First Thing Today: Spring Wheat CCI Erodes, Just Minor Shifts for Corn and Beans

Good morning!

Profit-taking across the board overnight... Corn futures faced profit-taking overnight and are down 6 cents as of 6:35 a.m. CT. Soybeans also dipped overnight and are currently down 4 to 5 cents. Winter wheat futures are posting losses mostly in the 17 to 19-cent range, while spring wheat is down 9 to 17 cents. The U.S. dollar index is slightly lower today, while crude oil futures are posting solid gains.

CCI for spring wheat continues to erode... When USDA's weekly crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the spring wheat crop fell another 5.36 points to 305.99 points. The No. 2 producing state of Montana led the decline, with ratings dropping 7.03 points. More declines may very well be ahead, with Don Keeney, senior agricultural meteorologist for MDA Weather Services, pointing out that "Spring wheat is pushing through the moisture-sensitive heading stage, and additional significant reductions in yield potential are likely as the hot and dry pattern remains in place." See the state-by-state breakdown.

Minor shifts in corn and soybean CCI ratings this week... Our weighted CCI for corn climbed nearly a point to 371.42 points last week. The soybean CCI now stands at 357.67 points, down 2.04 points from the week prior. Both crops are rated below year-ago levels; for corn, ratings are down roughly 13 points while soybean ratings are around 11 points under year-ago. Get more details.

North Korea a major world focus... North Korea's successful test launch of an intercontinental ballistic missile is the major focus of world leaders.“Self-restraint” is the only thing stopping the U.S. and South Korea from going to war with the North, according to the highest-ranking American general on the peninsula. An emergency United Nations Security Council meeting was held, with U.S. Ambassador Nikki Haley saying America would go its "own path" if needed to counter this aggression, while France's U.N. ambassador pushed for fresh sanctions against the isolated state. President Trump said he’s considering “some pretty severe things” in response to North Korea’s test-firing. Read more here.

Cut in advanced biofuels a big item in EPA’s proposed RFS volume requirements... Instead of increasing the required volume of advanced biofuels, the Environmental Protection Agency (EPA) decided to cut them by 40 million gallons, reducing the overall amount of biofuel required under the program. The biomass-based diesel (BBD) volume was kept unchanged for 2019, at 2.1 billion gallons, the same level in place for 2018. Also of note, EPA said it was launching an analysis for a "reset" of the volumes allowed under the law, asking for comment on imported ethanol and biodiesel, and opening the door to an examination of the market for 0% ethanol. EPA has until Nov. 30 to accept comments, analyze them and produce a final rule. Get more details on and reactions to the RFS proposals here.

Brazil to fast-track program to boost biofuel use... Brazil's government plans to employ a fast-track legislative tool to speed up implementation of a program meant to boost biofuel use via the use of mandates for fuel distributors, Andre Rocha, head of the National Sugar and Ethanol Council told Reuters. Whereas a normal draft bill could take months to get through Congress, a presidential decree takes effect immediately and then Congress must approve it within four months.

Egypt rejects corn shipment due to ergot... Egypt has rejected a 60,000 MT shipment of corn from Ukraine due to high levels of the fungus ergot, according to Hamid Abdel Dayim, an ag ministry spokesman. He detailed that the shipment contained more than 0.05% of the fungus ergot, a common international maximum limit. A recent court ruling that shifted the responsibility for inspections back to the ag ministry has raised fears about a return to a zero-tolerance stance on the fungus for wheat shipments.

FAO: Global food prices continue to climb in June... The Food and Ag Organization of the U.N. (FAO) reports its Food Price Index averaged 175.2 points in June, a gain of 2.5 points from May and 11 points from year-ago. This is the second month in a row where the index has climbed, with this month's gains driven by "relatively large increases in dairy and cereal prices," according to FAO, which also noted a gain in meat prices. FAO trimmed its global wheat crop estimate by 3.3 MMT to 739.9 MMT, due "almost entirely" to smaller crops in the EU and Ukraine. But global wheat stocks are still expected to hit an all-time high of 255.8 MMT.

Court won’t reconsider large livestock facilities emissions reporting ruling... A federal court said it would not reconsider a prior ruling that vacated a Bush-era EPA rule exempting large livestock facilities from reporting emissions from animal waste. Large livestock farms — known as concentrated animal feeding operations — will now be subject to waste emissions reporting requirements under the Comprehensive Environmental Response, Compensation and Liability Act and the Emergency Planning and Community Right-to-Know Act. The agency estimated in 2008 that would cost farmers more than a million hours for record-keeping and $60 million for compliance. This will not likely be the last word on the matter. EPA is expected to ask the court to stay its decision so it can figure out what it will do.

Beef movement solid on price drop... Boxed beef prices softened 31 cents for Choice and $2.13 for Select on Wednesday, but movement was again strong at 147 loads. This signals prices are nearing value levels and/or that retailers are preparing for some post-holiday grilling features. Meanwhile, a few thousand head of cattle traded from $116 to $117 in Iowa yesterday, and in Nebraska at $117, down from last week's action that mostly ranged from $118 to $120 in these states.

Keeping a close eye on the cash market... Traders continue to monitor the cash hog market for signs of a top, but cash prices strengthened across the country yesterday, according to USDA. This helped futures to strengthen on Wednesday, pushing July lean hog futures to a premium to the cash hog index. But deferred contracts have a healthy discount to the cash index in place, which should limit pressure once cash prices falter.

Overnight demand news... Egypt bought 350,000 MT of wheat from Russia as well as 60,000 MT from Romania. Japan said it would import 15,750 MT of feed wheat via a simultaneous buy and sell auction. It also purchased a total of 91,660 MT of food-quality wheat from the U.S. via its regular tender.

Today's reports:

• 7:30 a.m., Drought Monitor -- USDA/NWS
• 8:00 a.m., Milk Cost of Production -- ERS
• 9:30 a.m., Weekly Ethanol Production -- EIA
• 2:00 p.m., Broiler Hatchery -- NASS
• 2:00 p.m., Dairy Products -- NASS