Good morning!
Subdued overnight grain trade... Grain markets traded in relatively narrow ranges overnight as soybeans modestly firmed, while corn and wheat declined. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 2 to 3 cents higher, SRW wheat is 5 to 7 cents lower, HRW wheat is fractionally to 2 cents lower and HRS wheat is narrowly mixed. Front-month crude oil futures are around 75 cents higher and the U.S. dollar index is about 100 points lower.
Weekly Export Sales Report out this morning... For the week ended Aug. 10, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | 0-250,000 | 150,434 | 500,000-1,000,000 | 758,366 |
Wheat | NA | NA | 200,000-525,000 | 567,574 |
Soybeans | 0-400,000 | 406,646 | 550,000-1,300,000 | 1,096,434 |
Soymeal | 50,000-200,000 | 144,129 | 50,000-250,000 | 285,836 |
Soyoil | 0-10,000 | (667) | 0-10,000 | 22 |
U.S. to escalate GM corn case against Mexico... The U.S. is preparing to escalate its complaint that Mexico’s ban on genetically modified (GM) corn violates the U.S.-Mexico-Canada Agreement (USMCA). The office of the U.S. Trade Representative plans to request the formation of a dispute resolution panel under USMCA, Bloomberg reported, citing people familiar with the situation. U.S. Trade Representative Katherine Tai requested formal dispute settlement consultations with Mexico under USMCA in early June, starting an initial 75-day clock. That period expired on Wednesday. While the two countries are free to continue those discussions, and the U.S. isn’t required to ask for a panel to be formed, today is the first day that it can make the request.
India considers wheat imports from Russia to ease prices... India is in talks with Russia to import wheat via government-to-government deals at a discount to surging global prices in a rare move to boost supplies and curb food inflation ahead of state and national elections next year, Reuters reported. “The decision will be made cautiously,” one source told Reuters. The last time India imported a significant amount of wheat was in 2017.
Romanian route provides path for Ukrainian grain shipments... The Sulina Channel, a 40-mile stretch of water leading from the Black Sea to Romanian, Ukrainian, and Moldovan ports in the Danube delta, has become a crucial route for Ukrainian grain shipments, protected by NATO’s presence. This channel has gained strategic importance in the context of ongoing tensions between Russia and Ukraine, the New York Times reports. In the past, the Danube delta offered a relatively safe alternative for cargo ships picking up Ukrainian grain, but Russia has escalated its attacks on Ukrainian grain-loading facilities in the delta, aiming to disrupt this route. This has led to concerns about the safety of the Sulina Channel. Efforts have been made to keep the channel open and operational. Ukraine is also considering alternative routes, such as exporting grain through Polish, Baltic and Adriatic ports, but the Danube remains the most efficient for now. Despite challenges and risks, the Sulina Channel continues to facilitate grain shipments, and there are plans to expand its role. U.S. and EU officials have met to discuss ways to support and enhance the channel’s function.
Heightened focus on yuan, Chinese economy... China’s central bank said it will provide further stimulus to the slumping Chinese economy and wants to prevent the Chinese yuan from further depreciation. China has already taken strong measures to counter depreciation of the yuan by providing significant guidance through its daily reference rate for the managed currency. This move, the most forceful since October, comes amid a backdrop of a robust U.S. dollar and signs of a sluggish Chinese economy, pushing the onshore yuan closer to a 16-year low. The People’s Bank of China bank also said it will coordinate financial support for local government debt risk and provide support to the housing market. Of note: Unofficial reports from property agents and private data providers indicate that China’s real estate market is facing more severe challenges than official statistics suggest.
Hoeven: FY Ag Approps action when Senate returns... In September, the Senate is expected to prioritize fiscal year (FY) 2024 spending bills with broad bipartisan support, specifically focusing on measures such as Agriculture-FDA and Military Construction-Veterans Affairs. Sen. John Hoeven (R-N.D.), an appropriator, expects the Senate to lead the way on these bills. These measures are likely to be part of “minibus” bills, with additional funding measures planned for other areas, Hoeven told the North Dakota Basin Electric Power Cooperative’s annual meeting Wednesday. The Senate Appropriations Committee has already moved forward with all 12 spending bills prior to the August recess, while the House panel has approved 10. Notably, the House has already passed its Military Construction-VA appropriations bill in late July; the full Senate has approve no appropriations measures. To prevent a government shutdown on Oct. 1, when FY 2024 begins, House Speaker Kevin McCarthy (R-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) have agreed to collaborate on a short-term continuing resolution (CR). This resolution will reportedly aim to maintain funding until early December.
EU, Indonesia engage in biodiesel tit for tat... The European Union (EU) initiated an investigation into whether Indonesia is evading EU import duties on biodiesel by routing imports through China and the United Kingdom. The investigation was prompted by a request from the European Biodiesel Board, which provided evidence suggesting that Indonesia is bypassing the import duties. The EU has already imposed countervailing measures on biodiesel imports from Indonesia. The EU states that a change in trade patterns involving exports from Indonesia to China and the U.K. has occurred after the imposition of these measures. As we reported yesterday, Indonesia has requested the World Trade Organization (WTO) to review the EU duties on its biodiesel, asserting they contradict the EU’s WTO commitments.
Tyson plans to sell China poultry unit... Tyson Foods plans to sell its China poultry business, Reuters reported, citing people with knowledge of the situation. The company has reportedly hired Goldman Sachs to advise on the sale and sent preliminary information to potential buyers, including a number of private equity firms. The sources did not say why Tyson was planning to sell the business.
Wholesale beef prices continue to rise... Wholesale beef prices posted strong gains for a third consecutive day, rising $1.73 for Choice and $1.74 for Select on Wednesday. Beef packer margins are improving amid the rising wholesale prices but remain in the red. Cash sources signal packers will be reluctant to actively raise cash bids until their margins turn positive.
Cash hog fundamentals continue seasonal decline... The CME lean hog index is down another 90 cents, extending its seasonal decline since the end of July. The pork cutout value fell $1.36 on Wednesday as all cuts except butts weakened. Lean hog futures are short-term oversold, though that’s not likely to trigger a corrective rebound on its own given the continued seasonal decline in cash fundamentals.
Overnight demand news... Exporters reported no tenders or sales.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
- 7:30 a.m. Weekly Export Sales — FAS
- 10:00 a.m. Fruit and Tree Nuts Data — ERS
- 10:00 a.m. Vegetables and Pulses Data — ERS
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: August 2023 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: August 2023 — ERS
- 2:00 p.m. Farm Computer Usage and Ownership — NASS