First Thing Today: Corn Ratings Improve as Spring Wheat Drops
Spring wheat leads overnight gains... Corn futures stuck to a narrow range overnight and are steady to fractionally lower as of 6:30 a.m. CT. Soybeans are trading high-range and up 3 to 4 cents. Spring wheat futures shot higher overnight thanks to a bigger-than-expected decline in crop condition ratings and futures are currently trading high-range and up 5 to 7 cents. HRW wheat futures are up 4 to 5 cents, while SRW wheat futures are around 3 to 4 cents higher. The U.S. dollar index and crude oil futures are both slightly lower.
PF CCI: Corn ratings improve as spring wheat drops... When USDA's initial crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the corn crop came in at 370.68 points, up 6.91 points from last week thanks to some welcome sunshine and warmth. The spring wheat crop, on the other hand, is dealing with drought conditions that resulted in a 15.68-point plunge in ratings to 351.53 points. The HRW wheat crop fell 5.56 points to 323.27 points, while the SRW wheat crop gained 3.40 points to 369.88 points.
Consultant leaning down on corn yield... Crop Consultant Dr. Michael Cordonnier left his average corn yield forecast at 169 bu. per acre this week, but he now has a lower bias going forward. He sites two concerns -- "problematic spring planting in the eastern Corn Belt ... [and] developing dryness in the northwestern Corn Belt." Cordonnier also made no change to his average soybean yield projection that stands at 49 bu. per acre, with a neutral bias forward. Also of note, Cordonnier says that corn acreage is likely declining relative to the Prospective Planting Report, while soybean acres are rising. He estimates that wet conditions this spring will likely cause corn acres to decline between 500,000 acres and 1.25 million acres from March intentions. His best guess is that soybean acres will rise 500,000 acres.
Weather concerns mount for spring wheat... USDA made a larger-than-expected cut to the amount of spring wheat rated in "good" to "excellent" condition yesterday, confirming dry conditions on the Northern Plains are taking a toll on the crop. The forecast holds limited chances for relief. Spring wheat crops along the Canadian border are also dealing with dryness that has been tough on spring wheat. Meanwhile, the month of May was the coldest so far this century in Russia, and this has been paired with rainy weather that has kept spring grain sowing running behind year-ago. However, SovEcon reports damage has been limited.
Indian weather watcher ups monsoon forecast... India's monsoon rainfall will likely total 98% of the long-term average, the India Meteorological Department (IMD) said today. This was up two percentage points from its April forecast. IMD goes on to detail that rainfall will likely total 96% of its long-term average in July and 99% of the average during August.
Argentine inspectors delay strike... Argentine inspectors have agreed to push back a three-day nationwide strike that was set to begin just after midnight on Monday. If negotiations do not yield an agreement by Friday, workers will begin striking on June 13.
Inspection authority shifts back to Egypt's ag ministry... An Egyptian court struck down a government decree that transferred the responsibility of inspecting strategic ag imports from the ag ministry's quarantine body to a trade ministry body. The shift in responsibility back to the ag quarantine body is notable since it was the one viewed as pushing the zero-tolerance stance on ergot that basically cut off grain shipments to the country for a period.
Sugar trade talks continue, with tensions over key issues... U.S. and Mexican negotiators are aiming for wrapping up "final technical consultations" by this afternoon, with key issues including what type of sugar Mexico can supply to the U.S. if domestic U.S. sugar producers or other countries cannot meet demand. Mexico wants to send more semi-refined sugar to the United States. U.S. Commerce Secretary Wilbur Ross Monday extended the talks for 24 hours, saying "The two sides have come together in quite meaningful ways, but there remain a few technical details to work out. We are quite optimistic that our two nations are on the precipice of an agreement we can all support, and so have decided that a short extension of the deadline is in everyone's best interest."
Perdue chides Canada on 'underhanded' dairy policy... Canada needs to get rid of the Class 7 pricing system it put in place and disrupted shipments of U.S. milk to Canada, according to USDA Secretary Sonny Perdue. "I made it very clear that the Class 7 designation we felt was unfair, undercutting this [U.S.] industry that grew up south of the border," Perdue told reporters in Toronto. "... The quick win would be to do away with Class 7 milk, which we think is a very unfair, underhanded circumvention of WTO [World Trade Organization]." Perdue said he also raised concerns about how U.S. wheat is priced in Canada, and about how U.S. wines are displayed for sale in some provinces.
Choice beef surges... Choice boxed beef values surged $3.11 to start the week and Select values rallied $1.38 on solid movement of 123 loads. This could signal some last-minute purchases for Father's Day. Showlist numbers are down a net 1,000 head this week as declines in Nebraska and Texas were nearly offset by gains in Colorado and Kansas. Near-steady showlists, boxed beef market strength and weights that are well under year-ago levels bode well for feedlots in this week's cash negotiations.
Lean hogs face pressure to start the week... Traders took advantage of recent gains in the lean hog market by booking some profits on Monday and the move below the five-day moving average and last week's lows triggered some technical selling. Pressure also stemmed from the premium nearbys hold to the cash hog index. Traders will watch the cash hog market tomorrow, as gains could return some buying to the market.
Overnight demand news... Jordan made no purchase in its international tender to buy 100,000 MT of milling wheat. Iraq tendered to buy at least 50,000 MT of hard wheat, with the U.S. having the lowest offer. Japan tendered to buy a total of 159,610 MT of food-quality wheat from the U.S., Canada and Australia in its regular tender. Algeria tendered to buy a nominal 50,000 MT of milling wheat from optional origins.
Today's reports:
- 8:00 a.m., U.S. Bioenergy -- ERS
