First Thing Today: House Clears FY 2017 Budget with Help of Democrats

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Grain and soybean markets set back overnight... Corn futures saw two-sided trade overnight, but as of 6:30 a.m. CT most contracts are trading low-range and down 2 cents. Soybeans are also under pressure, with most contracts posting losses of 2 to 5 cents. Winter wheat futures are also down 2 to 5 cents, while spring wheat futures are fractionally to 2 cents lower. The U.S. dollar index is slightly lower, and crude oil futures are extending their slide.

 

Day 2 of Wheat Tour: Disease a concern... On Day 2 of the Wheat Quality Council's wheat tour, scouts traveling through the western third of Kansas found an average yield of 46.9 bu. per acre, down from last year's 49.3 bu. per acre but up from the five-year average of 39.1 bu. per acre. But scouts were unable to evaluate many of the fields in that area of the state due to snow. And even before the crippling winter storm, wheat was struggling due to wheat streak mosaic virus, with Kansas Wheat's Aaron Harries, VP of Research and Operations, saying the virus will impact yields more so than snow damage. He also said it was a bit too early to assess recent freeze damage. Scouts will travel from Wichita to Manhattan today, sampling fields in central and eastern Kansas. Final tour results and production guesses will be out this afternoon.

Industry group reports Oklahoma's winter wheat crop has yield prospects similar to year-ago... Scouts with the industry group Plains Grains traveled into Oklahoma to sample fields on Day 2 of the Wheat Quality Council's tour. They estimated the state's winter wheat crop would yield 33.7 bu. per acre this year, which would be roughly in line with what the group projected last year but down from USDA's official 2016 estimate of 39.0 bu. per acre, which was a record. Plains Grains projected Oklahoma's wheat crop will total 100.1 million bushels.

Export sales report expected to reflect still-strong soybean demand... USDA will release its weekly update on export sales activity at 7:30 a.m. CT. Traders expect the report to show corn sales ranging from 700,000 MT to 1.1 MMT, soybean sales between 400,000 MT and 800,000 MT, wheat sales of 200,000 MT to 550,000 MT, soymeal sales ranging from 50,000 MT to 250,000 MT and soyoil sales between 0 and 32,0000 MT.

House clears FY 2017 budget with help of Democrats... The House on Wednesday cleared a budget agreement that will keep the government operating for the rest of fiscal year ending Sept. 30. The House approved the measure 309-118. Democrats voted 178-15 in favor of the measure; Republicans voted 131-103 in support. The measure now moves to the Senate where it is expected to pass it as soon as today and be signed into law by President Donald Trump.

Global food prices continue to slide... The Food and Agriculture Organization of the United Nations' (FAO) Food Price Index stood at 168.0 points in April, which was a 3.1-point (1.8%) decline from March but still up 15.2 points (10%) from year-ago. This was the third month in a row where global food prices declined. FAO details that as was the case in March, all commodity indices except meat values declined last month. Global cereal production is likely to fall just 0.4% from last year's record high, according to FAO. It details that the world's 2017 wheat crop will likely total 740 MMT, down 20 MMT (2.6%) from last year's record. This is basically steady with its projection last month.

Record-high wheat crop prospects for India... India's 2017-18 wheat crop will likely hit a record 96.5 MMT, up 9.5 MMT from the year prior, projects a USDA attaché in the country. The post explains that favorable weather during key development stages will likely push up yields. Due to the expected production increase, the attaché expects imports to slow to 4 MMT in 2017-18, down 2 MMT from the year prior. None of that grain is expected to come from the United States.

Smaller Kazakhstan wheat crop likely for 2017-18... Kazakhstan will likely produce a 13 MMT wheat crop in 2017-18, down 2 MMT from the year prior, estimates a USDA ag attaché in the country. The post details that acreage is likely to fall in the coming marketing year. But despite the smaller crop size, the post expects exports to hold steady with the previous marketing year in 2017-18 at 7.0 MMT.

China's Cofco planning major expansion in hog production... Cofco Corp. plans to aggressively expand its pig farm capacity by 2 million head to 5 million hogs per year by 2020, according to the company's Vice President Ma Jianping. The state-owned company also says it will need to boost imports to meet growing demand.

Cash cattle prices tear higher... Cash cattle trade got underway at prices ranging from $144 to $147 across the Plains yesterday, up notably from last week when trade ranged from $135 to $140 for an average price of $136.22, according to USDA. The weekend snowstorm stressed animals and boxed beef prices continue to climb. This combination gave feedlots the advantage in this week's negotiations, despite a big increase in showlists this week. Futures remain well below the cash, signaling another surge to the upside is possible today. And after yesterday's strong gains limits are expanded.

Lean hogs also shoot higher on cash market gains... Lean hog futures have also benefited from gains in the cash market this week, which have stoked optimism supplies are tightening seasonally. In addition, traders are watching beef prices surge and speculating this could turn some consumers to pork over the near term -- especially if beef prices are slow to retreat, as has been the case in the past.

Overnight demand news... Tunisia issued an international tender to buy 75,000 MT of durum wheat from optional origins. Pakistani importers recently purchased around 65,000 MT of soybeans to be sourced from the U.S., as well as more than 100,000 MT of rapeseed likely to come from the Black Sea region.

Today's reports:

 

 

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