First Thing Today | June 17, 2021

Good morning!

Grain and soy futures slump amid rain and dollar strength… Corn futures faced followthrough selling overnight and are down 18 to 20 cents, hitting or testing new lows for the month. Soybean futures are down 22 to 27 cents, with November leading losses. Winter wheat futures have tumbled 9 to 11 cents, with spring wheat 2 to 4 cents lower. After a limit-lower performance in July soybean oil yesterday, limits expand to $1.50 for soybeans, $45 for soymeal and 550 points for soybean oil. The U.S. dollar index is posting strong gains, jumping to its highest level since mid-April after the Fed moved up the timing for its first interest rate hike. Crude oil futures are near unchanged.

Hot, stormy weather for the Midwest… Hot temperatures are expected for the Southern and Central Plains and much of the Midwest today through Saturday, stressing livestock and crops. Heat advisories are in effect for northeast Nebraska, northern Kansas, the southern two-thirds of Iowa and northern Missouri, with highs in the upper 90s to low 100s expected to stretch from eastern Colorado to southern Illinois. Severe weather and flash flooding are possible for the Midwest today and the Ohio Valley tomorrow. A tropical disturbance is expected to make landfall early Saturday in western Louisiana near the border with Texas. The system could reach tropical storm strength before making landfall. It should bring heavy rain and some flooding to the southern Delta and southeastern states over the weekend.

Expectations for today’s Weekly Export Sales Report… The report is for the week ending June 10. 

Brazil’s soybean exports to date running near in line with year-ago… Refinitiv trade flow data shows Brazil exported 13 MMT of soybeans during May, which would be a 16% retreat from April and a 2% dip from May 2020. Since February, the country has shipped 47.9 MMT of soybeans, up 1.6% from year-ago, according to the Refinitiv data. The latest vessel line up data shows 10.9 MMT of soybeans have been or are waiting to ship this month. Refinitiv Commodities Research expects Brazil to export 84 MMT of soybeans during 2020-21, a 4.7-MMT increase from the year prior on larger production. Also of note, the trade flow data shows Argentina exported just 813,000 MT of soybeans last month, a 44% drop from the five-year average. Rainy weather and slow farmer sales of soybeans due to the country’s inflationary woes have stymied shipments. While the country has around 9 MMT to 10 MMT of soybeans to ship, uncertainty about the Argentine peso and government intervention could curb shipments to between 7 MMT and 8 MMT of soybeans in 2020-21, the Refinitiv group forecasts.

Pace of Argentine soybean sales have nearly caught up to year-ago… Argentine producers sold another 853,500 MT of soybeans the week ending June 9, bringing cumulative 2020-21 sales to 21.8 MMT, the country’s ag ministry reports. That represents 50.1% of this year’s 43.5 MMT crop, as estimated by the Buenos Aires Grains Exchange. Last year at this time, producers had sold 25.3 MMT (51.6%) of their estimated 49 MMT crop. Corn sales are running around 3 MMT ahead of the 2019-20 season at this point, with 30.2 MMT registered for sale thus far.

APK-Inform trims wheat crop forecast for Ukraine, raises corn crop projection… The analyst APK-Inform now estimates Ukraine’s 2021 wheat crop at 27.264 MMT, a 358,000 MT reduction from its previous forecast. But it still expects Ukraine to export 19.75 MMT of the grain. APK-Inform also bumped its 2021 corn crop estimate 474,000 MT higher, pushing it to 36.179 MMT.

Reuters: India tables plan to lower duties on imports of edible oils… India has paused its proposal to lower import duties on edible oils amid a pullback in global prices for cooking oil from record levels, two government and one industry official told Reuters. The country had been considering lower import duties amid a price surge in domestic soyoil and palm oil prices in the midst of the Covid-19 pandemic. One government official told Reuters the country is looking for a longer-term, sustainable solution. India is the world’s largest importer of vegetable oils, and it has been working to boost domestic oilseed production to reduce its dependence on imports.

Biden and Putin agree to disagree... Noting the “hype” around the summit, President Joe Biden said his aim was “straightforward” about the Kremlin’s trampling of human rights, military adventurism in Ukraine and attacks on democracy, including interference in U.S. elections. Biden said the summit was about establishing “some rules of the road.” Biden said that the prospect of an American military response to Russia’s actions was never broached. But he also suggested that America’s cyber capabilities exceeded Moscow’s, hinting that the U.S. could retaliate in kind to continued cyberattacks from within Russia. And he said “the consequences ... would be devastating for Russia” if imprisoned Putin foe and opposition leader Alexei Navalny, who survived a poisoning with a Russian nerve agent last year, were to die in the state’s hands. Russian President Vladimir Putin compared Navalny’s protest movement seeking democratic reforms to the insurrectionists who sought to overturn the U.S. presidential election by storming the Capitol on Jan. 6.  Biden said that Putin, too, is interested in averting a new Cold War as he sees China on his borders, increasingly asserting economic and military power. Biden said he and Putin concurred on efforts to prevent Iran from acquiring a nuclear weapon. Biden laid out expectations for future relations with Russia, but success will be measured in changes in Russian behavior.

Bipartisan infrastructure plan gains support… Prospects for a bipartisan deal improved yesterday as 21 senators, including 11 Republicans, signed onto a bipartisan framework for a $579 billion package. Such legislation would still need support from nearly all 50 Democrats in the chamber unless more Republicans sign on, and it includes a funding mechanism —indexing the national gasoline tax to inflation — that the White House has opposed. There are a “lot of preconditions” from Republicans and Democrats both, so getting an overall deal “will be a challenge,” Senator Mark Warner (D-Va.), a member of the negotiating group, said after a meeting with White House officials.

Democrats mull plan to push immigration changes... Senate Democrats are weighing plans to speed some components of a stalled immigration overhaul through the Senate later this year as part of a broad Democrat-only measure with much of Biden’s economic agenda. The idea was discussed yesterday at a meeting between Senate leadership and all 11 Democrats on the Senate Budget Committee.

Bill to mandate disclosure of climate risks passes... Publicly traded companies would be required to disclose financial risks related to climate change under a bill passed by the House yesterday and sent to the Senate where it faces an uncertain future. The bill would also require disclosure of other so-called environmental, social, and governance information such as that related to political spending, tax jurisdictions and executive pay raises.

G.M. speeds up its electric-vehicle production targets… The auto giant said it would build two new U.S. battery plants and now plans to spend $35 billion on EVs by 2025, up from a forecast of $20 billion a year ago. It is another sign of the auto industry’s embrace of electric vehicles as key to its future.

Biden plans to sign legislation today that would make June 19 a federal holiday… Juneteenth commemorates the end of slavery in the U.S. The House and Senate passed the bill in votes earlier this week.

Grassley: Senate to hold June 23 hearing on cattle market/industry... Senator Chuck Grassley (R-Iowa) tweeted: “GR8 NEWS Ag Cmte answering my calls 2hold a hearing on June 23 on unfairness in cattle market/industry +need for transparency This is opportunity to educate senators/public on the dire issues family farmers r facing while up against Big Cattle/ 4 packers control 80% of market.”

Reports Argentina nearing a deal on beef exports… Argentine meat packers have reportedly reached a preliminary deal with the government allowing the partial resumption of beef exports following a month-long suspension of shipments. “There is a preliminary agreement on the amount to be exported. All other details are being discussed,” a source from the meat exporting sector with direct knowledge of the talks told Reuters. The local newspaper La Nacion reports the government has proposed meat processing plants export 50% of their usual volume during June and July. The newspaper reports that for quotas agreed to with the EU and the U.S. and of kosher meat to Israel, the reopening would be 100%. The ban stemmed from concerns about inflation within Argentina, with elections looming in October.

Beef market slides as cash prices climb… Choice boxed beef values dropped $5.26 and Select dived $8.32 at midweek, but the price break did spur solid movement of 141 loads. Choice values have fallen $9.48 over the past week, while Select has dropped about $17.91, widening its discount to Choice to $39.21. Additional cash cattle trade occurred yesterday at prices ranging from $121 to $124, with Iowa and Nebraska leading gains. Northern locations have been leading cash gains thanks in part to dried out pastures on the Northern Plains and northwest Corn Belt. Futures rallied in response to the cash market gains, with August live cattle setting a new contract high of $125.775 yesterday.

Exports in focus for lean hog market… A dive in live hog and pork prices and reports China’s sow herd has rebuilt to around 98.4% of its pre- African swine fever levels sparked concerns about a major slowdown in Chinese pork purchases. That said, a senior analyst at Rabobank warns China will likely face a shortage of live hogs the second half of the year. The situation will increase attention on weekly and monthly trade updates, with USDA’s Weekly Export Sales Report on tap today. Last week, pork exports hit a marketing-year low of 27,500 MT. The pork cutout value dropped $1.99 yesterday, while cash hog bids soared $5.73. Daily trading limits expand to $4.50 after yesterday’s limit-down close for several  contracts.

Overnight demand news… Japan’s ag ministry bought 109,062 MT of food-quality wheat from the U.S., as well as 74,660 MT from Canada and 23,750 MT from Australia.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 7:30 a.m. Extended Weather Outlook — NWS