Farm Bill movement
The Senate Agriculture Committee passed the Chairman’s version of the 2018 farm bill. It is expected to be on the floor of the Senate the week of June 25. The bill is similar to HR 2 in that it makes few changes to the core programs of the 2014 bill. There are, of course, many differences that will have to be worked out in conference, but core programs are maintained in both. Language previously introduced in the Thune/Brown bill that used decreased reference prices for cotton and rice to pay for fixes to ARC-CO was not included in the bill.

The House continues to search for a path forward on immigration to satisfy the Freedom Caucus, whose members will not support a Farm Bill until immigration bills are considered. Speaker Ryan announced this week that the House plans to vote on two immigration bills next week, potentially clearing the way for farm bill passage.

Cotton futures update
Cotton futures have seen a strong rally in recent weeks. U.S. export sales remain strong, with sales for the 17-18 marketing year up 2.5 million bales over the year ago total. Vietnam and China are the top buyers, at 19 percent and 16 percent respectively. Additionally, for the first time since 2013, China issued a new 800,000 metric ton import quota on top of their annual 894,000 quota.

USDA predicts the US crop will come in at 19.5 million bales, but there is still plenty of uncertainty on yields and abandonment, and many in the trade think the USDA estimate is too high. Ending stocks are estimated to be 4.7 million bales with a stocks to use ratio of 24.9 percent. Global production is pegged at 120.4 million bales, while ending stocks are pegged at 83.02 million bales with a stocks to use ratio of 66.2 percent.

The US crop is ahead of the 5 year pace at 90 percent planted, with Arkansas reporting 100 percent of the crop in the ground as of June 10. Farmers are taking advantage of the pricing opportunities presented by the recent rally, with 15 percent of the Mid-South crop currently forward contracted.

Soybeans sink
November soybean futures have taken over 85 cents off the market since the end of May. The market charted a double top at the high of $10.60 as the selloff began. There is significant technical support at $9.70, and the market is in oversold territory at this point. Livestock producers might consider this a pricing opportunity for feed, as a corrective bounce could be coming soon. The June WASDE report had some good news on the domestic front, with 2018 ending stocks down to 505 million bushels thanks to a 25 million-bushel increase in crushing. Next season’s ending stocks were cut to 385 million bushels, which was below the low end of pre-report estimates. World stocks, on the other hand, were increased to 119 MMT thanks to an increase in Brazilian production. The market will likely remain volatile and buying interest limited by uncertainty surrounding trade talks and potential tariffs.

A rice selloff
The rice market has seen a significant selloff, with futures taking over $2/cwt off the market since the April highs. On the domestic front, the 2017/18 ending stocks estimate has been raised 3 million cwt on a 1 million cwt increase in imported rice and a 2 million cwt decrease in exports, reflecting the current pace of trade. The season-average farm price for the same time period was lowered to $12.30-$12.70. For 2018/19, total supplies are raised 4 million cwt, due to the higher carryout and an increase in imported long-grain aromatics from Asia. Global supplies for 2018/19 are expected to be down 2.1 million tons on reduced production, mostly in China. With NAFTA negotiations deadlocked, the rice market will likely remain volatile, as Mexico is the single largest buyer of US rice, purchasing 250,000-300,000 metric tons and Canada accounting for approximately 75,000 metric tons annually.

Corn crop report
USDA’s first crop progress report of the season showed the second-highest crop condition rating ever. Seventy-nine percent of the crop was rated good-excellent, the second highest rating since 1991 and the highest rating since 1994. US growers are expected to harvest 80.7 million acres of corn with an average yield of 174 bushels per acre. While it is still early in the year, it is likely USDA will revise the production estimate in future reports. Like other markets, corn futures have sold-off in recent weeks. While the market is currently in oversold territory, traders will be watching the size of the crop and trade negotiations closely.

Livestock boost
Livestock futures have shifted focus away from trade concerns. Cattle and hog markets have received a boost post-Memorial Day as domestic grilling season is in full swing and demand has picked up. August live cattle are building on technical support near $98/cwt, but are finding resistance between $106 and $107/cwt. September feeders have found resistance just above $149. Hog futures, on the other hand, have blown through resistance in recent days, trending sharply higher, with little in the way of technical resistance until they reach the $85/cwt area.