Grains up slightly overnight... Corn futures are trading high-range with gains around a penny as of 6:30 a.m. CT. Soybean futures are steady to fractionally lower in most contracts after a choppy overnight session. SRW and HRW wheat futures are mostly 2 cents higher, while spring wheat is up 2 to 5 cents. The U.S. dollar index is marginally lower. Crude oil futures are also under pressure.
Despite hype, Trump says no immediate plans to abandon NAFTA... President Donald Trump told the leaders of Mexico and Canada that he would not immediately seek to end the North American Free Trade Agreement (NAFTA), only hours after some in the White House had signaled that it would begin pulling the U.S. out. In what the White House described as “pleasant and productive” evening phone calls with these nations’ leaders, Trump said he would quickly start the process of renegotiating NAFTA — not abandon it. “It is my privilege to bring NAFTA up-to-date through renegotiation,” Trump said in a late-night statement. “I believe that the end result will make all three countries stronger and better.” Earlier in the day, several media outlets quoted officials signaling Trump was laying the groundwork to pull out of NAFTA — a move apparently intended to increase pressure on Congress to authorize new negotiations and on Canada and Mexico to accede to American demands.
Export sales out this morning... 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 between 750,000 MT and 1.150 MMT, wheat sales ranging from 350,000 MT to 750,000 MT, soybean sales of 350,000 MT to 750,000 MT, soymeal sales between 100,000 MT and 350,000 MT, and soyoil sales ranging from 8,000 MT to 40,000 MT.
Argentine attaché expects modest rise in grain production and exports in 2017-18... USDA’s ag attaché in Argentina projects the country will produce a 39.0 MMT corn crop, which is expected to propel exports to a record 28.0 MMT. For comparison, the post estimates Argentina’s 2016-17 corn crop at 38.5 MMT, with exports expected to total 26.5 MMT. Its wheat exports are also expected to climb in 2017-18 to 10.5 MMT, up 300,000 MT from 2016-17, on a 16.65 MMT crop. A relaxation of export rules for grains has given farmers reason to boost acreage and shipments of these crops.
Russian grain interventions to begin in August... Russia will begin buying grain on the domestic market for its state reserves in August, says the country’s agriculture minister. The ministry has around 4 MMT in grain stocks. Previously, the ag ministry had proposed cutting wheat prices for its restocking program for 2017-18. There has been no word on whether it will indeed do so.
Cargill sells last of its feedyards... Cargill Inc. will sell its final two feedyards to the ethanol producer Green Plains Inc. for $36.7 million, meaning the company will soon officially exit the business of feeding cattle. It sold the rest of its feedyards to Friona Industries last year. Cargill says this will free up hundreds of million of dollars each year that it will direct elsewhere. In recent years, the company has shifted its focus, exiting some lower-margin businesses and expanding into higher-margin ones like food ingredients and aquaculture. Also of note, Cargill’s deal with Green Plains will make the ethanol producer the fourth largest U.S. cattle operation. The deal is expected to close next month.
Consortium may build railway to improve grain transport in Brazil... A group of grain trading companies, including Cargill, are analyzing whether to build the Ferrogrão railway in Brazil, which would come with a price tag of up to 15 billion reals ($4.8 billion), according to O Estado de S. Paulo newspaper. The railway would enable Brazilian grains from the center-west to be shipped out of northern ports, eliminating the need for grains to be trucked along a roadway that includes a long unpaved section that is nearly impossible to pass during rains.
Online cattle auction results push live cattle to new highs... Live cattle futures climbed to new contract highs yesterday thanks to higher trade at the online Fed Cattle Exchange auction that has been an indicator of likely cash cattle direction. Last week, cash sales took place in a range of $130 to $133. So far, there has just been some light cash cattle action at prices ranging from $125 to $130 in Kansas and Nebraska and at $132 in Texas.
Uncertainty regarding low for cash hog market... Traders remain uncertain whether cash hog prices have put in a seasonal low, and product market continues to struggle. Tighter supplies in some locations have led to some firmer cash hog bids this week, though some packers have still been able to pay lower prices for market-ready supplies. This uncertainty caused lean hog futures to retrace early gains and settle low-range yesterday. Until traders are convinced a low is in, more such choppy price action is likely.
Overnight demand news... Tunisia purchased around 75,000 MT of milling wheat from optional origins. An Israeli group of buyers bought around 70,000 MT to 80,000 MT of corn as well as roughly 30,000 MT of feed wheat and 20,000 MT of barley from optional origins. Traders signal the corn was likely sourced from South America and the other grains possibly from the Black Sea region.
Today’s reports:
- 7:30 a.m., Weekly Export Sales -- FAS
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 2:00 p.m., Agricultural Prices -- NASS
- 2:00 p.m., Dairy Products - Ann. -- NASS
- 2:00 p.m., Meat Animals - PDI -- NASS
- 2:00 p.m., Milk - PDI -- NASS
