First Thing Today | June 28, 2022

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Good morning!

Corn and wheat rebound, soybeans see followthrough buying overnight... Corn and wheat futures posted strong gains on corrective buying overnight, while soybeans sharply extended Monday’s gains. As of 6:30 a.m. CT, corn futures are trading 9 to 10 cents higher, soybeans are 14 to 18 cents higher, SRW wheat is 20-plus cents higher, HRW wheat is 12 to 13 cents higher and HRS wheat is 2 to 3 cents higher. Front-month U.S. crude oil futures are around $1.75 higher and the U.S. dollar index is posting modest gains this morning.

Corn, soybean and spring wheat CCI ratings fall... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop fell 6.7 points to 369.5, which was 2.8 points below the five-year average. The soybean crop declined 5.4 points to 360.6, which was still 0.4 point above average. The spring wheat crop slipped 3.8 points to 360.4, though that was still 17.9 points above the five-year average for the date. Click here to view details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended June 26.

  • Corn: 4% silking (4% average), 67% rated good/excellent (70% last week)
  • Soybeans: 98% planted (97% average), 91% emerged (91% average), 7% blooming (11% average), 65% rated good/excellent (68% last week)
  • Spring wheat: 98% emerged (99% average), 8% headed (34% average), 59% rated good/excellent (59% last week)
  • Winter wheat: 95% headed (98% average), 41% harvested (35% average)
  • Cotton: 33% squaring (33% average), 8% setting bolls (7% average), 37% rated good/excellent (40% last week)

Vilsack calls for Ukraine grain exports to resume... USDA Secretary Tom Vilsack called for Ukrainian ports in the Black Sea to be opened to ship grain out of the embattled country, to help relieve a global food crunch. Trading needs to resume from the ports in the Black Sea that have been damaged or disrupted by Russia’s invasion, Vilsack said, freeing up storage space for the coming harvest in Ukraine. He said the U.S. also needs to look for ways for it to increase its own crop production to help make up the gap in global grain supplies.

Another sign of inflation at the pump: bigger credit-card holds... Gas stations are putting bigger holds of up to $175 on customers’ cards when they swipe. When drivers insert a credit or debit card at the pump, the gas station doesn’t know how much fuel they will buy and it places a hold on the account for an amount set by the gas station. Merchants authorize the payment networks to lift the hold once the final total of the payment is determined, though the holds can take hours and sometimes longer to settle — raising risks of overdraft penalties for debit-card users and eating into credit limits during the holds. Visa and Mastercard raised the limit for gas station holds to $175 from $125 previously. The holds are set based on the largest allowed gas transactions. As gas prices rose, $125 was no longer enough for customers with larger vehicles to fill up their tanks on a single transaction.

U.S./Taiwan trade talks... Senior U.S. and Taiwanese officials held inaugural talks about developing an “ambitious roadmap for negotiations” to deepen economic and trade ties, a move likely to exacerbate tensions between Washington and Beijing. Deputy U.S. Trade Representative Sarah Bianchi and Taiwan Minister-Without-Portfolio John Deng are laying the groundwork to advance “mutual trade priorities” through potential agreements in areas such as regulatory practices, agriculture, anti-corruption and non-market policies and practices, the Office of the USTR said in an emailed statement Monday.

G7 to toughen stance on China market abuse... The Group of Seven (G7) leaders have agreed to develop a coordinated approach to remedying China's “non-market” international trade practices, a senior U.S. official said on the last day of their summit in Germany. Among their commitments was accelerated efforts to remove forced labor, including state-backed forced labor, from global supply chains, the official added. “You’ll see leaders release a collective statement, which is unprecedented in the context of the G7, acknowledging the harms caused by China’s non-transparent, market-distorting industrial directives,” the official said.

China eases Covid restrictions for travelers... China is cutting in half the amount of time visitors will have to spend in quarantine on arrival. Separately, Chinese President Xi Jinping will leave the mainland for the first time since January 2020 this week when he visits Hong Kong. Markets reacted positively to the signs of an easing of some of Beijing’s strict Covid measures.

Another Chinese official vows timely policy measures to support economy... China will roll out monetary policy tools in a timely manner to cope with economic headwinds such as a slumping property market, weak consumer spending and Covid. Beijing will implement its existing support measures while improving its policy toolbox, Ou Hong, deputy secretary general at the National Development and Reform Commission said. He acknowledged that Covid-19 outbreaks and the Ukraine crisis have threatened to undercut economic growth and driven up unemployment and inflation. The highest priorities are to safeguard food and energy security and stabilize industrial supply chains. The comments follow those from the head of the People’s Bank of China (PBOC) on Monday saying China’s monetary policy will remain accommodative to support economic recovery.

China building yuan currency reserve to compete with the dollar... PBOC announced it would team up with Indonesia, Malaysia, Hong Kong and Chile to help prop up other economies facing volatility. Each will contribute about $2.2 billion worth of yuan.

Malaysia urges palm oil mills to resume production despite price drop... Malaysian officials called on palm oil millers to resume production and buy oil palm fruits from farmers, after a plunge in prices of the edible oil prompted some companies to halt processing. The head of the state-run Malaysian Palm Oil Board said it requested mills restart production and was studying action that could be taken against them should they fail to do so. The Malaysian Palm Oil Millers Association said that at current prices, mills stood to lose at least 150,000 ringgit ($34,114) for every 100 MT of crude palm oil produced.

Widely varied cash cattle trade expected again this week... Last week’s average cash cattle price firmed 88 cents to $144.55, though there remained a wide discrepancy between trade in the Southern Plains and the northern region. Traders expect roughly steady prices in the Southern Plains again this week, while the northern market is likely to remain firmer given tight market-ready supplies.

Cash hog index maintains upward trajectory... The CME lean hog index is 45 cents higher to $111.35 (as of June 24). After Monday’s declines, July futures moved to a slight discount to the cash index, while August hogs finished nearly $6.50 below the cash index. The discount structure in summer-month hog futures signals traders sense a seasonal peak in the cash index is near.

Overnight demand news... Exporters reported no tenders or sales.

See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.

Today’s reports

 

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