Good morning!
Corn and wheat extend losses, soybeans retreat... Corn and wheat futures faced followthrough selling overnight, while soybeans gave back more than they gained on Wednesday. As of 6:30 a.m. CT, corn futures are trading 3 to 5 cents lower, soybeans are 12 to 15 cents lower and wheat futures are mostly 8 to 15 cents lower. Front-month crude oil futures are around $1.50 lower and the U.S. dollar index is more than 1,600 points higher this morning.
Russia hasn’t decided whether to extend grain export deal... The Kremlin said on Thursday it had not committed to extending the deal allowing Ukrainian grain exports from Black Sea ports beyond the Nov. 19 deadline. Russia says it still needs to assess whether the deal was working before deciding whether to extend its participation. Russian Foreign Minister Sergei Lavrov urged the United Nations to step up its efforts to ensure Western countries ease restrictions Moscow says hinder its agricultural and fertilizer exports, which also formed part of the deal. “We still do not see any results regarding a second aspect: the removal of obstacles to the export of Russian fertilizers and grain,” Lavrov said. Meanwhile, Russian inspectors resumed work at the Joint Coordination Centre in Istanbul.
Ukraine offers no new concessions in grain deal... Ukraine said on Thursday it had made no commitments to Russia that go beyond the terms of the Black Sea grain deal to persuade Moscow to resume its participation. Ukrainian Foreign Ministry spokesman Oleg Nikolenko said, “Our state has not undertaken any new commitments that go beyond those already existing in the grain agreement. Recall that within this agreement (in July) the parties committed to guarantee a safe and reliable functioning environment for the grain corridor. Ukraine has never put a grain route in danger. Ukraine did not use and did not plan to use the grain corridor for military purposes.”
StoneX raises corn estimate, lowers soybean peg... StoneX raised its U.S. corn crop estimate to 14.109 billion bu. on a yield of 174.5 bu. per acre, up from its October forecasts of 14.056 billion bu. and 173.9 bu. per acre. The commodity brokerage firm lowered its soybean crop estimate to 4.413 billion bu. on a yield of 50.9 bu. per acre, down from 4.442 billion bu. and 51.3 bu. per acre last month.
Aussie wheat crop hurt by excessive rains... Flooding and excessive rains across eastern Australia has resulted in extensive damage to the wheat crop. While Australia is still on track for a bumper harvest for a third straight year, about half of the crop grown on its eastern grain belt – around 8 MMT – is likely to be feed-grade wheat. That would result in about one-quarter of Australia’s crop not meeting international milling-quality standards, meaning increased demand for high-quality wheat from other exporters. Argentina, another global exporter, is also facing crop struggles, though due to drought.
Weekly Export Sales Report out this morning... For the week ended Oct. 27, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 250,000-600,000 | 263,999 |
Wheat | 200,000-600,000 | 533,220 |
Soybeans | 700,000-1,600,000 | 1,026,381 |
Soymeal | 150,000-400,000 | 217,194 |
Soyoil | 0-20,000 | 2,535 |
Powell rebuked critics who fret Fed will plunge global economy into recession... The United Nations Conference on Trade and Development and the International Monetary Fund, among others, warned last month that rising interest rates and a strong dollar endanger the world economy, especially developing economies. Fed Chair Jerome Powell’s retort: “The world’s not going to be better off if we fail [to get inflation under control]. Price stability in the United States is a good thing for the global economy over a long period of time.”
Higher inflation, rising rates hit family budgets... Families across U.S. are facing higher costs and fewer options for school meals as districts contend with rising food and labor prices and the loss of universal free pandemic meals. Many districts across the country have raised prices for school food by as much as 50 cents a meal this year as they face ingredient prices that have risen by 50% or more, the Wall Street Journal reports. The Fed’s aggressive interest-rate increases also are forcing people to reorder their financial priorities. Mortgage rates have doubled this year. Carrying a credit-card balance or borrowing money for a car are significantly more expensive. Returns on saving accounts, on the other hand, are slowly improving.
Russia raises wheat export tax... Russia’s wheat export tax for Nov. 9-15 will be 3,012.0 rubles ($48.52) per metric ton based on an indicative price of $314.00. That’s up from a rate of 2,923.2 rubles per metric ton the previous week.
China approves Brazilian firms for soymeal exports, too... As we reported in “Evening Report” on Wednesday, China updated its list of approved Brazilian corn exporters to include 136 facilities. China customs also published a list of 14 Brazilian facilities approved to export soymeal to the country, including those owned by Bunge and Olam. Demand for soymeal, however, is expected to be limited, given China’s large domestic crush industry.
China’s natty gas consumption may drop for first time in 20 years... China’s 2022 natural gas consumption may post the first decline in two decades amid a struggling economy, with demand this winter set to rise more modestly than in previous years, state energy officials said. Total natural gas demand is likely to fall 1% this year to 363.6 billion cubic meters, said Li Jianping, a researcher with China National Offshore Oil Company, which would mark the first annual decline since at least 2002. Covid restrictions and high import costs have reduced China’s demand.
Indonesia mulls boosting fuel bio-content following oil price rise... Higher oil prices are leading Indonesia to perhaps increase the bio-content in fuel, Coordinating Minister for Economic Affairs Airlangga Hartarto said during the Indonesia Palm Oil Conference in Bali. The government is considering raising its mandatory 30% content of palm oil in biodiesel, with Hartarto saying the government is testing B40, which would boost the palm oil content in biodiesel to 40%. “The effort to substitute fossil fuel with biodiesel, and green fuel and petrochemical with palm-based oleochemical is a strategy that will make it more feasible for the palm oil industry to maintain prices,” he said. Another official this week indicated the trials were in their final stages and could be completed in about two weeks. Under B30, some 11.15 million kiloliters of palm oil are used in biodiesel, with the palm oil fund indicating a B40 mixture could boost usage to 15 million kiloliters.
Packers slow playing cash negotiations... As expected, packers have been reluctant bidders for cash cattle this week, choosing to pull from fresh contract supplies and stay out of the negotiated market as long as possible. The limited trade that has been seen so far this week has occurred at $1 higher prices versus last week, though packers’ relative inaction has caused cautious corrective trade in futures.
Cash hog index slips again... The CME lean hog index is down another 46 cents (as of Nov. 1), marking the fifth day out of the past six with price declines. While this is the biggest decline during that stretch, the net drop has been only $1.52. December lean hog futures finished Wednesday $9.99 below today’s quote of $93.29, which is far greater than the five-year average decline of $6.34 from now until Dec. 16 when the contract will be settled against the cash index.
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
- 7:30 a.m. Weekly Export Sales — FAS