Good morning!
Corn and beans choppy, wheat lower overnight... Corn and soybeans posted two-sided trade overnight, while winter wheat futures were unable to build on yesterday’s corrective gains and spring wheat faced followthrough selling. As of 6:30 a.m. CT, corn futures are trading steady to a penny higher, soybeans are fractionally higher, SRW wheat is 5 to 8 cents lower, HRW wheat is mostly a dime lower and HRS wheat is mostly a nickel lower. Front-month crude oil futures are around 70 cents lower and the U.S. dollar index is nearly 400 points higher.
Weekly Export Sales Report out this morning... For the week ended Aug. 24, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | (150,000)-150,000 | (22,726) | 400,000-1,100,000 | 673,499 |
Wheat | NA | NA | 250,000-700,000 | 405,986 |
Soybeans | 50,000-300,000 | 364,948 | 600,000-1,400,000 | 1,218,168 |
Soymeal | 0-200,000 | 71,397 | 200,000-400,000 | 202,603 |
Soyoil | (5,000)-10,000 | 1,806 | 0-10,000 | (22) |
Assessing Idalia’s impact on crops... Hurricane Idalia, which has been downgraded to a tropical storm and is moving off the Carolina coast, left behind flooding rains and high winds. World Weather Inc. says, “Some lodging of cotton and corn may have occurred, although much of the corn crop had already been harvested from the most negatively impacted areas in Florida and Georgia. The most concentrated area of cotton is produced northwest of where the greatest wind occurred, which should have also helped to spare much of that crop from damage. Much of the rainfall that occurred in cotton areas of Georgia, Alabama and Florida was welcome because of the recent bouts of heat and moisture stress that was impacting the crop. Not only was that the case for cotton, but also for peanuts and soybeans. Since most of the cotton is produced northwest of where the greatest rain fell flooding was minimal in key production areas and mostly the moisture will prove to be highly beneficial.”
Putin, Erdogan to meet Sept. 4 to discuss grain exports... Turkish President Tayyip Erdogan will meet Russian President Vladimir Putin in Russia’s resort of Sochi on Sept. 4 to primarily discuss Black Sea grain exports, two Turkish sources told Reuters. The two leaders will discuss fallout from the war in Ukraine as well as a deal that allowed the export of Ukrainian grain via the Black Sea, one of the sources said. Meanwhile, the Kremlin said no specific results had been agreed yet on a proposal by Moscow to ship Russian grain via Turkey to poor countries, with financial support from Qatar.
French wheat quality declines but still above average... France’s ag ministry says 91% of the country’s wheat crop that has been harvested had protein requirements to meet milling quality, down from 93% in the prior survey but above the five-year average of 87%. In terms of Hagberg falling numbers – another measure of milling quality – 96% of the crop showed readings above 240 seconds, slightly below the 98% reported last week but still above the five-year average of 88%.
Is the Fed overdoing rate hikes?... Atlanta Federal Reserve Bank President Raphael Bostic has cautioned against excessively tightening monetary policy, emphasizing the need to avoid negative impacts on the U.S. labor market. Speaking at an event in South Africa, he noted current U.S. monetary policy is suitably restrictive. Bostic advocated for a cautious and patient approach, suggesting the existing restrictive policy should be allowed to affect the economy, to prevent the potential of excessive tightening and its associated unnecessary economic consequences.
Fed takes actions on regional banks... In response to a series of bank failures earlier this year, regulators are taking stronger measures to enhance supervision over regional banks. The Federal Reserve has discreetly demanded these regional lenders bolster their liquidity planning. Specifically, the Federal Reserve has issued confidential warnings to banks with assets ranging from $100 billion to $250 billion. This group includes institutions like Citizens Financial, Fifth Third Bancorp and M&T Bank. The warnings cover a broad range of aspects, spanning from the banks’ capital and liquidity levels to their technological capabilities and compliance practices.
China’s manufacturing sector improves, but still contracting... China’s official manufacturing purchasing managers index (PMI) rose to 49.7 from 49.3 in July but stayed below the 50-point level signaling continued contraction in the sector. Factory activity contracted at the softest pace since March amid recent stimulus measures from Beijing and a string of monetary support from the Chinese central bank.
Reuters: Xi to skip G20 summit... Chinese President Xi Jinping is likely to skip a summit of G20 leaders in India next week, sources familiar with the matter in India and China told Reuters. Premier Li Qiang is expected to represent Beijing at the Sept. 9-10 meeting in New Delhi. Li is also likely to attend a summit of East and Southeast Asian leaders in Jakarta, Indonesia on Sept 5-7, according to a report from Kyodo. The summit in India had been viewed as a venue at which Xi may meet with President Joe Biden, as the two superpowers seek to stabilize relations soured by a range of trade and geopolitical tensions.
Euro zone inflation unexpectedly holds steady in August... Euro zone consumer inflation held at 5.3% above year-ago in August, unchanged from the previous month, ending four months of declines. Core inflation, excluding unprocessed food and energy costs, slowed to 6.2% from 6.6% last month. The rise in prices excluding food, energy, alcohol and tobacco fell to 5.3% from 5.5% in July.
Slow developing cash cattle negotiations... Cash cattle negotiations have been limited so far this week, with packers not actively bidding for cattle and feedlots patiently waiting. With a three-day weekend ahead, it’s conceivable both sides will play it close to the vest and decide to reevaluate their situations after the holiday weekend.
Seasonal cash hog weakness picking up steam... The CME lean hog index is down another $1.74 to $90.67, marking the biggest daily decline since prices started their seasonal drop in late July. During that span, the cash index has fallen $15.33. Because of the steep discounts traders had built in, October hog futures have so far weathered the storm, falling only $1.425 during the same period.
Overnight demand news... South Korea purchased 203,000 MT of corn from two separate tenders with all of the supplies expected to be sourced from South America or South Africa. Egypt purchased 240,000 MT of wheat from Tuesday’s tender – 120,000 MT each from France and Romania.
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. Highlights From the August 2023 Farm Income Forecast — ERS
- 2:00 p.m. Fluid beverage milk sales by product (Annual) — ERS
- 2:00 p.m. Number and average size of U.S. fluid milk product plants — ERS
- 2:00 p.m. Outlook for U.S. Agricultural Trade: August 2023 — ERS
- 2:00 p.m. Selected soft dairy products, domestic use (Annual) — ERS
- 2:00 p.m. Vegetable and Pulses Yearbook— ERS
- 2:00 p.m. Agricultural Prices— NASS
- 2:00 p.m. Citrus Fruits — NASS