First Thing Today | June 11, 2021

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Good morning!

Profit-taking moves in as weekend nears… Corn futures are down 9 to 11 cents amid some profit-taking to close out the week. Soybean futures are 10 to 18 cents lower after USDA’s slightly higher than expected carryover projections. July soymeal futures closed at a six-month low yesterday and the contract is extending losses today. Winter wheat futures are down 4 to 6 cents, while spring wheat is 10 to 12 cents lower thanks to much-needed moisture on the Northern Plains. Crude oil futures hit a new 2.5-year high overnight. The greenback is also firmer.

Delaware lawmakers pressuring EPA to ease refiners’ blending obligations… Faced with mounting pressure from labor unions and lawmakers from his home state, President Joe Biden is considering ways relieve U.S. oil refiners of their blending mandates under the Renewable Fuel Standard, according to an exclusive report from Reuters. In recent weeks, Democratic senators Chris Coons and Tom Carper of Delaware have held at least two discussions on the matter with Michael Regan, head of EPA, according to the three sources cited by Reuters. At these meetings, Regan and the lawmakers discussed options like a nationwide general waiver exempting the refining industry from some obligations, lowering the amount of renewable fuel refiners must blend in the future, creating a price cap on compliance credits and issuing an emergency declaration, according to two of the sources. Nick Conger, an EPA spokesperson, confirmed Regan met with the lawmakers, but did not comment on the discussions.  

Tax on Russian wheat exports rises… Russia’s ag ministry announced the duty on wheat exports will stand at $33.30 per metric ton for June 16-22. That’s up $3.90 from the week prior but still under the set duty of 50 euros ($61) that was in place during the spring.

Warm weather bolsters the French soft wheat crop… France’s farm office rates 81% of the country’s soft wheat crop good or excellent as of June 7, a one-point rise from the week prior. That signals warm temperatures of late have boosted already solid crop conditions and helped speed along crop development after a slower start. Last year at this time, just 56% of the crop was rated in the top two categories. Temperatures are expected to remain in the 80s degrees F in the days ahead, with some welcome moisture expected midway through next week.

Brazil’s sugar and ethanol production surge after a slow start… Mills in Brazil’s center-south produced a record-high 2.62 MMT of sugar the second half of May, topping market expectations and surpassing year-ago by 2.6%, according to the industry group Unica. Ethanol production (including corn-derived) climbed 9.1% to 1.98 billion liters. Nicolle Monteiro de Castro, S&P Global Platts senior price specialist, says the rise in sugar production “can be mostly attributed to the strong dry weather in the CS region, which has been converted in an increased recoverable sugar.” Anhydrous ethanol production surged 47%, with mills working to lay to rest the possibility of any cuts to ethanol in fuel blends.

U.S. budget deficit grew to a record $2.1 trillion during the first eight months of the fiscal year… The government’s spending surge has propelled a rapid recovery from the pandemic-induced economic slump while also helping send the federal debt as a proportion of the economy soaring to levels not seen since the end of World War II.

Bipartisan group of Senators reach agreement on infrastructure proposal... Reports note the plan calls for $579 billion above expected future federal spending on infrastructure. The overall proposal would spend $974 billion over five years and $1.2 trillion if it continued over eight years. Key now is whether the latest plan can garner enough support from both sides of the political aisle. The group includes some key Senators like Kyrsten Sinema (D-Ariz.) and Joe Manchin (D-W.Va.). Details of the compromise offer are needed. Sen. Mitt Romney (R-Utah), another member of the group, said the group was looking at indexing the gas tax to inflation. But the White House has said that would violate Biden’s red line of not raising taxes on those earning less than $400,000 a year.

U.S. lifts some Iran sanctions... U.S. officials say the action, which comes amid stalled nuclear negotiations, signals Washington’s commitment to easing a broader pressure campaign if Tehran changes its behavior.

USDA provides funding to drought-hit states through EQIP’s new Conservation Incentive Contracts… Yesterday, USDA’s Natural Resources Conservation Service announced it will offer $41.8 million through the Environmental Quality Incentives Program (EQIP) to help ag producers in Arizona, California, Colorado and Oregon ease the immediate impact of drought and other natural resource challenges on working lands. NRCS will make this funding available through the EQIP’s new Conservation Incentive Contracts. Signup is underway and NRCS will accept applications through July 12, 2021. These 5- to 10-year contracts “address high-priority conservation and natural resources concerns, including drought.” Find more details here.

Wisconsin judge issues temporary restraining order on USDA socially disadvantaged loan forgiveness program... U.S. District Judge William Griesbach has issued a temporary restraining order halting payments under the loan forgiveness program for selected socially disadvantaged farmers that was included in the Covid-19 aid package approved in March. USDA in May announced they were moving forward with the debt forgiveness effort. The suit contends that the loan forgiveness to socially disadvantaged farmers includes explicit racial classifications — that farmers and ranchers have to be Black or African American, American Indian or Alaskan native, Hispanic or Latino, or Asian American or Pacific Islander to qualify for the debt forgiveness.

Cotton AWP back above 72 cents... The adjusted world price for cotton moved up to 72.36 cents per pound, effective today (June 11), up from 69.78 cents per pound the prior week and back above 70 cents per pound for the first time since the week of May 14. Meanwhile, USDA said that Special Import Quota #8 will be established June 17 for 48,008 bales of Upland Cotton, applying to cotton purchased not later than Sept. 14 and entered into the U.S. not later than Dec. 13.

South Dakota joins interstate shipment program meant to diversify meat and poultry processing… USDA’s Food Safety and Inspection Service (FSIS) and the state of South Dakota have finalized a Cooperative Interstate Shipment (CIS) agreement, which allows selected state-inspected meat and poultry processors to ship their products across state lines. Under the CIS agreement, South Dakota may inspect meat in selected establishments for shipment throughout the U.S. Nine states now participate in the program meant to promote the expansion of business opportunities for state-inspected meat and poultry establishments with less than 25 employees. “If we’re going to strengthen our nation’s food system and prevent supply chain bottlenecks before they occur, then we must continue to provide smaller meat processing establishments the opportunity to build their local and regional marketplaces,” said USDA Deputy Under Secretary for Food Safety Sandra Eskin.

Congress starts responding to livestock pricing issue… Senator Jon Tester (D-Mont.) is introducing a bill that would amend the Packers and Stockyards Act to establish a USDA Office of the Special Investigator for Competition Matters. Sen. Mike Rounds (R-S.D.) and Chuck Grassley (R-Iowa) are sponsoring the measure. The Senate ag panel is slated to announce a hearing soon on cattle marketing pricing.

NCBA files petition with USDA to eliminate ‘Product of the USA’ labels… The National Cattlemen’s Beef Association (NCBA) filed a petition with USDA’s Food Safety and Inspection Service (FSIS) to eliminate the use of “Product of the USA” and other broad U.S. origin labeling claims for beef products that are potentially misleading to consumers. The group pointed out imported products can be labeled as a “Product of the USA” if they have been minimally processed or repackaged in a USDA-inspected facility. The group said it wants to work with USDA’s Agricultural Marketing Service (AMS) to educate stakeholders in the industry to develop voluntary, verifiable origin marketing claims that deliver benefits to producers but do not violate U.S. trade commitments.

Strike likely averted at major Smithfield pork facility... The Sioux Falls chapter of the United Food and Commercial Workers reached a tentative agreement with Smithfield Foods on a four-year contract for union employees. Members will vote on the proposed contract next week. Workers had threatened to strike if contract negotiations fell through. The Sioux Falls facility produces nearly 5% of U.S. pork.

Higher beef export forecasts from USDA… July live cattle are working on a modest gain for the week, while August feeders are around $1.50 lower for the week. Choice boxed beef values slid 40 cents on Thursday, while Select gained $2.53. The spread between the grades is wide at $27.85, premium Choice. Packer profit margins continue to hold near $900 a head, according to HedgersEdge.com. Also of note, USDA increased its 2021 beef export forecast by 117 million lbs. yesterday, and it boosted its 2022 beef export forecast by 75 million lbs., citing “expected firm demand from Asian markets.”

USDA hikes pork export forecast for 2021 and 2022… Lean hog futures settled mixed yesterday as pork export sales slowed the week ending June 3 and pork exports hit a new marketing-year low. In its Supply & Demand Report yesterday, USDA boosted its 2021 and 2022 pork export forecasts by 125 million bu. each, pushing them to 7.552 billion lbs. and 7.550 billion lbs., respectively. USDA explains “demand in several markets has strengthened.” The department also trimmed its 2021 pork production forecast and made no change to its production outlook for 2022.

Overnight demand news… South Korea’s Major Feedmill Group bought around 65,000 MT of animal feed wheat that can be sourced from optional origins. Importers in the Philippines bought around 50,000 MT of animal feed wheat in a tender, reportedly from Australia. A buyer in Thailand is also thought to have bought an undisclosed amount of feed wheat from the Black Sea region. Tunisia is thought to have purchased around 50,000 MT of soft milling wheat in an international tender.

Today’s reports

 

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