First Thing Today | July 1, 2021

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Good morning!

Corn and beans rallying on bullish acreage data… Deferred corn futures contracts gapped higher overnight and extended gains, with most contracts up 11 to 19 cents. So far, the front-month has been unable to push through yesterday’s contract high. Daily trading limits for the corn market expand to 60 cents today after yesterday’s limit gains. Soybean futures are 15 to 20 cents higher, building on yesterday’s strong gains. Also of note, cash basis bids for corn and soybeans shot vertical this week. SRW wheat is 3 to 5 cents higher, while HRW and HRS wheat futures are mixed. The U.S. dollar index is marginally lower and crude oil futures are sharply higher as energy traders await the conclusion of today’s OPEC meeting.

Expectations for today’s Weekly Export Sales Report… The report is for the week ending June 24. 

 

2020-21 (MT)

2021-22 (MT)

Corn

-100,000-400,000

150,000-650,000

Soybeans

-100,000-300,000

1,000,000-2,000,000

Wheat

NA

200,000-500,000

Soymeal

125,000-400,000

125,000-275,000

Soyoil

0-15,000

0

 

Monthly soy and corn processing reports out today… Analysts polled by Reuters expect USDA to report 173.4 million bu. (5.202 million short tons) of soybeans were crushed during May. That would be up from April’s crush of 169.8 million bu. but down from last year’s 179.5 million bu., with tight supplies and high soybean prices curbing processing to some degree. Soyoil stocks are expected to finish May at 2.144 billion lbs., down marginally from the month prior but well below last year’s 2.447 billion pounds. USDA’s Fats & Oils and Grain Crushings Reports will be out at 2:00 p.m. CT. The latter report is expected to show 446.8 million bu. of corn was consumed for ethanol during May, according to analysts polled by Reuters. That would be a 48% surge from year-ago when Covid restrictions kept consumers off the road.

Record-setting grain crop in the works for Ukraine… Ukraine’s 2021 grain harvest could climb to a record 75.8 MMT this year, a 10.8-MMT boost from the 2020 season, according to the country’s state weather forecaster, Tetyana Adamenko, who cites improving weather. That could include 37.1 MMT of corn, 28.5 MMT of wheat and 8.3 MMT of barley, she details. The country’s ag minister also said he expects a record grain harvest topping 75 MMT. USDA’s Ukraine office also said it expects the country to produce a 29.5 MMT wheat crop in 2021-22, with exports likely to total 20.5 MMT. The office expects the country to bring in a 37.3 MMT corn crop, with exports likely to total 30.5 MMT. Last season, Ukraine harvested 24.9 MMT of wheat, roughly 16.4 MMT of which it exported. Its corn crop totaled 30.3 MMT, with exports expected to come in around 22.6 MMT.

Farmers concerned about rising propane prices, limited availability… At hubs in Mont Belvieu, Texas, and Conway, Kansas, propane futures traded Wednesday at $1.09 and 95 cents a gallon, respectively. Those prices are roughly twice their levels during the past two summers, the Wall Street Journal reports. Spot prices have moved in a similar way. Retail prices have also risen, but not as sharply. The Energy Information Administration said U.S. households can expect to spend an average of 14% more on propane this winter than they did during last year’s — and significantly more than that if the weather is colder than forecast. While demand for most fuels declined significantly in 2020, outbound cargoes of propane rose 13% to a record, according to the Energy Information Administration. OPEC members produced less propane when they dialed down oil production, ceding market share to the U.S. Propane surpassed distillate fuel oils, such as diesel, to become the U.S.’s top petroleum export. Now, supply concerns are rising. The petroleum supply district that stretches from Ohio to Oklahoma and up to North Dakota is particularly low on propane.

India eases restrictions and tariffs on imports of refined palm oil… India announced Wednesday it will permit the import of refined palm oil for six months. The country had restricted imports of refined palm oil in January 2020 to help local refiners and oilseed producers. The country also lowered the import duty on refined palm oil to 41.25% from 49.5% for three months. These moves are meant to help curb local edible oil prices. Analysts say the moves could reduce the country’s crude palm oil imports as some of its main suppliers like Indonesia tack higher taxes on crude palm oil vs. refined palm oil. India is a major consumer of edible oil and it meets more than two-thirds of its demand via imports.

Economists predict at least two U.S. interest rate rises by end of 2023... Elevated inflation will compel the Federal Reserve to raise U.S. interest rates at least twice by the end of 2023, according to a new poll of leading academic economists for the Financial Times and the University of Chicago’s Booth School of Business.

U.S. and Taiwan restarted dormant trade and investment talks… The trade talks, held by videoconference on Wednesday, were the first between the U.S. and Taiwan since 2016. The Office of the U.S. Trade Representative, which led the talks, said the U.S. and Taiwan would create a new labor working group to pursue the issue. Taiwanese officials said the discussions were wide-ranging, covering supply chains, intellectual-property protection and financial services, as well as the import and export of vaccines and wild-animal protection. U.S. officials said there are “a lot of things we have to do” before such an agreement can be reached. The two sides pledged to keep supply chains free from forced labor, a clear dig at China, which has objected to the negotiations.

TPA expires... July 1 brings about the expiration of “fast-track” Trade Promotion Authority (TPA). So far, the Biden administration had not submitted legislation to Congress to reauthorize TPA. It was last approved by Congress and signed into law in June 2015 by President Barack Obama. Originally it was only effective until July 1, 2018, but that was extended to July 1, 2021, by President Donald Trump. Only one Free Trade Agreement (FTA) has been approved by Congress without TPA — the U.S./Jordan FTA.    So far, only USDA Secretary Tom Vilsack has indicated that TPA is needed.

House appropriators clear FY 2022 ag bill... The House Appropriations Committee on Wednesday approved the fiscal year (FY) 2022 Agriculture appropriations bill. Cleared amendments included limiting poultry line slaughter speeds and forbidding the ownership of farmland by the Chinese government and its subsidiaries.

Biden signs CRA resolution reinstating Obama-era methane rule… President Joe Biden signed three Congressional Review Act (CRA) that disapprove final rules put in place by the Trump administration, including rolling the final rule that went into effect in September 2020 that eliminated a 2016 requirement for gas and oil companies to monitor and address methane leaks from wells and compressor stations. That puts the Obama-era methane rule back in place as EPA works on a new regulation.

Smithfield pays $83 million to settle price-fixing claims… Smithfield Foods Inc. will pay $83 million to settle litigation claiming it and several other companies conspired to limit supply to lift prices and profits. The settlement resolves antitrust claims by direct buyers like Maplevale Farms that accused the company of price fixing beginning in 2009. Smithfield, the U.S.’s largest pork producer, denied any liability in agreeing to settle, saying its conduct was always lawful. Hormel Foods Corp., JBS USA, Tyson Foods Inc. and the data provider Agri Stats Inc. are other defendants in the lawsuit.

Smaller corn acres rattle feeder cattle… Live cattle futures settled with slight gains Wednesday, but feeder cattle tumbled on smaller-than-expected corn planted acreage as well as a bit smaller June 1 corn and wheat stocks vs. analysts’ expectations. The trajectory of the corn market has likely shift higher. Choice boxed beef fell $1.05 and Select dropped $1.13 at midweek. That represented a moderation of the recent decline, which is a positive signal prices may be nearing levels that attract some value buying. An uptick in movement in recent days is also encouraging to that end. Meanwhile, cash cattle prices slipped to the $125 to $126 area in Iowa and Nebraska markets on Wednesday, in line with last week’s action but down slightly compared with trade earlier in the week. Active trade got started from $120 to $120.50 in Kansas and some light sales in Texas from $119 to $122, steady to lower compared with last week’s $122 trade.

Hog weights continue to slide… Average hog weights in the key Iowa/southern Minnesota/South Dakota market dropped 2.4 lbs. the week ending June 26 to 276.9 lbs., according to USDA. That’s 7.6 lbs. under year-ago levels when supplies were backed up due to Covid-related processing disruptions. Cash hog bids jumped $2.39 on Wednesday. The pork cutout value edged 38 cents lower yesterday and movement slowed to 272.66 loads. Today, the market will tune into USDA’s weekly update on pork exports given recent pressure on Chinese hog and pork prices.

Overnight demand news… Turkey provisionally purchased an estimated 395,000 MT of wheat in an international tender. Tunisia’s state grains agency bought around 100,000 MT of soft milling wheat and 100,000 MT of animal feed barley. Bangladesh issued an international tender to buy 50,000 MT of rice to be imported via railway.

Today’s reports

 

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