At 9:27 PM Eastern time Saturday evening, Reuters News Service reported President Joe Biden and House Speaker Kevin McCarthy had reached a tentative deal to raise the federal government's $31.4 trillion debt ceiling. The deal was described in terms that indicated it may not be absolute, and without any celebration reflecting the potentially difficult path to get the legislation approved by both Houses of Congress.
Reuters News quoted McCarthy:
"I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we've come to an agreement in principle that is worthy of the American people. We still have more work to do tonight to finish the writing of it."
McCarthy said he expects to finish writing the bill Sunday, then speak to Biden and have a vote on the deal on Wednesday.
If the debt ceiling news Monday night is still optimistic that the deal will become law, all markets around the world will be higher, everything else being equal.
The Baker Hughes reported the US oil and gas rig count was 711, 9 less this past week from the previous week and 16 less than a year ago. Rigs working has declined by 44 in the past month, biggest drop in three years. One year ago, the US had 16 more rigs drilling.
Canada had 82 rigs in operation this past week, 2 more than the previous week, but 16 less than a year ago.
Activity in Ukrainian ports has remained slow following the extension of the UN grain deal. There are 54 vessels awaiting inspection and average daily inspections are down to 3.2, lowest since August. Russia is still demanding access to the port of Pivdennyi for ammonia exports and SWIFT access for their agricultural bank.
The German association of farm cooperatives estimates German 2023 wheat production at 22.31 million mt, down 0.9% from last year.
Question from a client:
"Got about 15k of corn left in bin. Elevator said he would do plus 25 for July. Probably a good time to lock all basis in case they would go off new crop corn like those clowns did for March to July when prices go higher?
Still thinking higher on old crop corn or maybe start unloading rest slowly?"
Russ, corn basis is firmer at every location in the Corn Belt we checked or a client reported, except at Canton, Kansas, which went from +110 July to +100 July. That area has been done planting for the better part of a month and has been getting rain, which may be the main reason their basis was weaker.
Many of our clients notified us last week that their basis firmed last week and sometimes, two or even three times the basis was pushed higher.
Another noteworthy indicator is some merchandisers refused to buy corn at a cash price Friday after the CBOT closed. They would only buy on a basis only until Tuesday morning, 12 hours after the futures market opens Monday evening.
If you know your cash corn basis is very firm and you are satisfied, take it. Otherwise, we recommend you wait. In a weather market, futures and basis will firm. We expect futures to firm with or without a weather market. for our money, we would not set basis or futures and no cash sales.
And another comment:
"Hey Roger, & crew! Just curious as to your “tidbit” thoughts: Should it, or does it matter to those of us in flyover states if foreign countries do transactions in other currencies?"
Derek, not in the short run, meaning for the next several years. In the long run, as the US dollar becomes less in demand and less respected, all trade negotiations involving US products will be dealing with a less potent set of facts simply because the dollar is less respected.
World Grain FOB prices and Freight Rates
To read about world grain FOB prices and freight rates of this week visit our blog at the link below:
Rain Days Update
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days
Every day, every place in the world has a ten day weather forecast issued many weather services.
By a "place", we mean a Findlay, Ohio; Arcadia, Minnesota; Atlantic, Iowa; Fullerton, Nebraska; Cordoba, Argentina; Craig, Colorado, Saratov, Russia and ten million localities we have never heard of.
The ten day forecast predicts the high and low temperature for each day as well as whether or not rain is predicted for each of the ten days, likewise cloudy, partly cloudy, sunny, etc.
We look at the ten-day forecast and if we see rain is predicted for 4 of the next 10 days, we record a "4" for that location on the chart for the today. It does not matter whether it is one-hundredth of an inch or 5 inches. We realize about half the days expected to receive rain never get rain that day, but we must be consistent in what we report each day and every day because rain makes grain a few key weeks of the growing season. Of course, we scan the temperatures and the amounts of rain just to see if anything is getting way out of the norm.