Evening Report | June 29, 2022

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Check our advice monitor on ProFarmer.com for updates to our marketing plan.

 

Key Acreage, Grain Stocks data out Thursday... USDA will release its Acreage and Grains Stocks Reports at 11 a.m. CT on Thursday. In the Acreage Report, planted acreage is expected to increase compared with March intentions for corn, but decline for soybeans, wheat and cotton. Based on the average pre-report estimates from a Reuters poll, analysts expect USDA to estimate plantings at 89.861 million acres for corn (89.490 million in March), 90.446 million acres for soybeans (90.955 million), 47.017 million acres for wheat (47.351 million) including 10.844 million acres of spring wheat (11.200 million) and 12.194 million acres for cotton (12.234 million).

June 1 stocks are expected to total 4.343 billion bu. for corn (4.111 billion bu. on June 1, 2021), 965 million for soybeans (769 million bu.) and 655 million bu. for wheat (845 million bu.). June 1 wheat stocks will be final 2021-22 carryover.

 

Hogs & Pigs Report: U.S. Pork Producers Continue Contraction

Hogs & Pigs Report

USDA
(% of year-ago)

Average estimate
(% of year-ago)

All hogs June 1

99.1

99.3

Kept for breeding

99.2

98.9

Kept for marketing

99.1

99.3

 

 

 

Market hog inventory

 

 

  under 50 lbs.

98.7

99.4

  50 lbs.-119 lbs.

99.4

99.4

  120 lbs.-179 lbs.

99.3

99.9

  Over 180 lbs.

99.2

98.6

 

 

 

Pig crop (March-May)

100.0

99.1

Pigs per litter (March-May)

100.2

100.6

Farrowings (March-May)

98.6

98.6

Farrowing intentions (June-Aug.)

99.0

99.4

Farrowing intentions (Sept.-Nov.)

98.6

99.8

 

Ships going dark: Russia’s grain smuggling in the Black Sea... The Financial Times (FT) tracked vessels leaving Sevastopol port in Crimea, a port which has been hit by sanctions that preceded the Russian invasion of Ukraine. Ukrainian officials allege Crimean ports are being used to export grain that Russia has stolen from Ukraine in areas now occupied by Russian forces in the southeastern part of Ukraine. While FT acknowledged no evidence that grain being shipped out of Crimea was stolen from parts of Ukraine now occupied by Russia, “there is a pattern of activity that indicates a rise in smuggling from Crimea.” FT said their analysis of satellite photos and port records indicated around 140,000 MT of grain was exported from Sevastopol. The shipments appear to be supported by activity at Port Kavkaz in Russia, a hub for ship-to-ship transfers of cargo via anchorages outside of the port. The report also noted ships have shut off transmitters that provide their location, making it harder to track them.

 

Russia’s invasion of Ukraine not stopping flow of raw materials to European steel plants... Import volumes of some Russian steelmaking ingredients into Europe are surging, the Wall Street Journal reports, even after the continent’s steelmakers said they would avoid Russia-sourced raw materials. Russian exporters boosted shipments of Russia-sourced ferrotitanium, a metallic alloy used to strengthen steel, by 30% in March from the previous month and far above the average in the months before the invasion. Traders say bargain-hunting buyers are capitalizing on a discount for Russian products amid wide-ranging sanctions, while boosting purchases ahead of possible sanctions on the ingredient itself. The shipments show how markets are responding to sanctions and the threat of restrictions, complicating Western efforts to isolate Russia’s economy. One trader says that as long as Western governments avoid sanctioning ferrotitanium, “most steel plants are buying.”

 

Russian Foreign Ministry: Seizure of frozen assets will prompt retaliatory action...  Reuters reports Russia’s foreign ministry “hinted on Wednesday that it had not dropped the idea of seizing Western-owned assets and businesses in the country, as a top official sharply criticized governments that have hit Moscow with sanctions.” Reuters says that “in a combative media briefing,” Foreign Ministry spokesperson Maria Zakharova “warned that Russia was prepared to ‘act accordingly’ if the West decided to use Russia’s frozen state assets — chief among them being around $300 billion of central bank foreign currency reserves.” Zakharova is quoted as saying, “We should not forget about the foreign assets of Western countries, businesses and citizens who are located on the territory of our country.”

 

Economic prospects improving for rural America... Broad economic prospects for rural America may be looking up for the first time in years, even in the face of inflation and the risk of recession, the Wall Street Journal reports. Small communities have long lagged far behind big cities in job creation and income growth. But since the pandemic, many are seeing an infusion of remote workers drawn by lower costs, laid-back lifestyles and natural beauty — and less crime and other urban challenges. Their presence has helped spur hiring, income gains and home-price growth in rural towns. The question now is whether these transplants are there to stay.

 

Q1 GDP contracts more than expected... The final estimate for first quarter GDP showed the U.S. economy contracted slightly more than expected in the first quarter of 2022, declining 1.6% versus the initial reading of a 1.5% decline. This sets the stage for a potential recession reading next month. A rise in the trade deficit to a record mark was largely behind the slightly larger decline as both consumer and business spending rose in the first quarter. However, consumer spending was not as strong as initial figures suggested.

 

Powell: Soft landing for U.S. economy still possible, but no guarantee... Federal Reserve Board Chairman Jerome Powell on Wednesday said there was no guarantee that the central bank can engineer a soft landing for the U.S. economy. In a central banker panel discussion at the European Central Bank policy conference in Sintra, Portugal, Powell said, “We think that there are pathways for us to achieve the path back to 2% inflation while still retaining a strong labor market. We believe we can do that.” Still, Powell added there was “no guarantee that we can do that.”

Powell noted there is a “risk U.S. Federal Reserve interest rate increases will slow the economy too much, but the bigger risk is persistent inflation that starts to let public expectations about prices drift higher.” Powell said, “The clock is kind of running on how long will you remain in a low-inflation regime. ... The risk is that because of the multiplicity of shocks you start to transition into a higher inflation regime and our job is to literally prevent that from happening and we will prevent that from happening.”

 

House Ag Committee Ranking Member focuses on margins, CCC use in farm bill confab... House Agriculture Committee Ranking Member GT Thompson (R-Pa.) joined Rep. Dusty Johnson (R-S.D.) in South Dakota for a farm bill listening session, talking about the need for the coming farm bill to address issues of margins being faced by farmers.

“Where we may have record prices now, American farming is a business, and so it’s the margin you’re left with at the end of the day, and where we have programs that are not driven by margin, they’re driven by the actual reference price, that’s probably something we need to take a look at,” Thompson said. He also took issue with the use of Commodity Credit Corporation (CCC) authority by USDA Secretary Tom Vilsack, saying USDA chief was using it as his own personal fund to push forward on policy goals that have not been cleared by Congress.

Farmers at the session as expected noted crop insurance is a critical component of the farm bill that needs to be maintained and that the existing farm bill safety net programs need to be modernized.

 

More than $4 billion have been paid out in ERP payouts to date... It looks like USDA again waited for USDA Secretary to travel or give testimony to Congress to announce a major development. This time Vilsack was in Minburn, Iowa, in a district where Democratic Rep. Cindy Axne could well face a tough campaign. Vilsack announced that to date, agricultural producers have already received more than $4 billion through the Emergency Relief Program (ERP), representing approximately 67% of the more than $6 billion projected to be paid through Phase 1 of the program. USDA mailed out pre-filled applications in late May to producers with crop insurance who suffered losses due to natural disasters in 2020 and 2021. Commodity and specialty crop producers have until July 22 to complete applications.

 

Results of Tuesday’s congressional primary elections, primary runoffs or special elections...

  • Colorado: State Rep. Ron Hanks lost his bid for the GOP’s Senate nomination to Joe O’Dea, a businessman who has repeatedly acknowledged that President Joe Biden legitimately won the 2020 election. O’Dea now figures to give Colorado Democrats what they feared: A competitive general-election contest against Senator Michael Bennet, who has privately told people his race will be difficult.

Rep. Lauren Boebert, one of Congress’ most polarizing members, easily beat back a challenge from a more mainstream Republican, moderate state Rep. Don Coram, a rancher and hemp farmer.

 In Colorado’s deeply conservative El Paso County, eight-term Republican Rep. Doug Lamborn staved off a challenge from the right from state Rep. Dave Williams for his 5th Congressional District seat.

  • Illinois: Darren Bailey, a southern Illinois farmer and state senator endorsed last weekend by former President Donald Trump, was declared the GOP winner by the Associated Press. He will face Democratic Gov. J.B. Pritzker, a billionaire and the nation’s wealthiest elected official, on November’s ballot. Hedge-fund billionaire Ken Griffin lost his $50 million bet in the Illinois Republican primary for governor after the suburban mayor he supported lost to a staunch conservative who benefited from Democratic advertising. The candidate Griffin bankrolled, Aurora, Ill., Mayor Richard Irvin, had trailed in polls going into Tuesday’s final day of voting.

Republican Rep. Mary Miller won her primary over fellow five-term incumbent Rep. Rodney Davis in a heavily red district in central Illinois that was redrawn after the state’s shrinking population cost it a congressional seat. Davis is the ranking member of the House Transportation and Infrastructure Highways and Transit Subcommittee. Miller voted against certifying Biden’s victory in the 2020 presidential election and is a member of the far-right House Freedom Caucus. Davis was a co-chair of Trump’s 2020 Illinois campaign but voted to certify the 2020 presidential election results.

Democratic Rep. Sean Casten beat progressive Rep. Marie Newman for a seat in suburban Chicago. Casten is a two-term congressman who flipped a suburban seat in 2018 that Republicans had held for decades.

 Jonathan Jackson, the son of civil rights leader the Rev. Jesse Jackson, emerged from a crowded field vying to replace 15-term Democratic Rep. Bobby Rush, the only lawmaker who has ever beaten Barack Obama in a race. Obama challenged Rush in a 2000 U.S. House primary and lost. The heavily Democratic 1st Congressional District that Jackson will now run in November to represent was redrawn after the 2020 census and now stretches from Chicago’s South Side to Kankakee.

 In Illinois’ open 17th Congressional District, Esther Joy King won the GOP nomination, while Eric Sorensen, a former meteorologist, won the Democratic nomination. They are vying to replace five-term Democratic Rep. Cheri Bustos, who decided against seeking re-election in the largely rural swath of northwestern Illinois.

  • Mississippi: Rep. Michael Guest, a Republican who bucked Trump to vote for an independent Jan. 6 commission, beat back a challenge from an air force pilot. Republican Rep. Steven Palazzo lost in a rare runoff to Sheriff Mike Ezell.
  • Nebraska: Republican state Senator Mike Flood won the special election for the Nebraska District 1 congressional seat formerly held by Republican Jeff Fortenberry, who was sentenced to probation on Tuesday for lying to federal agents just as voters picked a replacement for the rest of his term. A judge sentenced him to two years of probation, a $25,000 fine and community service. Flood defeated Democrat Patty Pansing Brooks. Flood, a former speaker of the Nebraska Legislature, will fill the remainder of Fortenberry’s term and is favored to win the general election in November, also against Pansing Brooks.
  • Oklahoma: Sen. James Lankford easily defeated a GOP primary challenge from an evangelical pastor who complained he hadn't echoed Trump's election comments.

Rep. Markwayne Mullin and T.W. Shannon are headed for an Aug. 23 Republican runoff in the Oklahoma Senate special election after emerging as the top two vote recipients in Tuesday’s primary. Given the partisan lean of the state, whoever wins the Republican nomination is likely to win the November general election for the seat of Sen. Jim Inhofe (R), who’s resigning two years into his term after holding the seat since a 1994 special election. The nominee will face former Rep. Kendra Horn, who was unopposed for the Democratic nomination.

 

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Weekly wheat sales exceed expectations, while soybeans miss
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Weekly wheat sales were just above the pre-report range for the week ended March 21, while soybean sales missed the expected range by 36,000 MT. Corn sales held steady at 1.21 MMT.