Evening Report | July 2, 2021
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Happy Fourth of July!…. All markets and government offices are closed July 5 in observance of Independence Day. There will be no Pro Farmer updates Monday. Grain and livestock markets will reopen at 8:30 a.m. CT on July 6. Have a happy and safe holiday weekend.
Your Pro Farmer newsletter is now available!... USDA once again surprised the market with lower-than-expected planted soybean and corn acreage numbers, leaving crops less room for error and increasing focus on the weather. Forecasts are favorable for the eastern Corn Belt but stressful for areas to the west. You’ll also find some late-breaking news on the E15 front, crop comments and coverage of USDA’s latest Cattle on Feed Report in this week’s newsletter. Access it here.
Court overturns year-round E15… EPA exceeded its authority when it allowed year-round sales of E15, the D.C. Circuit ruled Friday. In June 2019, EPA issued its final rule extending the Reid Vapor Pressure (RVP) volatility waiver to E15, and found that E15 is substantially similar to E10 certification fuel, allowing its introduction into commerce by fuel manufacturers without the need for a separate E15 waiver. This allowed for the sale of E15 fuels year-round. Oil refiners soon challenged the rulemaking in the D.C. Circuit Court of Appeals in an attempt to undermine the expansion of biofuels in our nation’s fuel supply.
The ruling allows refiners to ask for an immediate injunction to halt sales of E15 as soon as 10 days from July 2. But even if the injunction is granted, E15 could still be sold to motorists as legal steps are needed and the ruling takes effect in 45 days. That means it shouldn’t impact summer 2021 demand much. The case could be appealed and petitioned for an en banc hearing before the entire circuit.
EPA said it was reviewing the court ruling.
Brazil’s ship lineup for corn down 54% from year-ago… Shipping data from Cargonave shows Brazil has just 39 vessels lined to load corn this month, less than half the 85 vessels that were in the que last year at this time. This year’s crop was battered by drought, with frost taking a toll on the safrinha corn crop this week. Consequently, Brazil’s corn exports are only expected to hit 20 MMT this season, well behind last year’s 33 MMT. Traders are reportedly dealing with a washout in contracts negotiated before weather decimated crop prospects, with grains being diverted to the domestic market.
Data from the Maritime agent shows 116 soybean ships are slated to be loaded with Brazilian soybeans this month, which is 14 vessels shy of July 2020.
Job growth surges in June… The U.S. economy added a stronger-than-expected 850,000 non-farm payrolls in June, though the unemployment rate unexpectedly ticked up to 5.9%. Analysts had expected the report to show 706,000 jobs added in June, with the unemployment rate dropping a 10th of a point to 5.6%. Average hourly earnings rose 0.3% last month and were up 3.6% over the past year. The Labor Department also revised May and April payrolls a net 15,000 higher. The jobs market is expanding and wage inflation is building — but not enough to prompt an immediate Fed response.
North Dakota drought brings visit by federal agriculture officials… Senator John Hoeven (R-N.D.) earlier this week hosted federal officials from USDA at several meetings in the state to assess drought conditions and gather input from agriculture producers. Hoeven said there were three years of his 10 years as North Dakota governor that the state faced drought. “I think this drought’s every bit as bad or worse than any one of them, so what we’re trying to do is get some assistance and get it as soon as possible,” he said. Hoeven is a ranking member of the Senate Agriculture Appropriations Committee and a senior member of the Senate Agriculture Committee.
Hoeven outlined efforts to secure additional disaster assistance, including urging USDA Secretary Tom Vilsack to allow emergency haying and grazing of Conservation Reserve Program acres in North Dakota before Aug. 1. CRP acres in 50 North Dakota counties are currently eligible to be grazed at limited capacity but they are not eligible to be hayed. Other efforts include pressing RMA to work with approved insurance providers to ensure quick and fair crop adjustments and payments.
Some suggestions at the meetings included simplifying CRP contracts; using a combination of programs to help cover the remaining 40% cost with Livestock Forage Program; and RMA sending guidance to adjusters and crop insurers to make it as simple as possible to get crops adjusted.
DMC payment triggered for May. Eligible producers enrolled in the Dairy Margin Coverage (DMC) program may receive a payment for May, depending on the margin trigger they have selected. For May, the difference between the national all milk price and the national feed cost was $6.89 per hundredweight (cwt.), triggering payments for those under Tier 1 that have coverage levels of $7.00, $7.50, $8.00, $8.50, $9.00 and $9.50, and those with Tier 2 margin coverage levels of $7.00, $7.50 and $8.00. The payments range from 11 cents for those with $7.00 coverage levels up to $2.61 for those with a $9.50 coverage level.
USTR Tai to visit Mexico next week... President Joe Biden’s top trade negotiator plans to travel to Mexico City next week for meetings with her counterparts from Mexico and Canada as the governments seek to build on their free-trade agreement (USMCA) that took effect a year ago. Katherine Tai is due to head to the Mexican capital for meetings on Wednesday with Mexican Economy Minister Tatiana Clouthier and Canadian Trade Minister Mary Ng.
Clear signal for antitrust action ahead… The Federal Trade Commission voted to broaden its discretion to challenge what it finds to be unfair methods of competition, potentially allowing more antitrust cases against big technology companies. The commission also approved a streamlined rule-making process that could enable it to more easily oversee data-privacy violations. The U.S. meat processing and seed sectors are expected to see heightened scrutiny.
Market Watch… Our Market Watch table features monthly and quarterly price outlooks along with weekly prices for a variety of ag markets. Check it out.
