First Thing Today: Dual Port Strikes Hit Argentina
Good morning!
Firmer tone overnight... Corn futures are fractionally to a penny higher as of 6:40 a.m. CT. Soybeans are posting even stronger gains of 2 to 3 cents. Winter wheat futures are fractionally to 2 cents higher, while HRS wheat is up 1 to 4 cents. Gains come despite a firmer tone in the U.S. dollar index. Crude oil futures are slightly higher.
Dual port strikes hit Argentina... Yesterday, URGARA inspectors union launched a 48-hour work stoppage that coincides with a three-day strike by the government sanitary inspection union Senasa in Argentina. Together, the strikes are halting movement of soybeans, soymeal and other grains and byproducts in the midst of the busy harvest season.
Weather causes some ports to close in southern Brazil, disrupting meat trade... Bad weather in southern Brazil has resulted in the closure of ports in Itajaí and Rio Grande the past several days, according to local media reports. BRF SA, the world's No. 1 poultry exporter, says the closures may curb total meat product exports by 25,000 MT for May.
Major expansion package approved for world's largest soy crushing plant... The Inter-American Investment Corporation, the International Finance Corporation and Cooperative Rabobank U.A. have agreed to a $410-million financing package with Renova S.A. to expand the world's largest soybean crushing plant, which is located in Argentina. The project will expand the plant's daily soy crushing capacity from 20,000 MT to 30,000 MT. Plus, it will boost the plant's grain storage and loading capacity. The money will also be used to construct a barges terminal.
Strong demand continues at Chinese corn auctions... China sold nearly 3.231 MT of the 2013 reserve corn put up for auction today at an average price of 1,377 yuan ($202.38) per metric ton, reports China's National Grain Trade Center. This represents an impressive 93.03% of the grain offered at the auction.
Caixin PMI reflects contraction in Chinese manufacturing... China's Caixin Purchasing Manager's Index (PMI) fell to 49.6 in May, dropping below the 50.0-point level that separates expansion from contraction in the manufacturing industry. This was a 0.7-point drop from April, the lowest level in 11 months and below expectations for a reading of 50.1.
Russian ag minister expects higher grain shipments in 2017-18... Russia will likely export between 37 MMT and 38 MMT of grain in 2017-18, which would be up from shipments between 34 MMT and 35 MMT this season, according to Agriculture Minister Alexander Tkachev, as cited by TASS news agency. Tkachev also lowered his estimate of Russia's 2017 grain crop from 110 MMT to a range of 100 MMT to 105 MMT, citing unfavorable weather.
Poor spring weather prompts lower EU crop estimates... The European Commission has trimmed its estimate of the bloc's usable common wheat production for 2017-18 by 600,000 MT to 141.3 MMT. Bad weather this spring has curbed crop prospects. The EU corn crop will likely total 64.2 MMT, which is down 2.3 MMT from month-ago. The Commission slashed its usable barley production estimate by 2.9 MMT to 59.5 MMT. It also trimmed its rapeseed production outlook from 22.2 MMT to 21.9 MMT.
Trump decision on Paris Accord coming today... "I will be announcing my decision on Paris Accord, Thursday at 3:00 P.M. [ET] The White House Rose Garden. MAKE AMERICA GREAT AGAIN!" President Donald Trump wrote on Twitter. During his 2016 presidential campaign, Trump blasted the accord, and called global warming a hoax aimed at weakening U.S. industry. The landmark agreement asks the nearly 200 participating countries to reduce greenhouse-gas emissions in an effort to combat climate change.
Fed president says four rate hikes a possibility in 2017 if growth impresses... San Francisco Fed President John Williams said he views three rate hikes in 2017 as his baseline scenario and even sees a fourth increase if growth surprises to the upside. Meanwhile, Fed Governor Jerome Powell, a permanent voter on monetary policy who may succeed Chair Janet Yellen next year, is scheduled to speak before the Economic Club of New York today.
J&F hit with record-setting fine... J&F Investimentos, the controlling shareholder of JBS SA, has agreed to pay a record-setting 10.3 billion real ($3.2 billion) leniency fine for its role in corruption scandals rocking Brazil. The company will have 25 years to make the payments and they will begin in December 2017. The fine is being paid by the holding company to protect minority shareholders of JBS.
Near steady cash cattle trade anticipated... Cash prices slipped just marginally at yesterday's online Fed Cattle Exchange auction, leading traders to believe that this week's cash action will get underway at at prices similar to last week's $132 action on the Central and Southern Plains. A few hundred head changed hands in Kansas at $132.00 and in Texas at $132.50 yesterday, with some light sales in Nebraska from $131 to $132. Also supportive is talk that retailers are buying beef for Father's Day.
Hogs rally around cash market strength... Lean hog futures surged to new highs on Wednesday, pulling nearby contracts back into overbought territory according to the nine-day Relative Strength Index. Strength stemmed from ongoing gains in the cash hog market thanks to strong processing margins, as well as improved pork movement on Wednesday.
Overnight demand news... South Korea's Major Feed Mill Group bought around 68,000 MT of corn to be sourced from optional origins in an international tender. The country's Feed Leaders Committee also purchased around 66,000 MT of corn from the U.S. or South America in a private, non-tender deal. Egypt purchased 120,000 MT of Russian wheat and 60,000 MT of Romanian wheat. Jordan issued an international tender to buy 100,000 MT of hard milling wheat from optional origins.
Today's reports:
- 7:30 a.m., Drought Monitor -- USDA/NWS
- 9:30 a.m., Weekly Ethanol Production -- EIA
- 2:00 p.m., Broiler Hatchery -- NASS
- 2:00 p.m., Fats & Oils -- NASS
- 2:00 p.m., Grain Crushings -- NASS
