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Good morning!
Profit-taking sets in... Corn futures enjoyed followthrough buying to kick off the overnight session, but that has since given way to profit-taking, with most contracts now trading around a 7 cents lower. Soybean futures are down 7 to mostly 16 cents after similar price action. Spring wheat futures are mixed as of 6:30 a.m. CT, but most winter wheat contracts are 8 to 10 cents lower.
PF CCI for spring wheat drops below 300 points... When USDA's weekly crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the spring wheat crop plunged another 14.68 points to 291.31 points, which is nearly 80 points under year-ago levels. Ratings fell in all major producing states, with North Dakota and Montana leading the decline. See the state-by-state breakdown.
CCI for corn and soybeans also declines... Our weighted CCI for corn fell 4.15 points over the past week to 367.27 points, which is nearly 20 points under year-ago levels. Our weighted CCI for soybeans declined by 5.09 points to 352.58 points. The bean crop is rated roughly 18 points under year-ago levels. Generally speaking, western Corn Belt states led the declines with ratings in most other areas holding near steady. Get more details.
Cordonnier trims corn, soybean yield estimates... Crop Consultant Dr. Michael Cordonnier lowered his average U.S. corn yield estimate by 2 bu. to 165 bu. per acre this week, and he has a neutral to lower bias going forward. He explained that the weather was "OK in the far eastern Belt," but "less than ideal" in the western Belt over the past week and that more of the same is expected this week and the next. Cordonnier also cut his minimum corn yield estimate by 2 bu. to 158 bu. per acre, while leaving his maximum at 170 bu. per acre. He also trimmed his soybean yield estimate by 0.5 bu. to 47.5 bu. per acre and has a neutral to lower bias going forward. He says that if the forecast verifies more condition rating declines are likely. "Soybeans always have the capability of recuperating if the weather turns more favorable later in the growing season, but I think it is time to take a more conservative approach," he explains, adding that the weather needs to improve "very soon" for the crop to maintain its yield potential.
Return to trendline yields to dramatically curb Brazil's bean crop in 2017-18... A USDA ag attache in Brazil projects the country will produce a 105 MMT soybean crop in 2017-18, down notably from this season's 114 MMT due to a return to trend yields. The post expects Brazil export a record 64 MMT soybeans this marketing year. Meanwhile, farmers in Brazil's top producing state of Mato Grosso have now sold 83.61% of their 2016-17 soybean crop, a gain of 5.45 percentage points from the month prior, according to the state's ag research agency IMEA. Producers in the state have also forward-sold sold 9.36% of their 2017-18 soybean crop, up from 4.2% last month.
House Budget markup again delayed as no consensus on mandatory spending cuts... The House Budget Committee has put off a markup of a fiscal 2018 budget resolution until at least next week, the third delay over the past three weeks. The panel is tentatively looking at July 19 for the markup. If the budget is marked up next week, the House could take it up the following week during its last week in session before the August recess. If not, plans to introduce a budget resolution will likely be shelved until September. Disagreement over the minimum amount of spending that would be cut through budget reconciliation is the main hurdle.
House tries to speed up WOTUS rule rollback but Senate hurdles likely... Speeding up the rollback of the Obama-era waters of the U.S. (WOTUS) rule by circumventing the normal rulemaking process is the goal of a provision in the energy and water spending bill the House Appropriations Committee will consider Wednesday. The provision would allow the Environmental Protection Agency and the U.S. Army Corps of Engineers to withdraw the 2015 stayed WOTUS rule “without regard to any provision of statute or regulation that establishes a requirement for such withdrawal.” The rule is facing dozens of lawsuits. In essence, this would shorten the rulemaking process by getting rid of the public comment process. But Senate Democrats are expected to oppose the measure. Plus, any such change would likely be challenged in court.
Wall Street Journal: Wheat crop and market volatility could undermine a strong performer for rail networks... The newspaper says spring wheat futures “have leapt 40% in a little over a month, far outpacing more widely traded corn and soybean contracts.” Despite the potential impact of lower wheat supplies on the rail network, grain shipments on U.S. railroads were up 12.2% in the first five months of 2017, including a 24.5% year-over-year increase in May, according to the Association of American Railroads.
U.S. biodiesel fair trade coalition files new claim in imports case... The National Biodiesel Board Fair Trade Coalition has filed a new allegation with the U.S. Department of Commerce claiming that critical circumstances exist with respect to imports of biodiesel from Argentina. The “critical circumstances” provision allows for the imposition of duties on imports that enter the U.S. prior to preliminary determinations of subsidization and dumping. The coalition found that imports of biodiesel from Argentina jumped 144.5% since the filing of the anti-dumping and countervailing duty petitions, as compared to the period prior to the filings. To determine critical circumstances, the Commerce Department must find that there are “massive” imports over a relatively short period of time, and that other statutory criteria are met, including whether the imports benefit from illegal subsidies.
USDA expands emergency drought help by allowing haying on CRP land... USDA announced it will further aid drought-impacted ranchers by letting them hay land normally protected under the Conservation Reserve Program (CRP). In June, USDA opened up CRP land in much of Montana, North Dakota and South Dakota to grazing for ranchers suffering severe, extreme or exceptional drought conditions. The new announcement will allow ranchers on July 16 to begin haying the land. CRP land owners can hay the land themselves or allow livestock owners to do it. The landowners will not be penalized with lower CRP payments because of the emergency.
Cash cattle market may be stabilizing... Choice boxed beef values slid again on Monday, signaling ongoing resistance to prices that are still well above year-ago levels. But Select values did firm 16 cents yesterday. Movement was again decent at 134 loads. Meanwhile, showlist estimates are a bit tighter this week (around 5,000 head), which could lead to more steady cash action this week. Last week, sales took place at an average price of $118.67, according to USDA, up 3 cents from the average the week prior.
Pork prices slip as cash prices rise... The pork cutout value dipped 11 cents and movement was quite light at 197.38 loads to kick off the week, raising some concern about demand for BLT season. But on a more positive note, cash hog prices strengthened notably in both the western and eastern Corn Belt on Monday, which could signal packers kicked off the week short on supplies.
Overnight demand news... Taiwan bought 65,000 MT of corn, likely from Brazil. Pakistani importers have purchased around 122,000 MT of canola from Canada in recent deals. The country also recently bought around 180,000 MT of soybeans that are likely to be sourced from the U.S. or Brazil.
Today's reports:
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