Canadian National Railway for the coveted U.S. railroad. Canadian Pacific’s board of directors met Monday to authorize a bid that values Kansas City Southern near $300 a share, or about $27 billion, up from its existing $25 billion offer. There is no guarantee Canadian Pacific will follow through with the plan; if it does, it is expected to do so soon. Kansas City Southern shareholders are planning to vote later this month on a $30 billion offer from Canadian National.
Beef price surge continues… Cash cattle traded at an average price of $123.83 last week, more than a $2 gain from the week prior, with northern locations leading gains. Boxed beef prices continue their surge off the mid-July lows, with Choice up $3.54 and Select surging $3.72 to start the week; 104 loads changed hands. Traders will keep an eye on movement for signs the nearly three-week rally is running out of steam. Packer profit margins continue to climb, with HedgersEdge.com pegging them at $671.70 a head on Monday.
Heavy pressure on lean hogs to kick off the week… Lean hog futures faced heavy pressure to start the week and the most active October contract settled its $3.00 limit lower on Monday. Consequently, daily trading limits expand to $4.50 today. The pork cutout value climbed 57 cents to start the week and movement was strong at 352.19 loads. Packer profit margins have climbed to $34.45 a head, reports HedgersEdge.com. Cash hog bids edged 9 cents lower nationally to start the week.
Overnight demand news… A South Korean flour mill bought an estimated 135,100 MT of wheat, including around 50,000 MT from the U.S., 50,000 MT from Australia and 35,100 MT from Canada. South Korea’s state-backed Agro-Fisheries & Food Trade Corp. issued a tender to buy around 3,700 MT of GMO-free soybeans. Morocco’s state grains agency issued a tender to buy around 363,000 MT of U.S.-origin durum wheat under a preferential tariff import quota. Jordan’s state grains buyer issued a new international tender to buy 120,000 MT of animal feed barley.
Today’s reports
- No reports.
