First Thing Today: Heat Advisories for the Heart of the Corn Belt

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Good morning!

Weather concerns again lifting corn and soybeans... Corn futures are around 2 to 4 cents higher and soybeans are up 8 cents as the forecast remains hot and dry across the Midwest. In contrast, wheat futures are fractionally to 3 cents lower as traders shift their focus to ample global supplies of wheat and some profit-taking. The U.S. dollar index is a bit firmer today, while crude oil futures are marginally higher.

Heat advisories for the heart of the Corn Belt... The National Weather Service has issued a heat advisory or excessive heat watch for much of the nation's midsection, stretching from the southwest half of Nebraska through Illinois and southward through Texas. This paired with just limited precip in the forecast for these areas through week's end keeps crop concerns high. Some rains are possible for the western and central Corn Belt late next week, but a high pressure ridge could expand into the southwest Corn Belt from July 28 to Aug. 3, notes World Weather Inc. The National Weather Service outlook for July 25-29 calls for heat across most of the Corn Belt and the Plains and normal to below-normal precip.

Export sales out today... USDA will release its weekly export sales activity update at 7:30 a.m. CT. Traders expect the report to show corn sales ranging from 350,000 MT to 750,000 MT, soybean sales between 1.4 MMT and 2.1 MMT (includes recent large Chinese buys), wheat sales of 250,000 MT to 450,000 MT, soymeal sales ranging from 50,000 MT to 300,000 MT and soyoil sales between 5,000 MT and 30,000 MT. These expectation ranges include old- and new-crop sales combined.

White House announces more top USDA position nominees... Last night, the White House announced the nominations of Indiana Agriculture Director Ted McKinney to become undersecretary for trade and foreign agricultural affairs and Sam Clovis to be undersecretary for research, education and economics, both names previously mentioned as likely for the positions. McKinney spent most of his career working with Dow AgroSciences and Elanco, a subsidiary of Eli Lilly. Clovis served as chief policy adviser on the Trump campaign and has been working as a senior White House adviser at USDA since President Donald Trump took office. Iowa Agriculture Secretary Bill Northey is the likely pick as undersecretary for farm and conservation programs. Meanwhile, the Senate Ag Committee plans to schedule a confirmation hearing on deputy secretary-nominee Stephen Censky once it goes through "all the proper protocols," said Press Secretary Meghan Cline.

White House unveils infrastructure council... Trump is forming a council to advise his administration on the best ways to improve the nation's infrastructure. The council will be run out of the Commerce Department and will include 15 members from various segments of the economy. While agriculture is not yet represented, the executive order says more sectors could be added.

OMB to unveil regulatory and deregulatory actions... The White House Office of Management and Budget this morning will release a compendium showing it has withdrawn or postponed many Obama-era regulations. "Government is using muscles it hasn't used in a really long time, exposing and removing redundant and unnecessary regulation," OMB Director Mick Mulvaney said in a statement. The "Unified Agenda" adds "deregulatory actions" to its name and details the Trump administration has shelved about 860 regulatory actions, either withdrawing them or moving them from "active status."

Steel issues forge limited U.S./China meeting results... A spirited discord over how much China should reduce its excess steel production capacity dominated the first meeting of the U.S./China Comprehensive Economic Dialogue on Wednesday, apparently blocking progress on other issues. China nixed U.S. pressure to agree to specific cuts in production capacity and U.S. officials did not move to other issues. Both countries canceled press conferences planned for the afternoon. The confab produced just one result: China's acknowledgment "of our shared objective to reduce the trade deficit, which both sides will work cooperatively to achieve," according to Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross' joint statement.

HFCS production on the rise in China... China's output of high fructose corn syrup (HFCS) is set to climb 7% this year as China's efforts to pare its massive corn stockpiles have encouraged producers to increase output or restart idled capacity, according to the commodities information service Zhuochuang. At 4.15 MMT, China's expected HFCS production will equate to around half of U.S. supplies. The inexpensive sweetener is becoming more popular in China, and it expects to export more of it going forward. In 2016, China's HFCS shipments jumped as much as a 70% to 454,843 MT, with around half of that total going to the Philippines.

China gives Syngenta's Agrisure Duracade line the green light... China approved Syngenta's Agrisure Duracade trait in both corn and co-products (including distillers dried grains) for import. Over the past month, China has approved four other biotech products for import as part of its 100-day talks with the U.S. Four other biotech crops are still awaiting a decision.

Japan's corn usage in feed climbs in May... Japan increased the amount of corn it used in animal feed rations by 0.5 percentage points from April to 46.9% in May, according to preliminary data from its farm ministry. Its use of sorghum, wheat and barley were unchanged from the month prior in May at 2.2%, 1.9% and 3.5%, respectively.

Bullish reversals for cattle on better-than-expected cash prices... Cattle futures posted a bullish reversal on Wednesday, which bodes well for followthrough buying today. Cash cattle traded at prices steady to up slightly from week-ago levels at the online Fed Cattle Exchange auction, which lifted futures. This led to some fairly active trade in Nebraska at $118 with a very light test around that level for several other locations. This is down slightly from last week but above where August futures have been trading.

Positive signals from the product and cash markets... The pork cutout value slipped on Wednesday, but the value is still up slightly for the week. And movement was again solid at 385.85 loads. This eased concerns that the product market may be working on a top. Also encouraging, cash hog prices strengthened in the western Corn Belt and the Iowa/Minnesota market yesterday, though prices slipped in the eastern Belt.

Overnight demand news... Jordan made no purchase in its tender to buy 100,000 MT of milling wheat; it later launched an international tender to buy the same amount of milling wheat from optional origins. Saudi Arabia issued an international tender to buy 1.5 MMT of animal feed barley.

Today's reports:

 

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