First Thing Today | July 14, 2021
Soybean and wheat futures still climbing… Corn futures saw two-sided action overnight and futures are currently down 1 to 3 cents amid some profit-taking. Soybeans are 4 to 8 cents higher, extending the market’s rebound off the mid-June lows. SRW wheat futures are 5 to 6 cents higher, while HRW and HRS wheat are up 2 to 3 cents. The U.S. dollar index and crude oil futures are under light pressure.
Storms expected to roll across the Midwest from today forward… Rains fell in the far eastern Corn Belt over the past 18 hours, areas where moisture has been plentiful, according to maps released by World Weather Inc. An active weather pattern is expected for the Corn Belt today through early next week, with the dry northwestern Corn Belt expected to receive some significant rain and severe thunderstorms. “However, more rain will still be needed in eastern South Dakota and Minnesota,” World Weather adds. Warmer weather is likely to heighten crop stress in the driest areas of the northwest during the last 10 days of July, the weather watcher says.
ANEC hikes monthly corn, soybean export forecasts for Brazil… Brazil’s soybean exports will likely total 8.955 MMT in July, forecasts the association of grain exports known as Anec. That’s up more than 1.3 MMT from its forecast last week. The association also expects Brazil’s corn exports to pick up to 3.035 MMT this month, which is also up a solid 658,000 MT from its forecast last week.
German association trims wheat crop estimate, citing recent heatwave… Germany’s all wheat crop will likely total 22.80 MMT this season, which would be a 3.2% increase from the year prior, the country’s association of farm cooperatives said. That’s down a bit from its 22.98 MMT crop estimate in June as a recent heat wave stressed crops in eastern areas of the country. On the other hand, the association raised its rapeseed production forecast marginally to 3.68 MMT, which would be a 4.7% rise from last year’s crop. Germany is the EU’s top rapeseed producer and typically its second largest wheat producer.
China’s summer wheat crop climbs from year-ago, though quality a concern in some areas…. China’s summer wheat crop climbed 2% from 2020 levels to 134 MMT on a rise in both planted acreage and yields, the country’s National Statistics Bureau said in a statement. However, heavy rains leading up to and during harvest for Shandong, Henan, Hebei and Hubei, major producing provinces, did cause some quality damage. The country’s summer wheat crop accounts for most of China’s wheat production. The year-over-year rise in China’s summer wheat crop pushed its total summer grain output to 145.82 MMT, up 2.1% from the year prior. Summer grain acreage increased for the first time in six years, reflecting China’s shift to a focus on food security and bolstering production.
Food prices still climbing… U.S. inflation accelerated in June at the fastest pace in 13 years as the recovery from the pandemic gained steam, according to yesterday’s consumer price index. Restaurant prices rose 0.7% for the month and posted a 4.2% rise over the past year, while grocery store prices were up 0.8% from May, but only posted an annual increase of 0.9%, according to the Bureau of Labor and Statistics. The rise in restaurant prices on an annualized basis was the biggest rise since May 2009. At the grocery store, beef prices were a key as they rose 4.5% in June, the biggest monthly rise since June 2020.
Biden to meet with Senate Democrats about their $3.5-trillion reconciliation budget plan… President Joe Biden is set to meet with Senate Democrats at the Capitol today to discuss an agreement reached late Tuesday on a $3.5 trillion budget plan that would expand Medicare, fund climate-change initiatives, subsidize childcare and fulfill other parts of Biden's economic agenda. Democrats hope to pass the “human infrastructure” legislation via reconciliation, which they could pass with a simple majority in the evenly divided Senate and avoid a filibuster. The key is whether Biden and Democratic leaders can unite all Senate Democrats in support of the package. Moderate Democrats, including Senator Joe Manchin (D-W.Va.), are key swing votes. In the past, Manchin has signaled he would not support anything beyond $2 trillion. Another issue is how the measure would be funded.
Headway on physical infrastructure… Meanwhile, negotiations on a $579-billion bipartisan bill focused on physical infrastructure, the second part of Biden’s two-track economic package, made some headway after meetings earlier last night. Senator Rob Portman (R-Ohio), the lead Republican negotiator, said “about half” of the outstanding issues were resolved last night, but a “couple dozen” remain. The goal, he said, is to resolve the remaining issues by tomorrow and work on drafting the legislation over the weekend.
CBO calling for the second largest budget deficit since 1945 in FY 2021… The U.S. budget deficit narrowed to $2.2 trillion during the first nine months of the fiscal year from the same period a year earlier, with the gap between spending and revenue shrinking as the recovery boosted tax collections. The nonpartisan Congressional Budget Office (CBO) projects that the federal budget deficit for this fiscal year will reach about $3 trillion. Relative to the size of the economy, this year’s deficit is projected to total 13.4% of gross domestic product, the CBO says, making it the second largest since 1945, exceeded only by last year’s 14.9% gap.
Chinese companies scooping up land overseas… Chinese companies acquired 6.48 million hectares (16.01 million acres) of land overseas between 2011 and 2020, Nikkei Asia says, citing a new report released by Land Matrix. Chinese purchases dwarfed the 1.56 million hectares (3.85 million acres) bought by the United Kingdom (the next largest buyer of overseas land during that time).
Senators push to ease Cuba trade ban... A new bipartisan push in Congress to open Cuba for U.S. agriculture stands at least a chance of moving ahead with a trade relationship that has bedeviled American presidents over decades. Despite industry support, it won’t happen without a fight from Cuban Americans in the GOP who have protested any move seen as benefiting the island’s communist government.
Argentina’s beef exports dropped 6.6% from year-ago during May when suspension took effect… Argentina exported 55,700 MT of beef during May, a 6.6% slide from the year prior given a suspension on shipments from May 20 forward, the country’s CICCRA meat industry chamber said in a report. The Argentine government has since restored exports through year-end, but only at 50% of last year’s average export pace as the country works to curb prices and ensure adequate domestic supplies this election year. Argentina is the world’s fifth largest beef supplier, with China as its main market. CICCRA reports 77.5% of Argentina’s beef exports between January and May went to China.
Early cash cattle market strength… The five-area weighted average daily slaughter price for cattle strengthened early this week, a signal packers 1) are in need of supplies and 2) expect to be paying higher prices by week’s end. That helped lift both live and feeder cattle futures in the face of rising corn prices yesterday. On Tuesday, cash trade picked up at $120 in Kansas and Texas and from $124 to $125 in Nebraska and Iowa. That’s steady to a buck or two higher compared with last week’s action; trade was active to the South and lighter to the north. Boxed beef prices softened yesterday, but movement surged to 178 loads.
Momentum favors market bulls in the lean hog market… Lean hog futures gapped higher to start Tuesday’s session and settled high-range, an encouraging technical signal. The August contract pushed above the 100-day moving average to start the week and extended those gains yesterday, a move that could spur some fund long buying. This week’s price action gives market bulls the advantage and signals hog supplies are likely near their 2021 lows. Cash hog bids jumped a national average of $4.56 yesterday. And the pork cutout value shot $1.08 higher, with 392.34 loads changing hands.
Overnight demand news… South Korea tendered to buy 7,600 MT of GMO-free soybeans. Egypt tendered to buy an unspecified amount of wheat from global suppliers. The Philippines purchased around 40,000 MT of animal feed wheat to be sourced from the Black Sea region late last week. Turkey bought around 395,000 MT of milling wheat in an international tender. Japan will import 220 MT of feed-quality barley for livestock use via a simultaneous buy and sell auction in which it was seeking 80,000 MT of feed wheat and 100,000 MT of feed barley.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 11:00 a.m. Cotton and Wool Outlook: July 2021 — ERS
- 11:00 a.m. Oil Crops Outlook: July 2021 — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Feed Outlook: July 2021 — ERS
- 2:00 p.m. Rice Outlook: July 2021 — ERS
- 2:00 p.m. Wheat Outlook: July 2021 — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Turkey Hatchery — NASS
