Grain prices this morning are mixed as the complex tries to rebound on slightly bullish crop progress and weather data points.
“Hope is important because it can make the present moment less difficult to bear. If we believe that tomorrow will be better, we can bear a hardship today.” -Thich Nhat Hanh (Vietnamese Monk and Activist)
Crop Progress Overshadowed by Trade War
Grain prices this morning are mixed as the complex tries to decipher a slightly bullish crop progress report and rebound from yesterday’s sell-off on heightened trade war talk. Supporting grain prices are some fresh weather forecasts which are showing some hot, dry weather. We’ve also got the acreage reports out from StatsCan AND the USDA on Friday!
Comparably, we saw headlines from the White House that they’ll try to stop Chinese companies from investing in American firms.  There’s also some talk from US President Trump that he’s considering “Tariff Payments” to try and help prop up the American ag industry using a division of the USDA, called the Commodity Credit Corporation [doesn’t sound very governmental, eh?) 
As Garrett discussed in yesterday’s trading recap, Grain Markets Today, soybean prices plunged again by 20 cents. Corn prices fell by nearly 2% while winter wheat prices in Chicago and Kansas City dropped between 15 and 20 cents, depending on the contract. Spring wheat prices in Minneapolis lost about a dime, while canola prices on the new crop, November 2018 contract lost a few bucks to fall back to levels seen in early March.
It looks like the EPA will announce a biofuel target for 2019 of 19.9 billion gallons, up 3.1% year-over-year.  The increase is mainly attributed to more advanced biofuels, with conventional renewable fuels like corn-based ethanol earning the same number that they did in 2018: 15 billion gallons. The announcement was slightly delayed as the debate raged on over the potential change for refiners to blend biofuels into gasoline and diesel (a change in the RFS and its impact on corn prices has something that we’ve been covering at GrainCents for quite some time).
Crop Progress Still Impressive
Garrett provided a full recap of the USDA’s crop progress report in yesterday’s Grain Markets Today, so I won’t dig into the details but here are the main takeaways:
• Soybeans crop rating: 73% rated good-to-excellent (G/E), unchanged week-over-week (WoW)
• Corn crop rating: 77% G/E, -1 WoW
• Spring wheat crop rating: 77% G/E, -1 WoW
• Barley: 83% G/E, -1 WoW
• Oats: 72%, +2 WoW
• Winter wheat rating: 37% G/E, -2 WoW
• Winter wheat harvest: 41%, +14 WoW
While the US winter wheat harvest is certainly accelerating (now 8 points above the five-year average), but quality continues to be a concern. This is especially true in central and western Kansas where rains are stalling combines in the field. 
The precipitation is a double-edged sword as it likely will deteriorate the quality of winter wheat ready to come off, but it will certainly help charge desperately-depleted soil moisture conditions in the area. For perspective, look at where Kansas, Oklahoma, and Texas G/E crop ratings are today versus a year ago in the table below.
Bedlam in Brazil & Anarchy in Argentina?
The safrinha corn crop in Brazil continues to be downgraded as harvest goes on, but that’s the least of the country’s worries. Grain movement has slowed to a trickle as freight costs have skyrocketed with the implementation of a minimum freight rate across Brazil. There is a lot of contention with the issues as it has complicated local supply and demand factors, with the result being little interest in grain getting contracted.
In Argentina, grain movement has also stalled thanks to another strike by workers at crush facilities and ports.  The workers are looking for better wages to compensate for rising inflation, on account of Argentina’s Peso losing about 50% against the US Dollar so far in 2018!
While the strike is only a 24-hour affair, the rise of domestic and international political unrest is a growing theme that we’re watching for all major crops for GrainCents readers, especially in this past Sunday’s weekly digest emails.
In a time where there are more noise and moving parts than ever, I invite you to sign up for a free 3-week trial of GrainCents and at least be on top of things til mid-July. If you have any questions, please send us a note here under the category Site Features and Tools.