Good morning!
Wheat firmer, corn and beans lower overnight... Wheat futures were supported by mild corrective buying overnight, while corn and soybeans pulled back from yesterday’s gains. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents lower, soybeans are 12 to 16 cents lower and wheat futures are mostly 5 to 8 cents higher. Front-month crude oil futures are around $1.75 lower and the U.S. dollar index is about 500 points higher this morning.
China issues ‘yellow alert’ drought warning... China has issued its first national drought alert of the year as authorities battle forest fires and mobilize specialist teams to protect crops from scorching temperatures across the Yangtze river basin. The national “yellow alert” issued late on Thursday is two levels below the most serious warning on Beijing’s scale. In one of the Yangtze’s important flood basins in central China’s Jiangxi province, the Poyang Lake has shrunk to a quarter of its normal size for this time of year, state news agency Xinhua reported on Thursday. As many as 66 rivers across 34 counties in the southwestern region of Chongqing have dried up, state broadcaster CCTV reported today. China’s water resources ministry has instructed drought-hit agricultural regions to draw up lists determining who can access supplies at any particular time, to ensure they do not run out.
Ukraine’s grain exports sharply behind year-ago despite port reopenings... Ukraine has exported 2.99 MMT of grains since July 1, according to the country’s ag ministry, down 51.6% from the same period last year. The ministry data showed exports so far in 2022-23 included 1.94 million MMT of corn, 783,000 MT of wheat and 257,000 MT of barley. Export volumes have picked up this month after three Black Sea ports were reopened on Aug. 1. Since then, Ukraine has exported 1.29 MMT of grain, though that’s still down sharply from 3.14 MMT during the same period last year.
Ukraine’s wheat harvest nearing completion... Ukraine’s wheat harvest is 91% complete at 17.4 MMT, according to grain traders union UGA. It said total harvest of grains and oilseeds stood at 25.7 MMT, 2.3 MMT higher than the country’s ag ministry indicated. Ukraine’s government expects total production to be 65 MMT to 67 MMT, down from last year’s record of 86 MMT.
Russia lowers wheat export tax... Russia’s wheat export tax for Aug. 24-30 will be 4,794.7 rubles ($80.92) per metric ton based on an indicative price of $358.10. That’s down from a rate of 5,018.1 rubles per metric ton the previous week.
Fertilizer crunch… again... European producers are again curbing operations because of rising prices of gas — a key feedstock — with at least a quarter of the region’s nitrogen fertilizer capacity thought to be lost already, according to Bloomberg. In China, a power crunch in the Sichuan province is stopping fertilizer output there. Most nitrogen prices are up after aggressive summer fill, yet they’re down sharply from spring highs, portending relief ahead of the U.S. fall season, Bloomberg Intelligence says.
China soybean auctions continue... China will auction another 500,000 MT of imported soybeans from state-owned reserves on Aug. 26.
FSA sending additional ERP applications under initial phase of program... Another 18,000 producers will be receiving pre-filled applications for assistance under the Emergency Relief Program (ERP) covering losses from natural disasters in 2020 and 2021. The installment of aid will reflect those with potentially eligible losses but had received crop insurance indemnities for those losses after May or were not included in the initial Phase 1 ERP effort for several reasons. Before program payment factors or eligibility criteria, FSA estimated the effort could generate about $756 million in assistance.
Placements key in Cattle on Feed data... USDA’s Cattle on Feed Report this afternoon is expected to show the Aug. 1 feedlot inventory up 0.7% from year-ago at nearly 11.2 million head. While placements on average are expected to be down 1.5% from last year, estimates ranged from a 5% drop to 1.3% increase. July marketings are expected to be down 2.9% from last year.
Light cash cattle trade... Cash cattle trade has been light so far this week, with most feedlots passing on mildly firmer bids and packers showing no urgency after two weeks of aggressive purchases. At this stage, active cash trade is likely to wait until after USDA’s Cattle on Feed Report this afternoon. And with feedlots current on marketings, they could choose to carry some animals into next week if packers don’t increase bids from current levels.
October hogs extend sharp discount to cash index... October lean hogs closed down the $4.75 daily trading limit on Thursday at $93.30, which was $27.30 below today’s CME lean hog index quote (as of Aug. 17). The daily limit for hog futures expands to $7.00 for today’s session. While yesterday’s technical breakdown could lead to active followthrough selling, the huge discount the front-month contract holds to the cash index appears far too wide.
Overnight demand news... Japan purchased 13,400 MT of feed wheat.
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
- 8:00 a.m. Food Expenditure Series — ERS
- 11:00 a.m. Rice Stocks — NASS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC