Good morning!
Followthrough buying in soybeans and corn overnight, wheat mixed... The corn and soybean markets extended Thursday’s corrective gains during overnight trade, while wheat futures pivoted around unchanged. As of 6:30 a.m. CT, corn futures are trading fractionally to 2 cents higher, soybeans are 7 to 9 cents higher and wheat futures are trading fractionally on either side of unchanged. The U.S. dollar index and front-month crude oil futures are both marginally higher this morning.
Labor Day schedule... Grain and livestock markets will trade normal hours today ahead of the extended holiday weekend. All markets and government offices are closed on Monday, Sept. 2, for Labor Day. There will be no Pro Farmer market updates on Monday. Grain markets resume trade on Monday, Sept. 2, at 7:00 p.m. CT with the overnight session. Livestock markets reopen at 8:30 a.m. CT on Tuesday, Sept. 3. Have a happy and safe holiday weekend.
Indonesia wants to fulfill rice import quota... Indonesia seeks to import another 900,000 metric tons of rice until the end of this year amid expectations of lower output and delayed planting season, the country’s food procurement company Bulog said. As of Aug. 30, Bulog has contracted 2.7 MMT of rice imports of the allocated quota of 3.6 MMT for this year.
Global sugar deficit to swell in 2024-25... In its first outlook for 2024-25 (October-September), the International Sugar Organization (ISO) forecast there would be a global sugar deficit of 3.58 MMT. ISO sharply reduced its forecast for the 2023-24 deficit to 200,000 MT from 2.95 MMT in its June update, noting Brazil’s center-south region “shifted more output into the pre-October window,” which will leave 2024-25 with a larger deficit.
India allows ethanol production from cane juice, other food products... India will allow sugar mills to use cane juice or syrup to produce ethanol in the new marketing year starting Nov. 1, the government said. The world’s second-biggest sugar producer imposed restrictions on diverting sugar for ethanol production in December 2023 to increase sugar output after cane crop was hit by below-average monsoon rains. Distilleries can also use B-heavy molasses, a byproduct with higher sucrose levels, for ethanol production and will be allowed to purchase up to 2.3 MMT of rice from the state-run Food Corporation of India for ethanol production.
ASA criticizes CARB’s proposed limits on soy-based biofuels in LCFS comments... The American Soybean Association (ASA) submitted critical comments to the California Air Resources Board (CARB) regarding proposed changes to the Low Carbon Fuel Standard (LCFS). ASA expressed deep concern over measures such as capping soybean and canola oil use in biofuels and imposing burdensome sustainability requirements, arguing that these changes lack scientific justification and could harm soy-based biofuel production. ASA is actively pushing back against these proposals and remains committed to collaborating with CARB to support soy-based biofuels.
EPA extends emergency fuel waiver for Midwest states... EPA has extended the emergency fuel waivers through Sept. 15 for Illinois, Indiana, Michigan and Wisconsin. These states can make the changeover to winter gasoline without having to shift back to summer fuel due to shortages caused by the outage of Exxon Mobil’s refinery in Joliet, Illinois.
Food industry pushes back to Harris price gouging plan... The food industry has a plan to push back on Kamala Harris’s plan to bar price gouging for groceries. In a memo sent to Congressional offices, the National Grocers Association, which represents family-owned grocery chains, argues they’re the ones getting squeezed. “The real culprit is skyrocketing overhead costs which get passed on to consumers in tight margin environments,” it said, noting independent grocers scraped by with 1.4% margins in 2023. Supporters of the plan are unlikely to be deterred.
Euro zone consumer inflation falls to three-year low... The annual consumer inflation rate in the euro zone fell to 2.2% in August from 2.6% the previous month, the lowest level since July 2021. Core inflation, excluding food, energy, alcohol and tobacco, fell to 2.8%, the lowest in four months. With inflation inching closer to the European Central Bank’s 2% target, the central bank is expected to cut interest rates for a second time this year in September.
PBOC starts trading gov’t bonds to stabilize market... The People’s Bank of China (PBOC) sold long-dated bonds and bought short-term ones, an operation that resulted in a net purchase of 100 billion yuan ($14 billion) of debt in August, according to a statement on its website. It didn’t specify the tenors or dates it bought or sold. These moves came on the heels of a sharp rally that dropped benchmark yields to a record low. Speculation on PBOC starting to trade debt in the secondary market mounted since late Wednesday, as the central bank created a new section on its website about its “buying and selling of government bonds.”
China to launch FX derivative... China will launch a new derivative instrument next week to help market participants better hedge forex risks, the operator of China’s forex market said. The launch of foreign currency non-deliverable forwards (NDF) in the interbank market on Sept. 2 will further satisfy market demand for risk-management, the China Foreign Exchange Trade System said. In NDF trading, the counterparties settle the transaction, not by delivering the underlying pair of currencies, but by making a net payment that reflects the difference between the agreed forward exchange rate and spot fixing.
China to continue with low-carbon reforms... China will keep phasing out fossil fuels and reforming its electricity system, the energy regulator said, issuing a white paper long on listing accomplishments but short on new plans for China’s energy transition. National Energy Administration head Zhang Jianhua said China would continue to reform its electricity system, expand the spot market, promote green electricity trading and replace fossil fuels with renewable energy. He also called for market-oriented reforms.
China considers major mortgage refinancing to boost slumping property sector... China is exploring a plan to allow homeowners to refinance up to $5.4 trillion in mortgages to lower borrowing costs and stimulate consumption, Bloomberg reports. The proposal would enable homeowners to renegotiate mortgage terms with their current lenders or switch banks, a first since the global financial crisis. While the move could reduce mortgage rates and ease financial burdens for millions, it may squeeze profitability for state-run banks. The plan is seen as a significant step to counteract the ongoing property market slump, which has dampened economic growth and consumer spending.
Cash cattle trade lower... Cash cattle trade got underway at mostly $1.00 to $2.00 lower prices on Wednesday and Thursday. While sales activity was light, that sets a weaker tone for cash cattle prices for a fifth consecutive week.
Discount narrows in October hog futures... October lean hog futures continued to strengthen on Thursday, despite ongoing seasonal weakness in the cash index. The CME lean hog index is down another 41 cents to $87.04 as of Aug. 28. October hogs finished Thursday $4.865 below today’s cash quote, which is less than the five-year average decline of $7.28 from now until mid-October.
Overnight demand news... Taiwan purchased 65,000 MT of corn expected to be sourced from Brazil.
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
· 2:00 p.m. Agricultural Prices — NASS
· 2:00 p.m. Egg Products — NASS
· 2:00 p.m. Peanut Prices— NASS
· 2:30 p.m. Commitments of Traders — CFTC