First Thing Today: Rain Still in the Forecast
Profit-taking overnight... Some profit-taking moved in overnight as traders prepared for today's USDA reports and the weekend. Corn futures are mostly 2 cents lower as of 6:35 a.m. CT, while soybeans are steady to a penny lower. Winter wheat futures are down 3 to 5 cents, while spring wheat is narrowly mixed. The U.S. dollar index is posting strong gains, while crude oil futures are marginally higher.
Minor changes expected in USDA's reports... No major changes are expected in USDA's Supply & Demand or Crop Production Reports that will be released at 11:00 a.m. CT today. Traders expect USDA to peg old-crop corn carryover at 2.287 billion bu. and new-crop at 2.085 billion bu., both down slightly from May. Soybean carryover for 2016-17 is expected to fall 2 million bu. to 433 million, while 2017-18 carry is expected to climb 5 million bu. to 485 million bushels. Wheat carryover is expected to rise 2 million bu. for 2016-17 to 1.161 billion bu. and fall 3 million bu. for 2017-18 to 911 million bushels. Traders also expect a 7-million-bu. cut to USDA's all winter wheat crop from last month, bringing it to 1.239 billion bushels.
Wet weather remains in the forecast... Traders continue to monitor rain chances next week, as precip will be badly needed after extreme temperatures this weekend and recent dry weather. The evening GFS weather model run in the U.S. decreased rainfall amounts expected for the western Corn Belt for Wednesday, but the model continues to show a low pressure system should bring rain to the Midwest midway through next week. Looking ahead, the National Weather Service forecast for June 14-18 calls for warm, wet conditions across much of the Corn Belt, with the exception of the Dakotas and Nebraska. These states will trend dry and cool. Wet conditions are also expected for eastern areas of the Plains over this timeframe.
Some areas of Brazil may see a light freeze over the weekend... Temps are expected to drop to the low- to mid 30s over the weekend in Parana, Santa Catarina, and northeastern Rio Grande do Sul, Brazil, bringing the possibility of a light freeze, reports World Weather Inc. But it adds that serious crop damage is unlikely.
U.S., global markets digest Thursday events with relative calm... Global equity markets have not reacted with shock to any of the big items on Thursday's schedule. The European Central Bank (ECB) did not shift its stance on monetary policy except to no talk about the prospect for an interest rate reduction. The testimony by former FBI Director James Comey didn't provide any new revelations that raised further questions on the Russia election situation. And, global market are reacting mostly with calm to the UK elections where the ruling Conservative party was dealt a sharp rebuke and no longer outright controls parliament. The prospect of a hung parliament hasn't spooked markets, though the British pound is weaker, boosting the U.S. dollar. However, the Brexit prospects are now less clear.
USDA Secretary Sonny Perdue is in Mississippi... Perdue travels to Cleveland, Mississippi, today to address the annual conference of the Delta Council, an economic development organization serving a host of counties in northwest Mississippi. "Secretary Perdue has an impressive background as an agribusiness man and two-term successful Governor of Georgia, and we look forward to the opportunity to meet with him and hear his thoughts on the future of America’s agricultural industry," Delta Council President Harry Simmons.
Huge Brazilian crop forecasts from Agroconsult... Crop estimates just keeping getting bigger in Brazil. Agroconsult now estimates the 2016-17 soybean crop at 115 MMT, with exports expected to total 61 MMT. The firm is at the high end of soybean crop estimates for the country. Agroconsult upped its safrinha corn crop estimate by 1.8 MMT to 88.8 MMT, noting rains should help Mato Grosso to produce a record crop. The consultancy also said that cotton plantings will likely surge 18% in 2017-18 to 1.1 million hectares.
Wet weather in Argentina could leave some wheat acres unplanted... Argentine farmers may not be able to replant 100,000 hectares (247,105 acres) of wheat due to flooding and excessive humidity in southern production areas, the Buenos Aires grains exchange warned in a report yesterday. However, the exchange made no change to its forecast for 5.5 million hectares to be planted to wheat in 2017-18. It details that growers have thus far planted 21.4% of their intended wheat area.
Adverse weather curbs Chinese corn crop... Drought and hail have have hit China's top-producing region in the northeast, prompting its ag ministry to slash its 2017-18 corn crop peg by 700,000 MT to 211.65 MMT. This production estimate is down 3.6% from year-ago and would be China's smallest crop in four years. Besides weather concerns, acreage is also down as China is working to curb its corn production.
China's consumer inflation as expected... China's consumer inflation in May was up 1.5% from year-ago levels, as expected, according to data from the National Bureau of Statistics. This is also up 0.3 points from April. Food prices were down 1.6% from year-ago levels in May, driven by a 12.8% drop in pork prices versus year-go. The producer price index was up 5.5% from year-ago levels in May, down 0.9 points from April and marking the third month in a row where that index has cooled. This was 0.2 points below analysts' expectations.
Demand for corn at Chinese reserve auctions picks back up... China sold nearly 1.016 MMT of the 1.681 MMT of state reserve corn put up for auction today, representing a sales percentage of 60.4%. The vast majority of the business was for 2013 crop corn, which sold at an average price of 1,340 yuan ($197.08) per metric ton.
Cotton AWP falls; upland cotton import quota #7 announced... The Adjusted World Price (AWP) for cotton fell to 68.03 cents per pound, effective June 9, down from 68.43 cents the prior week and the lowest since the week of April 14, 2017, when it was 66.71 cents per pound. Meanwhile, USDA announced special import quota #7 for upland cotton will be established June 15, 2017, allowing importation of 13,890,026 kilograms (63,796 bales) of upland cotton purchased not later than Sept. 12, 2017, and entered into the U.S. not later than Dec. 11, 2017.
So far, just light cash trade... Some light cash cattle trade got started at prices mostly ranging from $134 to $137, which is within last week's range. But many feedlots held out for higher prices they feel are justified by strength in the boxed beef market, near-steady showlist numbers and strong cutting margins for packers.
Aggressive hog slaughter numbers... This week's kill is running 81,000 head in advance of year-ago, signaling aggressive packer demand. Considering the amount of pork this is bringing to market, solid pork prices are impressive. The pork cutout value is up 88 cents for the week.
Overnight demand news... There is no business to report.
Today's reports:
- 11:00 a.m., WASDE -- ERS
- 11:00 a.m., Crop Production -- NASS
- 11:15 a.m., Cotton: World Markets and Trade -- FAS
- 11:15 a.m., Grains: World Markets and Trade -- FAS
- 11:15 a.m.,Oilseeds: World Markets and Trade -- FAS
- 11:15 a.m.,World Agricultural Production -- FAS
