Good morning!
Grain markets mixed overnight… As of 6:00 a.m. CDT, December corn futures were steady after hitting a contract low overnight. November soybeans were up 3 cents and December winter wheat futures were fractionally higher and poked to new contract lows overnight. There is a slim glimmer of hope for the corn market bulls. December corn’s Relative Strength Index (RSI) reading has fallen into oversold territory. In past months when such has occurred, December corn futures prices have at least stabilized, and most times started to work higher. The key outside markets today see the U.S. dollar index weaker. Nymex crude oil prices are up and trading around $66.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.236 percent.
Latest on U.S. tariffs front… President Trump said he would impose increased tariffs on countries buying energy from Russia. Trump also said he’d raise tariffs on India “very substantially over the next 24 hours,” and that levies on semiconductor and pharmaceutical imports would be announced “within the next week or so.” Trump said the U.S. is “very close to a deal” with China to extend a trade truce, but would impose tariffs on additional countries, including China, if necessary, saying “we’ll be doing quite a bit of that.” China’s Shanghai Composite stock index rose 0.45% on Wednesday, while the Shenzhen Component gained 0.64%, marking a third straight session of gains as optimism grew over progress in U.S.-China trade talks. China’s offshore yuan currency fell to around 7.19 per U.S. dollar on Wednesday, as investors responded cautiously to the latest updates on the U.S.-China trade truce.
China to extend its probe into beef imports… China’s investigation on beef imports has been extended into November, after originally being slated to end this month, according to Bloomberg. China is the world’s top buyer of beef, which means its imports are tracked closely by the global market. The country’s overseas purchases have climbed in recent years, alongside rising domestic production as the government urged farmers to raise more cattle at home. That’s strained the local industry as a slowing economy now prompts consumers to cut back, leaving beef supplies piling up in freezers. China’s wholesale beef prices fell to the lowest level since 2019 earlier this year. Share prices of major meatpackers including JBS SA and Marfrig Global Foods SA dropped when the China probe began late last year, with Beijing signaling at the time it was likely to be completed within eight months. Brazil, Australia and Argentina rank among the countries that supply beef to China.
Mosaic says U.S. tariffs reducing fertilizer shipments to the United States… Mosaic Co., the world’s leading producer of two key crop fertilizers, said U.S. tariffs are limiting shipments to the U.S. Phosphate deliveries to the U.S. are “tracking well below last year,” with levies applicable to most sources of the fertilizer, the company said in its earnings release. Demand elsewhere in the world is absorbing some of the volumes no longer bound for the U.S., Mosaic said. The company posted an $8 million loss in its phosphate earnings in the second quarter. China is the world’s biggest producer of the crop input. Mosaic said rising prices for phosphate and potash, another key fertilizer, boosted second-quarter net potash sales up from the prior year, while offsetting lower phosphate volumes to keep sales flat. Potash, largely produced in Canada, is among the goods exempt from U.S. tariffs under a North American trade agreement, according to Bloomberg.
Bayer AG shares down on disappointing sales of soybean seeds and pesticides, including Roundup… The German company’s crop science division posted sales of 4.79 billion Euros ($5.55 billion), worse than analysts expected, according to an updated statement today. Shares in Bayer fell as much as 4.2% in Frankfurt. Bayer’s soybean and cotton seeds sales declined, while lower prices for the best-selling Roundup weedkiller hit revenues. Still, the company posted higher demand and prices for corn seeds, while the overall herbicides business outpaced estimates. Bayer CEO Bill Anderson “is looking to resurrect the fortunes of a company that’s mired in mass litigation in the U.S. over products inherited with the $63 billion purchase of Monsanto. Once an icon of German industry, Bayer has struggled since the 2018 transaction, with the stock losing more than half of its value,” according to a Bloomberg report.
Brazil corn, wheat, cotton crops weather update… In a special report late Tuesday, World Weather Inc. said southern Brazil either received enough rain or had ample moisture in the soil to maintain a good outlook for winter wheat. Planting is virtually complete and most crops were planted under relatively good conditions. The main production areas will see a mix of spotty rain and sunshine during the coming week that will maintain favorable wheat prospects. Winter wheat planting is nearly complete in Brazil. Long-term production potentials are good as long as timely rain continues in the coming weeks, said World Weather. Meantime, harvesting of Safrinha corn and cotton is also ongoing and should advance swiftly around the brief bouts of rain that evolve. Rainfall in late July and early August ramped up across some center-south and far southern crop areas in Brazil. Harvesting of the summer crops continued across portions of Brazil during the past week. As of August 2, 75.2% of the Safrinha corn was harvested, compared to 91.3% at this time last year and 77.6% for the previous five-year average. Cotton harvesting was 29.7% finished, compared to 36.7% last year and 46.1% for the previous five-year average. Harvesting of the remaining crops was either complete or virtually complete.
The Philippines to suspend rice imports for 60 days starting Sept. 1… The Philippines government action to suspend rice imports is aimed to help local farmers. Agriculture Secretary Francisco Tiu Laurel Jr. pushed for a temporary halt in imports and an increase in rice import tariffs, saying an influx of imported rice was hurting local producers. The 60-day suspension period covers the country’s peak harvest season, when domestic supplies are adequate, according to Agriculture Assistant Secretary Arnel de Mesa via a Bloomberg report.
Palm oil futures down on profit taking… Malaysian palm oil futures fell around 1% to below MYR 4,250 per MT as traders took profits after a 2.5% rally on Tuesday. Palm oil traders also turned cautious ahead of key Chinese economic data, including July trade, CPI, and PPI figures, as China remains a major buyer. Traders await next week’s supply and demand report from the Malaysian Palm Oil Board, with Reuters estimating palm oil inventories rose for a fifth month in July to near a two-year high.
Cattle futures bulls keeping their foot on the gas… Technical buying from the speculators was featured in the live cattle and feeder cattle futures markets Tuesday, amid no strong, early chart clues that market tops are close at hand. And the speculative cattle futures bears do not want to step in front of a steaming locomotive. Cash cattle and beef market fundamentals remain strong. Cash cattle prices last week rose $3.79 to $243.17, which is a new record high. Very light cash cattle trade has occurred this week, with an average price at $240.00.
Lean hog futures catching the bullish tailwinds from cattle… The lean hog futures market on Tuesday also saw some technical buying featured, as the near-term chart posture has improved. Strong gains in cattle futures to record highs also supported buying interest in hog futures. The latest CME lean hog index is down another 27 cents to $109.99 as of Aug. 1. Wednesday’s projected cash index price is down another 43 cents at $109.56. The national direct five-day rolling average cash hog price quote Tuesday was $112.95.
Today’s reports—Wednesday
--2:00 pm Broiler Hatchery