Mild price strength overnight... Soybean futures benefitted from mild followthrough buying overnight and are trading around 2 cents higher as of 6:30 a.m. CT. Corn futures are steady to fractionally higher, while wheat is fractionally to 3 cents higher. The U.S. dollar index is just below unchanged this morning after light, two-sided trade overnight.
Trump threatens North Korea with ‘fire and fury'… Kim Jong Un’s North Korea regime will be “met with fire and fury and, frankly, power the likes of which the world has never seen before” if the kingdom continues to threaten the U.S., President Donald Trump told reporters in Bedminster, New Jersey on Tuesday. That came after a report in the Washington Post, citing a Defense Intelligence Agency analysis, noted that Pyongyang successfully developed a miniaturized nuclear warhead that could fit onto its missiles. The North Korean army reacted to the statement by announcing it is examining operational plans for a strike on Guam, a U.S.-controlled island 2,200 miles southeast of Pyongyang.
South Korea says situation not a crisis... An official from South Korea's presidential office said the current situation with North Korea does not represent a "crisis," according to Yonhap News. “It is true the situation on the Korean Peninsula is becoming very serious due to North Korea’s repeated provocations though many believe they are rather strategic provocations," the official told reporters. “We are working to fundamentally resolve the North Korean nuclear and missile issues at the earliest date possible, and are working with a belief that the possibility is very high. However, I do not believe the situation has reached a state of crisis, and rather think we may turn this into an opportunity to overcome the serious security condition.”
‘All-in’ farm bill… That phrase may have several meanings relative to a new farm bill. One is the call for all farm and commodity groups and farm-state lawmakers to work together for a timely, successful bill. Another is the suggestion by some to include an “all-in” safety net that would combine both Ag Risk Coverage (ARC) and Price Loss Coverage (PLC) features that would mean farmers would have only one safety-net option. But the all-in safety-net program proposal would likely face opposition from some commodity groups and lawmakers who continue to favor the two different program options (ARC, PLC) that they want tweaked during the coming farm bill debate. The ‘all-in’ safety net concept was put on the table during the 2014 Farm Bill negotiations inside Ag panel discussions. It was rejected. No major commodity or farm group pushed it at the time, similar to the current situation.
Crop insurance tweaks may be pushed in farm bill debate... While no major changes are likely for the popular crop insurance program once lawmakers finish farm bill specifics, some tweaks to the program could be proposed. One possibility is to alter some of the current subsidies provided to farmers to encourage them to “buy up” higher levels of crop insurance coverage. Corn and soybean farmers frequently buy up to the 80% to 85% level, while other crop producers find such action too expensive. That is why some lawmakers want to alter the subsidy percentages. Corn and soybean producers and their lobby groups would be expected to fight any such move, noting those other crops are frequently grown in more risky areas. Meanwhile, several amendments regarding means testing and other crop insurance proposals are expected to be made on the House and Senate floor.
Key dairy policy ruling awaits a USDA decision… Some lawmakers are waiting to see whether USDA’s Office of General Counsel signs off on pulling milk products out of a livestock insurance policy, thereby eliminating any cap for dairy products in an insurance policy along the lines of a proposal from the American Farm Bureau Federation. That new program would have to be approved by the Federal Crop Insurance Corporation (FCIC). If that occurs, it would make farm-state lawmakers’ job easier relative to making adjustments to the 2014 Farm Bill’s Margin Protection Program (MPP).
A higher CRP acreage maximum… The current maximum for the Conservation Reserve Program (CRP) is 24 million acres. Some lawmakers want to raise the maximum by few more million acres. Budget offsets for that to occur could bring some reforms to the program, such as revising CRP rental rates on a more timely basis, restricting some whole-farm or other ground program access once those current CRP acres are up for program renewal and moving some of those and other acres into the Grassland Reserve Program.
U.S. hits China aluminum foil with duties... The Commerce Department has set duties on imports of aluminum foil from China, setting preliminary countervailing duties of 16.56% to 80.97% to offset Chinese government subsidies. "The Trump administration will not stand idly by as harmful trade practices from foreign nations attempt to take advantage of our essential industries, workers, and businesses," Commerce Secretary Wilbur Ross said in a statement. The U.S. imported $389 million in aluminum foil from China last year, about 70% of all aluminum imports. Imported foil accounts for about one-third of U.S. foil use. The Commerce Department is still studying the U.S. industry request for antidumping duties on Chinese aluminum foil of 40% to 140% to combat unfair pricing by China. Their preliminary decision is expected Oct. 5.
Chinese consumer inflation eases, factory-gate prices steady... China's Consumer Price Index (CPI) eased to 1.4% above year-ago in July, down 0.1 point from June. Food prices dropped 1.1% amid a 15.5% plunge in pork prices. Non-food prices rose 2.0% from year-ago. China's July Producer Price Index (PPI) held steady from the two previous months at 5.5% above year-ago. Steady factory-gate prices are seen as a positive for China's economic growth.
Beef movement picks up... Boxed beef movement improved to 149 loads Tuesday, though it took a further decline in wholesale prices to spur the increased retailer buying. Unless wholesale beef prices stabilize or movement is consistently strong, packers are unlikely to raise cash cattle bids this week despite profitable cutting margins.
Bellies lead pork prices lower... Belly prices led losses in the wholesale pork market, dropping $9.25 yesterday. While all cuts except ribs were lower, traders will focus on bellies since they are coming off recent record highs. A sharp drop in belly prices would pressure the pork cutout value and erode packer cutting margins.
Overnight demand news... Japan purchased 350 MT of feed wheat and 6,300 MT of feed barley. Taiwan made no purchase in its tender to buy up to 130,000 MT of corn.