First Thing Today | June 15, 2021
Cooler forecast keeps new-crop futures under pressure… Corn futures opened the overnight session slightly higher but quickly turned down, with futures 6 to 8 cents lower in all but the front-month, which is just 2 cents lower. Soybean futures are split, with nearbys up 4 to 12 cents, September a penny lower, and new-crop futures down 3 to 4 cents. Winter wheat futures are down 13 to 14 cents, with HRW wheat leading losses. Spring wheat is down 1 to 3 cents. While crop ratings generally came in worse than expected yesterday, the market also recognizes it’s early in the growing season and cooler temperatures and possibly some rain are in the forecast next week. The greenback is up slightly. Crude oil futures continue to climb.
Crop progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended June 13. Find more details here.
- Corn: 96% emerged, 68% “good” to “excellent” (G/E)
- Soybeans: 94% planted, 86% emerged, 62% G/E
- Spring wheat: 96% emerged, 8% headed, 37% G/E
- Winter wheat: 92% headed, 19% harvested, 48% rated G/E
- Cotton: 90% planted, 14% squaring, 45% G/E
Corn, soybean and spring wheat CCI ratings drop… 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 crop dropped 9.5 points to 372.3 points while the soybean crop fell 8.8 points to 358.0 points. Corn is now 4.5 points under its five-year average for this date, while the soybean CCI rating is 13.3 below average. The spring wheat CCI rating dropped another 4.7 points this week to 304.7 points. That’s now 67.9 points below the norm for this point in the growing season.
Cordonnier will wait to see if cooler, wetter weather verifies before lowering U.S. crop pegs… Crop Consultant Dr. Michael Cordonnier continues to forecast the U.S. corn crop will yield an average of 177.5 bu. per acre, which paired with planted acreage of 93.5 million would result in a crop of 15.17 billion bushels. “I was prepared to lower the yield estimate this week, but the forecast is calling for cooler temperatures and improved chances of rain at least in the central and eastern Corn Belt, so I decided to wait to see of the forecast verifies,” Cordonnier says. He also stuck with his 50.8 bu. per acre soybean yield projection and a planted acreage forecast at 88 million, resulting in a 4.42 billion bu. production projection. Cordonnier’s bias toward both crops is neutral to lower, and he emphasized that while conditions are not ideal, it is early in the growing season.
No change to Cordonnier’s South American production forecasts… Cordonnier maintained his Brazilian corn and soybean crop estimates of 92 MMT and 134 MMT, respectively. His bias is neutral to lower toward the corn crop going forward. He commented that early yields have been variable and noted Conab warned that its 96.3 MMT corn crop estimate could move lower if there are additional frost in Parana or Mato Grosso do Sul before the end of June. Cordonnier’s bias toward Brazil’s soybean crop is neutral to higher going forward, observing that Conab estimates the crop at 135.8 MMT and USDA is at 137 MMT. He made no change to his Argentine soybean or corn crop estimates that stand at 45.0 MMT and 46.5 MMT, respectively.
NOPA’s crush expected to fall short of year-ago for May… Members of the National Oilseed Processors Association (NOPA) will likely report they crushed 165.12 million bu. of soybeans during May, according to analysts polled by Reuters. That would be up 4.81 million bu. from April but down 4.46 million bu. from year-ago. Last month’s crush surprised to the downside, with processors taking downtime for seasonal maintenance. Some of those facilities restarted operations in May, but analysts still expect crush to come up shy of year-ago levels, especially given tight supplies of the oilseed and some demand destruction due to soaring prices. Analysts on average expect NOPA to report soyoil supplies around 1.713 billion lbs. at the end of May, which would be an 11-million lb. rise from the month prior but a 167-million-bu. retreat from May 2020.
Warm June benefits German wheat crop… Germany’s all wheat crop will likely climb 3.8% this year to 22.98 MMT, the country’s association of farm cooperatives said today. The association’s wheat crop forecast is up 320,000 MT from May. A warm June has helped crops to catch up on growth after a cool spring, the association details. Germany is typically the European Unions’ second largest wheat producer.
Truce on U.S./EU aircraft dispute… U.S. and the European Union announceda five-year truce in their 17-year dispute over aircraft subsidies to Airbus SE and Boeing Co. In 2019 the long-running disagreement led the allies to impose tariffs on $11.5 billion of each other’s exports. European Commission President Ursula von der Leyen made the announcement before a U.S./EU summit with President Joe Biden. A similar dispute exists between the U.S. and U.K. with a four-month suspension of tariffs also announced in March, but there has been no word that dispute has been resolved. The deal has also been driven by the emergence of Commercial Aircraft Corp. of China, or Comac, as a competitor to the two planemakers.
China says radiation levels near Taishan nuclear plant normal... China said that radiation levels near the Taishan nuclear project in Guangdong province were normal despite media reports of leaks at one of the plant’s reactors. French utility EDF said that it was investigating the situation after CNN reported that EDF’s Framatome unit that designed the reactors was warning of an “imminent radiological threat” at the project. But Chinese Foreign Ministry spokesman Zhao Lijian said there were no signs of any abnormalities. "So far China's nuclear power plants have maintained a good operating record, with no incidents affecting the environment and public health," Zhao said. EDF indicated Monday that fuel rods supplied by Framatome could be the problem.
Shipping Impact focus of hearing… The House Transportation and Infrastructure Coast Guard and Maritime Transportation Subcommittee will hold a hearing on today to discuss the impacts of shipping container shortages, delays, and increased demand on the North American supply chain. Agriculture shipments have been particularly affected by the container situation, with the Federal Maritime Commission also investigating the issue under its Fact Finding 29 effort.
CFAP 2 payouts just over $13.7 billion… Payments approved under the Coronavirus Food Assistance Program 2 (CFAP 2) are now at $13.71 billion, up from $13.69 billion the prior week. Acreage-based payments are at $6.27 billion, livestock at $3.45 billion, sales commodities are at $2.72 billion, dairy at $1.22 billion and eggs/broilers are at $61.84 billion. CFAP 1 payments were little changed at $10.58 billion.
Early cash cattle sales at higher prices… Cattle futures got a boost yesterday from a pullback in corn and wheat prices, as well as recent heat and dryness on the Northern Plains that have parched pastures. USDA rates 35% of the nation’s pastures and rangelands “good” to “excellent” and 36% of them “poor” to “very poor.” Cash cattle traded at an average price of $120.03 last week, according to USDA, up 11 cents from the week prior and extending the multi-month trend of steady cash prices. Early expectations are for more of the same this week. But around 1,400 head traded in Nebraska yesterday at $124, up $4 from the bulk of action last week in the state. Choice and Select boxed beef values fell $2.09 and $1.80 on Monday, with movement slowing to 80 loads.
Pork prices drop… Lean hog futures faced heavy followthrough selling to start the week, with traders taking note of a $3.86-drop in the pork cutout value to start the week after softer prices late last week. Ribs jumped $15.80 on Monday, but all other cuts softened. Movement was decent at 319.20 loads. Cash hog bids slipped an average of 46 cents nationally to start the week, according to USDA. Packer profit margins have dived more than $23 over the past week to $2.80 a head as of June 14, according to HedgersEdge.com.
Overnight demand news… Egypt tendered to buy an unspecified amount of wheat from global suppliers; payment will be at sight. South Korea’s Major Feedmill Group bought around 65,000 MT of animal feed wheat from optional origins. The Philippines tendered to buy a total of around 205,000 MT of milling wheat and animal feed wheat. Japan is seeking 109,062 MT of food-quality wheat from the United States, as well as 74,660 MT of the grain from Canada and 23,750 MT from Australia.
Today’s reports
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
