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3 Big Things Today, July 25
1. Wheat Futures Surge Overnight on Global Crop Concerns
Wheat futures jumped double digits in overnight trading on concerns about global crops.
European consultant Strategie Grains said today that it cut its forecast for the EU’s soft wheat crop to just under 130 million metric tons compared with 132.4 million tons estimated earlier this month. If realized, that’d be the smallest crop from the EU since 2012, according to Reuters.
Participants on the U.S. spring wheat tour who are traveling across North Dakota said they’re seeing evidence of heat stress on the crop and that the crop doesn’t look as good as some had expected considering the lofty crop ratings.
About 88% of the crop was in good or excellent condition as of Sunday, the USDA said in a report this week. Tour participants will release their findings from the state as a whole on Thursday.
Yields in Russia are also of concern to market-watchers as they’re pegged by SovEcon at the lowest in three years, according to Reuters.
Wheat for September delivery rose 11¼¢ to $5.21½ a bushel overnight on the Chicago Board of Trade. Kansas City futures added 12½¢ to $5.22¼ a bushel.
Corn futures for December delivery rose 3½¢ to $3.69½ a bushel in Chicago.
Soybean futures for November delivery fell 2½¢ to $8.70¾ a bushel overnight. Soy meal declined 10¢ to $326.60 a short ton, and soy oil rose 0.03¢ to 28.61¢ a pound.
2. Producer Groups Appreciate Government’s Help, Want Long-Term Fix to Trade
The USDA’s announcement that the government will offer $12 billion in assistance to growers hurt by the escalating trade spat between the U.S. and China was met with relief Tuesday, but producer groups hope it’s only a first step before trade is again normalized.
Soybean prices are down more than $2 a bushel since late May when the trade war between the U.S. and China started in earnest. Earlier this month, the U.S. imposed tariffs on $34 billion worth of Chinese goods, and China followed with duties on an equal amount of U.S. goods.
President Trump followed that by saying he’d impose tariffs on another $200 billion worth of Chinese wares, and last week said on CNBC that he wouldn’t have a problem with putting levies on more than $500 billion worth of goods from the Asian nation – encompassing everything China ships to the U.S.
China, meanwhile, has began devaluing its currency in a bid to lure buyers.
The USDA said on Tuesday that to offset those losses, it would offer a one-time bailout to farmers affected by the trade war. Though details are scant, the USDA said the money would come in the form of incremental payments to farmers from the Commodity Credit Corporation.
The American Soybean Association said in response that it appreciates the president’s recognition that soybean farmers are being hurt by the tariffs, but it hopes the administration has a long-term plan to mitigate continued low prices for ag commodities.
ASA President John Heisdorffer said the U.S. needs to finish negotiating the North American Free Trade Agreement and look to other key markets including Japan, Vietnam, Indonesia, and the Philippines. Exports are pegged down 11% next year, and the soybean harvest is expected to be near record high, he said.
“The American Soybean Association has consistently advised the administration that the best way to reduce our nation’s trade deficit is by increasing exports, including of agricultural products,” Heisdorffer said in the ASA statement. “Since the administration has decided to use tariffs to address trade concerns with China and China has retaliated, farmers don’t have time to wait to see how this trade war turns out.”
The National Pork Producers Council said in a statement that the industry now faces tariffs on 40% of its exports, including in China and Mexico, the top export markets by volume last year. That’s placed American pig farmers in “dire financial straits,” the group said.
“While we recognize the complexities of resetting U.S. trade policy, we hope that U.S. pork will soon regain the chance to compete on a level playing field in markets around the globe,” the NPPC said. “We have established valuable international trading relationships that have helped offset the U.S. trade deficit and fueled America’s rural economy.”
3. Thunderstorms Forecast For Parts of Eastern Nebraska, Western Iowa on Wednesday
The weather maps for the Corn Belt on Wednesday are relatively quiet after a couple weeks of heat waves and flood warnings, but storms are developing in a few areas that need to be watched.
Thunderstorms are possible today in parts of eastern Nebraska and western Iowa that could turn severe, according to the National Weather Service. The storms could bring damaging wind, large hail and locally heavy rain, the NWS said in a report early Wednesday morning.
Minor flooding is expected to continue in extreme southeastern Nebraska along the Missouri River.
Farther east, storms are expected in much of northern Illinois, though they’ll likely be in a “weakening state,” the NWS said.
“Some of the storms may produce small hail or gusty winds to 40 mph or so across north-central Illinois, but generally … the severe threat is low,” the agency said.