Good morning!
Corn and beans weaker, wheat mixed overnight... Corn and soybeans pulled back from Tuesday’s corrective gains overnight, while the wheat market traded narrowly on either side of unchanged. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents lower, soybeans are around 7 cents lower, SRW wheat is fractionally higher, HRW wheat is fractionally to 3 cents lower and HRS wheat is 1 to 2 cents lower. The U.S. dollar index is around 450 points higher and front-month crude oil futures are about $1.30 lower.
China wants to curb barley, sorghum imports to boost local grain prices... China asked domestic traders to buy less foreign grains as ample supplies and weaker-than-expected demand weigh on domestic prices and threaten its longstanding policy to support local growers. Beijing this week summoned top importers for meetings and suggested they halt purchases of barley and sorghum, people familiar with the situation told Bloomberg. Barley and sorghum shipments that have already been booked are not affected, and the new measures would likely impact arrivals from November and into the first quarter next year, said the people. They noted the majority of booked cargoes are for October and November delivery. Beijing manages overseas buying of corn and wheat under an annual tariff rate quota system, but there’s no official quota on barley and sorghum.
Canadian crop production forecasts out later this morning... Statistics Canada will release its first Canadian crop production estimates based on a model-based approach at 7:30 a.m. CT. Analysts expect all-wheat production of 35.125 MMT, up from 31.954 MMT last year, according to a Reuters survey. Canola production is expected to total 19.217 MMT, up from 18.328 MMT in 2023.
Poor weather causes sharp drop in German wheat production... Germany’s wheat production is expected to fall 12.7% to 18.80 MMT due to poor weather, especially persistent late-season rains, the agriculture ministry said. Germany’s farmer associations previously forecast harvest reductions after unfavorable weather. Neighboring France also suffered severe wheat crop losses due to poor weather. France is the EU’s largest wheat producer, while Germany is No. 2.
U.S. imports of Chinese used cooking oil set for new record, future uncertain... U.S. imports of used cooking oil (UCO) from China are set to hit a record in the months ahead, even as regulatory uncertainty casts doubts over longer-term trade prospects, Reuters reported. Through June, China accounted for roughly 60% of the roughly 1 MMT of UCO imported into the United States. The U.S. biofuels market is set to undergo major changes next year as the government prepares to transition from a program that rewards producers based on output volumes to a qualitative system that will award tax credits based on the fuel’s carbon intensity. Since UCO is otherwise a waste product, its carbon footprint is lower than alternative biodiesel feedstocks, such as soybean oil and canola oil. That makes UCO more attractive for producers. However, EPA said it has been auditing supply chains of at least two U.S. renewable fuel producers amid concerns of fraudulent feedstock usage. U.S. trade policy could also shift dramatically following the November presidential election, which is creating uncertainty for Chinese UCO exporters.
India may raise vegoil import taxes to protect farmers... India is considering increasing import taxes on vegoils to protect local farmers from declining oilseed prices, according to Reuters. A proposal from the ag ministry is aimed at reducing imports of palm oil, soyoil and sunflower oil. Soybean prices in India are currently below the government support price and July’s vegoil imports reached 1.9 MMT, a 22.2% increase and the second highest on record. The country imports over 70% of its vegetable oil needs, buying palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine. A decision is expected in the coming weeks.
Indonesia plans mandatory B50 biodiesel by early 2025... Indonesia president-elect Prabowo Subianto hopes to implement mandatory 50% palm oil-based biodiesel blending by early next year. Indonesia said last week it planned to raise the blending to 40% in January 2025, from 35% now, in an effort to reduce fuel imports and lower emission from fossil fuels. Prabowo takes over in October from incumbent Joko Widodo, whose administration has ordered the palm oil industry to prepare for B50. Tests have already started on the higher blending. Indonesia biofuel producer association APROBI said producers would need time to test the B50 fuel and increase their production capacity to meet demand. The biodiesel industry may need to improve quality of its products to ensure the fuel will remain stable for higher mandatory blending, said Tatang Hernas Soerawidjaja, a biofuel expert at Bandung Institute of Technology.
CME Group to launch wheat spread futures on Oct. 14... CME Group and Euronext will launch two new joint wheat spread futures contracts on Oct. 14, pending regulatory review. The two joint CME/Euronext spread contracts will allow trades on the spread between Euronext’s milling wheat futures and both the Chicago Board of Trade (SRW) and Kansas (HRW) wheat futures. The contracts will each be U.S. dollar-denominated in metric tons. In addition to the two joint contracts, Euronext will launch a third spread contract between its milling wheat futures and maize (corn) futures.
USDA resumes ERP 2022 payments... USDA has resumed payments under the Emergency Relief Program (ERP) 2022 after being temporarily blocked by a court ruling in June. The program initially included additional benefits for “socially disadvantaged” farmers and ranchers, such as premium refunds and payment increases. However, to comply with the court ruling, these specific benefits have been removed. The payments under Track 1 resumed on Aug. 26, and those under Track 2 are expected to resume around Aug. 30. Under ERP 2022 Track 1, the payment calculation included a refund for underserved farmers or ranchers share of the premium and fees for crop insurance or the Noninsured Crop Disaster Assistance Program. For Track 2, the payment calculation included an increase equal to 15% of the gross payment after progressive factoring. To comply with the court ruling, the resumption of ERP 2022 payments will not include the refund of premiums under Track 1 or the 15% increase under Track 2 for socially disadvantaged farmers or ranchers.
24 states ask SCOTUS to block Biden’s methane emissions rule... Republican officials from 24 states, led by Oklahoma, have asked the Supreme Court to block a Biden administration initiative aimed at significantly reducing methane emissions. The EPA rule, which went into effect earlier this year, targets an 80% reduction in methane emissions from oil and gas operations by 2038. This request is part of a broader effort by these states to challenge the Biden administration’s environmental regulations, a campaign that has found some support among the conservative majority of the Supreme Court. The Court is expected to take several weeks to decide on the request.
Consumer confidence at six-month high... U.S. consumer confidence rose to a six-month high in August amid optimism over the economic outlook, but Americans are becoming more anxious about the labor market after the unemployment rate jumped to near a three-year high of 4.3% last month. The Conference Board’s consumer confidence index increased to 103.3 this month, the highest level since February, from an upwardly revised 101.9 in July. The Conference Board’s Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, improved to 82.5. That was the highest level since August 2023. The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, fell to 16.4, the narrowest since March 2021.
Limited packer demand for cash cattle... Cash cattle negotiations are off to an expected slow start, with packers showing limited willingness to establish bids. While cutting margins are in the black, packers have purchased a lot of cattle with time, will be working with a holiday-shortened schedule next week and will have fresh contract supplies available with the flip of the calendar. That all points to lower cash cattle prices for a fifth consecutive week. But big discounts to the cash market have helped fuel corrective buying in futures the first two days this week.
Cash hog decline slows, pork cutout firms... The CME lean hog index is down another 4 cents to $87.82 as of Aug. 26 – the smallest daily decline since a one-day uptick Aug. 14. The pork cutout firmed $1.07 to $96.05 on Tuesday, recouping a portion of Monday’s plunge, while movement improved to 300.6 loads.
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
· 9:30 a.m. Weekly Ethanol Production — EIA
· 2:00 p.m. Broiler Hatchery — NASS
· 2:00 p.m. United States and Canadian Hogs — NASS