First Thing Today | July 7, 2021
Some corrective buying after yesterday’s dive… July corn futures are 8 cents higher, while deferred months are narrowly mixed after yesterday’s sharp to limit losses. Soybean futures are 28 to 38 cents higher after yesterday’s lower-than-expected crop condition ratings, taking back a decent chunk of yesterday’s sharp to limit losses. Today, daily trading limits expand to 60 cents for corn futures and $1.50 for soybean futures. Limits also expand to $45 for soybean meal and 550 points for soybean oil. Winter wheat futures are up 5 to 10 cents, with HRW wheat leading gains. Spring wheat futures are 9 to 11 cents higher. Crude oil futures are sharply higher and the U.S. dollar index is holding near unchanged.
Fed to release FOMC minutes today… At 1:00 p.m. CT, the Federal Reserve will release the minutes of its June Federal Open Market Committee (FOMC) meeting, which traders will scour for clues regarding the timing of the Fed’s policy moves to tighten monetary policy in the months ahead. Speculation is rising that the minutes may not be as hawkish as some had expected.
Crop progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended July 4. Find more details here.
- Corn: 10% silking, 64% “good” to “excellent” (G/E)
- Soybeans: 29% blooming, 3% setting pods, 59% G/E
- Spring wheat: 69% headed, 16% G/E
- Winter wheat: 45% harvested, 47% G/E
- Cotton: 42% squaring, 11% setting bolls, 52% G/E
Spring wheat CCI still plunging… 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 rating inched 0.4 point higher to 367.4 points. For the beginning of July, the corn CCI rating is 7.5 points below the five-year average. The soybean crop dropped 2.4 points over the past week to 351.9 points. The soybean CCI rating is 9.2 points below average for the first week of July. The spring wheat CCI plunged another 15.8 points over the past week to 253.6 points. That’s 108.3 points below the five-year average for this date.
Anec expects Brazil’s soybean exports to slow and corn shipments to pick up this month… Brazil will likely export 7.64 MMT of soybeans during July, forecasts the association of grain exporters Anec. That would be roughly a 25% retreat from June, with focus shifting to some degree to corn. Anec expects Brazil to export 2.37 MMT of corn this month, which would be up notably from shipments of just 89,213 MT during June. But delays planting the safrinha corn crop have slowed the start of exports relative to years’ past.
Pace of Argentine soybean sales a bit ahead of 2019-20… Argentine farmers have sold 23.7 MMT of soybeans so far this marketing year, a 788,800-MT advance for the week ended June 30, the country’s ag ministry reports. That represents 54.5% of this year’s 43.5 MMT crop, as estimated by the Buenos Aires Grains Exchange. Last year at this time, producers had sold 26.3 MMT (53.7%) of their 49 MMT crop. So far in the 2020-21 marketing year, corn sales stand at 32.3 MMT, which is 3 MMT ahead of last season at this point.
Chinese corn production likely to climb at least 6% in 2021-22… Chinese corn production is likely to surge in 2021-22, cooling the country’s demand for imports of the grain. Record-high domestic prices are expected to fuel a surge in corn plantings at the expense of soybeans, sorghum and small grains. The China-based ag consultancy JCI has called for a 6.2% (14.9-MMT) rise in corn production to around 253.9 MMT. The government think tank China National Grains & Oils Information Center is calling for a 4.9% increase in corn production. But other forecasters and farmers say these estimates are too conservative. At least one major brokerage is calling for a 14.5% surge in production. China has reversed its policy in recent years of encouraging producers to diversity away from corn. Estimates for how much this might curb China’s corn imports vary widely. JCI expects China to import 27 MMT of corn in 2021-22, USDA pegs imports at 26 MMT, a U.S. ag attaché in Beijing expects imports to slide to 20 MMT and StoneX expects Chinese corn imports to drop to 15 MMT. On the other hand, smaller soybean production could bolster already strong Chinese soybean imports.
Bigger German wheat and rapeseed crop prospects… German farmers will likely bring in a 22.82-MMT winter wheat crop in 2021, which would be a 5% rise from last season, forecasts the German association of farmers known as DBV. Including spring and hard wheat, Germany’s total wheat crop will likely total 23.13 MMT, up 4.5% from 2020. Rain helped crops recover after a hot, dry start to summer, the association reports. That has also helped to lift the country’s winter rapeseed crop prospects by 6% from 2020 to 3.71 MMT. Germany is the EU’s largest rapeseed producer and the bloc’s second largest wheat producer.
Russia’s wheat exports climbed 10% in 2020-21… Russia’s ag ministry reports preliminary data shows the country exported 47.8 MMT of grain during the 2020-21 marketing year that ended July 1, a 12.7% increase from last season. Wheat exports jumped 10.0% from year-ago to 37.2 MMT, with barley exports shooting 37.8% higher to 6.1 MMT and corn exports climbing 2.9% to 4 MMT. Looking ahead to 2021-22, the ministry says its preliminary estimate is for grain exports to total 51 MMT.
Weak monsoon phase worries Indian farmers… Monsoon rains have weakened notably after a strong start, with inadequate rainfall recorded every day since June 19. Yesterday marked a shift in cumulative rainfall to a deficit of 2%, which compares to a 16% surplus the week prior and a 32% surplus two weeks ago. Rains the week ended July 7 were 46% below average. Concerns are rising that some crops may need to be replanted.
Vilsack heading to Nebraska for a ‘major announcement’ on Friday… On Friday, July 9, U.S. Agriculture Secretary Tom Vilsack will travel to Omaha, Nebraska, for a “major announcement.” More details are expected to follow.
Growth Energy CEO Emily Skor on E15 Court Decision and Future of RFS… Growth Energy CEO Emily Skor was on the Farm Journal Radio podcast Signal to Noise and laid out how the industry is grappling with recent court decisions that went against the biofuel industry and how they are positioning ethanol for the future amid the recent developments. Listen and find details here.
Welcome uptick for Choice beef… Cash cattle trade last week took place at an average price of $123.89, down $1.58 from the week prior. But the currentness of marketings has improved thanks to the recent rebound in cash prices, with weights sliding at a time when they are usually on the rise. Choice boxed beef values firmed $1.24 today, a welcome gain after a long stretch of lower to sharply lower trade. Select boxed beef values fell $1.10, with 120 loads changing hands. Traders will watch to see if Choice beef is able to build on Tuesday’s gain, signaling a product market low is in the works. Feeder cattle soared to start the week thanks to sharp to limit losses in corn futures.
July hog futures and CME lean hog index have narrowed the gap… Lean hog futures saw split trade yesterday, with nearbys ending solidly higher and deferred months moderately lower. The pork cutout value fell $1.58 on Tuesday, with movement improving from last week’s totals to 321.37 loads. Negative packer profit margins have improved to near breakeven over the past week, according to HedgersEdge.com. Average hog weights dipped another 0.3 lbs. the week ending July 3 in the key Iowaa/southern Minnesota/South Dakota market. July lean hog futures ended yesterday roughly $1.30 below the CME lean hog index, a dramatic improvement from late June when the discount was double-digits. August lean hogs are still around $9 under the index, however.
Overnight demand news… Jordan issued a new tender to buy 120,000 MT of wheat. Algeria tendered to buy a nominal 50,000 MT of milling wheat. Japan’s ag ministry said it will seek 80,000 MT of feed what and 100,000 MT of feed barley via a simultaneous buy and sell auction. South Korea's Nonghyup Feed Inc. made no purchase in an international tender to buy up to 138,000 MT of corn, citing high prices. But the feed maker did buy 65,000 MT of animal feed wheat. South Korea's Major Feedmill Group (MFG) also bought around 65,000 MT of feed wheat in a private deal.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 1:00 p.m. FOMC Minutes — Federal Reserve
- 2:00 p.m. Broiler Hatchery — NASS
