First Thing Today: Trump’s Self-inflicted Crisis Has Growing Implications
Good morning!
Position evening in the wake of USDA's reports... Corn futures are fractionally to a penny lower, while soybeans are up 2 to 3 cents in most contracts. Wheat futures are up 1 to 2 cents. The U.S. dollar index is barely lower, while crude oil futures are posting solid gains.
Trump’s self-inflicted crisis has growing implications... Democrats smell opportunity in 2018 elections and are already starting to slow-walk congressional activity as a result of President Donald Trump’s firing of FBI Director James Comey, amid other Trump missteps. Meanwhile, the Senate Intelligence Committee has issued a subpoena to former national security adviser Michael Flynn for documents related to its investigation into Russian interference in the election, committee leaders announced Wednesday. The subpoena came after Flynn's attorney did not provide documents requested in late April. Trump's real estate empire, as well as his associates' real estate deals, are expected to come under focus.
Perdue to announce new Undersecretary for Trade post and USDA reorganization... USDA Secretary Sonny Perdue travel to Cincinnati to announce new USDA Undersecretary for Trade post, and talk about a reorganization of his department. Former USDA Secretary Tom Vilsack actively worked against installing the undersecretary post. The new position means another post will be lost, because there is a statutory cap on undersecretary jobs.
Export sales out today... USDA will release its weekly update on export sales activity at 7:30 a.m. CT today. Traders expect the report to show corn sales falling between 750,000 MT and 1.150 MMT, soybean sales ranging from 300,000 MT to 700,000 MT, wheat sales of 250,000 MT to 650,000 MT, soymeal sales between 40,000 MT and 215,000 MT, and soyoil sales ranging from 0 MT to 35,000 MT.
Aggressive corn buys at Chinese auctions continues... China sold roughly 2.139 MMT of the 2013 corn crop up for auction this week at an average price of 1,378 yuan ($199.64) per MT. This represented 85.4% of the total reserve supplies put up for auction, signaling strong demand persists.
Exchange raises Argentine soybean crop estimate... Argentina's 2016-17 soybean crop will likely total 57 MMT, says the Rosario Grains Exchange, which is a 1 MMT increase from its previous peg. Yesterday, USDA also raised its soybean crop estimate for Argentina by 1 MMT to 57 MMT.
Brazil extends port license duration... Brazil has extended the length of its port operating licenses from 25 years to 35 years, according to the government's official gazette. The decision also allows an operator's first license to be repeatedly extended for up to 70 years. Previously, these licenses could only be extended once by 25 years. These changes are aimed at attracting private investment in infrastructure. They could also help expand ports' capacity to ship commodities like soybeans and corn.
Brazil's Maggi emphasizing safety of Brazilian food supplies... Since the meat safety scandal in March, Brazil has tightened controls on shipments, with importers inspecting 100% of merchandise at destination, Ag Minister Blairo Maggi told a congressional hearing yesterday, adding that no problems with production have yet been found. He also said he plans to visit the United Arab Emirates, Kuwait, Saudi Arabia and Qatar on Friday to reassure these major poultry buyers about the quality of Brazilian meat.
China lifts ban on Canadian poultry imports... China has lifted a ban on poultry imports from Canada. The restrictions were put in place in 2014 in response to an H5 bird flu outbreak.
Cash cattle trade begins at softer prices... Cattle traded at slightly lower prices at the online Fed Cattle Exchange auction on Wednesday, paving the way for the start of trade on the Plains at $138 and in Iowa at $140. This compares to last week's action that ranged from $140 to $147. June live cattle hold nearly a $14 discount to the lower end of this week's action, signaling some corrective trade is warranted. Meanwhile, boxed beef prices continue to tear higher.
Cash hog prices on the rise... Pork movement was decent yesterday at 321.66 loads, and pork cutout prices have climbed $3.62 over the past week. Cash hog prices have also been on the rise. But May lean hog futures are already at a fairly substantial premium to the cash index considering the contract must settle to it in a matter of days. The June contract is more than $11 above the index, which is not unreasonable given expectations for seasonal supply tightening.
Overnight demand news... Algeria's state grain buyer purchased an unspecified amount of milling wheat from optional origins. Japan bought 76,357 MT of food-quality wheat from the U.S. as well as 30,271 MT from Canada and 31,560 MT from Australia.
Today's reports:
- 7:30 a.m., Weekly Export Sales -- FAS
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 8:00 a.m., Feed Grains Database -- ERS
- 2:00 p.m., Dairy Monthly Tables & Dairy Quarterly Data -- ERS
- 2:00 p.m., Wheat Data -- ERS
