Good morning!
Corn firmer, soybeans and wheat weaker to open the week... Corn futures extended last week’s gains overnight, while soybeans and wheat traded lower. As of 6:30 a.m. CT, corn futures are trading mostly 5 to 6 cents higher, soybeans are mostly 18 to 19 cents lower and wheat futures are 6 to 9 cents lower. Front-month crude oil futures are around 30 cents higher and the U.S. dollar index is about 200 points higher this morning.
Scattered rains early this week, then drier... Weekend rains were greatest from Wisconsin and southeastern Minnesota through the heart of Iowa into parts of eastern Kansas. Some showers are expected early this week across the central and eastern Corn Belt before drier conditions move in for about 10 days. The Southern Plains are expected to receive frequent rains this week.
U.S. sends ships through Taiwan Strait... On Sunday, the U.S. Navy sent two guided-missile cruisers through the Taiwan Strait, which China now claims as its “internal waters.” The U.S. and others maintain the strait is international waters under the United Nations Convention on the Law of the Sea. The USS Chancellorsville and USS Antietam, a pair of guided-missile cruisers, sailed in international waters between Taiwan and the Chinese mainland. “The ship’s transit through the Taiwan Strait demonstrates the United States’ commitment to a free and open Indo-Pacific,” the U.S. Navy said in a statement. “The United States military flies, sails, and operates anywhere international law allows.” There was a muted response from Beijing. The Chinese military’s Eastern Theater Command said it monitored the two ships, maintained a high alert and was “ready to thwart any provocation.”
Ukrainian grain exports top 1 MMT... More than 1 MMT of grains and other foods have so far been exported from Ukrainian ports since the deal was signed to resume shipments. However, millions of metric tons of grains from previous years still need to be cleared to make room for this year’s harvest, the United Nations coordinator for the grains export deal said on Saturday. Since July 1, Ukraine has exported 3.6 MMT of grains, according to the country’s ag ministry, down 52.6% from the same period last year. Exports included 2.33 MMT of corn, 981,000 MT of wheat and 289,000 MT of barley.
Canadian crop production estimates out later this morning... Based on a Reuters survey, traders expect Statistics Canada to report Canadian all-wheat production at 34.0 MMT, up sharply from 21.7 MMT last year. The canola crop is expected to total 19.6 MMT, up from 12. 6 MMT last year.
Kazakhstan to scrap wheat export caps... Kazakhstan plans to scrap wheat and flour export quotas next month, Agriculture Minister Yerbol Karashukeyev said. The country introduced the export limits in May to keep the local market stocked and cool inflation linked to rising global food prices. “The situation has changed now, the (wheat) harvest outlook is optimistic – about 13 MMT, which is far more than last year,” Karashukeyev wrote on Facebook. He said the cabinet would discuss his ministry’s proposal to lift the quotas next week.
Indonesia raises palm reference price, export tax... Indonesia will set its crude palm oil (CPO) reference price for Sept. 1-15 at $930.02 per metric ton, up from $900.52 per metric ton for Aug. 16-31, senior economic ministry official Musdhalifah Machmud told Reuters. The price reference would put Indonesia’s CPO export tax at $124 per metric ton for the period, up from the current $74 per metric ton. Indonesia also extended its export levy waiver until Oct. 31.
Shipping capacity squeeze is moving from the water to land... Logistics executives say sea containers and the steel trailers needed to ferry goods on trucks are in short supply, the Wall Street Journal reports, as efforts to cope with steep inventory imbalances send new backups rippling across supply chains. Executives say shippers are tying up the transportation equipment for weeks at a time, often because they are storing goods as warehouses brim to capacity. It’s the latest sign of how ad hoc tactics aimed at solving short-term problems raise disruptions elsewhere in distribution channels. In this case, logistics companies say they’re waiting longer periods for empty sea containers and truck chassis, complicating efforts to keep imports flowing and hampering outbound business. One chassis provider says its equipment is tied up about three times longer than the trailers were out before the pandemic.
U.S. food and beverage companies racing to keep operations running during shortage of CO2... Companies including Tyson Foods and Kraft Heinz have been searching for carbon dioxide with more urgency, the Wall Street Journal reports, after supply disruptions this summer exacerbated existing shortages, threatening production of goods from cold cuts to beer. It’s one of the results of pandemic-driven shifts in industrial output that are continuing to reverberate across supply chains for key raw materials. Officials say shortages have grown acute in parts of the country and that supplies will remain tight this fall. Meatpacking giant Tyson said in recent correspondence to suppliers it was in an emergency state and needed help closing gaps in its carbon dioxide supplies across plants in 10 U.S. locations. Kraft notified retailers in August of disruptions to the company’s meat supplies, citing “severely constrained” carbon-dioxide supplies and other issues.
The week ahead in Washington... Congress is out into September for its extended summer recess. On the economic front, markets will focus on Friday’s employment data for August, with economists expecting a gain of 285,000 non-farm payrolls, down from 528,000 jobs added in July. The unemployment rate is expected to be unchanged at 3.5%. The focus for ag will be Friday’s world food price index reading from the UN Food and Agriculture Organization.
China to sell state pork reserves... China’s state planner said it will release pork reserves from September to ensure meat supply during upcoming holidays when demand typically increases. Pork prices have risen rapidly in recent months amid tighter supplies.
China’s sow herd increased in July but below year-ago... China’s sow herd at the end of July totaled 42.98 million head, according to the country’s ag ministry, up 0.5% from June but down 5.3% from last year.
Wait-and-see attitude for cash cattle trade... Traders come into the week not knowing what to expect from the cash cattle market. While market-ready supplies are tightening and feedlots are current on marketings, packers were rather passive buyers last week. This week’s cash cattle trade isn’t likely to turn active until midweek or later.
Cash hog index falling at a faster rate... The CME lean hog index is down $2.73 today (as of Aug. 25) to $113.32. That’s the lowest level since July 12 and nearly $9 below the early August seasonal peak. October lean hog futures finished Friday $22.67 below that level. While the cash index is picking up steam on its seasonal descent, that wide of a discount signals traders are overly pessimistic.
Weekend demand news... Algeria tendered to buy a nominal 50,000 MT of optional origin soft milling 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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Egg Products — NASS
- 3:00 p.m. Crop Progress — NASS