This morning’s grain trade is firmer on row crops as Brazilian farmers are holding grain on the new tax. The US Central weather forecast reflects dry and warm temperatures in the 10-15-day forecast. Wheat futures are softer ahead of Wednesday’s WASDE crop report, anticipating an increase in the carryout.
This afternoon’s crop progress reports expect both corn and soybean conditions to be historically high at 73-76% good/excellent, with more than 94% of the corn crop seated and soybean seedings near 90%.
The interior and export Brazilian corn basis bids rose sharply late on Friday, with gains of .06-$0.12 posted. Brazilian soybean basis has gained 1-6 cents. Brazilian farmers' selling of corn and soybeans has halted due to last week's sizable tax increase. Farmers are trying to assess its ramifications, as exporters now struggle to fill their winter corn sales due to tight farmer holding.
Ukraine’s APK estimated that their 2024 grain harvest would be down 7.1 MMTs due to lower seedings and adverse weather. The wheat crop is at 20 MMTs versus 21.6 last year, with corn at 26.8, lower than last year’s 31 MMTs. Barley is put at 4.5 MMT compared to last year’s 5.5. Exports are anticipated to be down 5.5 MMTs, with corn exports off 6.7 MMTs. The decline in in combined Ukraine/Russian wheat exports could amount of 14-15 MMTs. This puts considerable importance on the size and quality of the EU wheat crop.
There is the anticipation of some rain falling across SW Russia this weekend and early next week, which can stabilize drought-stress crops. The damage is already done, as harvesting will get underway in some areas within 10 days. Meanwhile Mexico’s drought is unrelenting for another two weeks, while the north China Plains holds in a hot/dry pattern for the 10 days. World weather forecasts are worrisome, with US crop yield potential on paper plants at record to attain a trendline for corn.
The Federal Crop Insurance Corporation (FCIC) Board recently approved an increase in the subsidy rate for the Enhanced Coverage Option (ECO), effective from the 2025 insurance year starting after July 1, 2024. The subsidy rate for ECO will rise from 44% to 65%, aligning it with the Supplemental Coverage Option (SCO) endorsement. This change, irrespective of current farm bill discussions, aims to boost interest in ECO by lowering coverage costs. ECO offers additional county-based shallow-loss coverage on top of existing multi-peril revenue or yield policies and/or SCO endorsements, covering losses from 90% or 95% of a county’s expected revenue for the insured crop. ECO cannot be purchased with the Stacked Income Protection Plan (STAX) for cotton but can be combined with the Agriculture Risk Coverage (ARC) program, provided no SCO endorsement is also purchased.
Limited rain will fall in the Midwest into this weekend, with the exception of western and central Texas from late Tuesday and Wednesday, when .5-1.50″ falls. The remainder of the Central US will be dry, with above-normal temperatures on Tuesday, with central temperatures reaching the mid-80s to lower 90s. These warm temperatures extend to the remainder of the 15-day forecast, making this a warm/dry Central US weather prime that will help crops with the down of the next few weeks.
Live and feeder cattle futures ended lower last week, with a steady outlook anticipated this morning. Last week’s negotiated fed cattle trade had sales in the north unchanged from the previous week, which was $190 live and $30 one dressed. Live trade in IA was steady-$2 lower at $188-190, and live sales in the South were $1 lower and $185. It’s estimated that the five-area average was $187, which is $were to less than a year ago. This marks the first year-over-your cash market decline since March 2021.
Cattle slaughter last week was 3000 head less than a year ago, with the average carcass weight being 43 pounds heavier. Beef production was 5% larger than last year, as weights are more than offsetting smaller kill rates. Choice box beef prices gained $3.55 last week, and select beef prices went down by $0.57. Cattle slaughter will fall to multi-year lows this summer, but carcass weights are at historic highs, adding weight to production. Support for August live cattle is critical at trendline 175.
The U.S. exported 655.9 million lbs. of pork during April, up 34.8 million lbs. (5.6%) from March and 75.3 million lbs. (13.0%) above year-ago, driven by a record volume to Mexico. During the first four months of 2024, U.S. pork shipments totaled 2.458 billion lbs., up 209.5 million lbs. (9.3%) from the same period last year. Beef exports totaled 259.5 million lbs. during April, up 3.4 million lbs. (1.3%) from March but 8.1 million lbs. (3.0%) below year-ago. During the first four months of the year, beef shipments totaled 992.3 million lbs., down 54.4 million lbs. (5.2%) from the same period last year.
