Good morning!
Soybeans and corn higher, wheat weaker overnight... Soybean futures posted strong gains overnight, which spilled over to corn, while wheat faced light selling pressure. As of 6:30 a.m. CT, corn futures are trading a penny higher, soybeans are 13 to 14 cents higher and wheat futures are 4 to 5 cents lower. Front-month crude oil futures are around $1.00 higher and the U.S. dollar index is more than 100 points lower this morning.
Some weekend rains in dry areas of Brazil... Central areas of Mato Grosso and Minas Gerais reported locally heavy rainfall Friday into Saturday while other center-west and center-south crop areas in Brazil reported scattered showers of light to moderate intensity. Southern Brazil experienced drier weather during the weekend, but waves of rain will be returning later this week. Center west and center south Brazil rainfall is expected to be erratic and lighter than usual during the next 10 days while temperatures will be warm, according to World Weather Inc. Argentina is expected to see mostly favorable weather during the next two weeks.
The week ahead in Washington... The ongoing debate over immigration and border policies is having a major impact on congressional discussions about government spending and emergency aid packages. Republicans are pushing for changes in immigration policies aimed at deterring illegal border crossings. They want to address border security issues and make it more difficult for migrants to enter the U.S. without proper documentation. Democrats, including President Joe Biden, emphasize the need to allocate $13.6 billion to manage the increasing number of migrant arrivals. They argue this funding is essential to address the current challenges at the border. The debate over immigration is causing tensions in Congress, particularly as it relates to funding for Ukraine and other foreign aid initiatives. There is a risk that disagreements over immigration policies could lead to delays or the derailment of government spending and aid packages. Talks on a limited stopgap measure to keep the government funded beyond Nov. 17 are ongoing. With the funding measure unsettled, it’s becoming clear one-year extension of the 2018 Farm Bill is the most likely outcome. The economic calendar is relatively light this week, though Fed Chair Jerome Powell, along with other key global central bank heads, will speak at an International Monetary Fund event. The highlight for agriculture will be USDA’s November crop reports on Thursday. USDA’s early release of its long-term baseline projections will be out Tuesday.
EPA defends RFS rule against refiners... The plain language of the Clean Air Act justifies EPA’s decision-making process and underlying reasons for changes it made to the renewable fuel standards (RFS) program, the agency argued in court Friday. Refineries and biofuel groups countered the rule should be vacated. We’ll have further details in “Evening Report.”
De minimis rule impacting U.S. trade... The de minimis rule, which exempts packages below $800 from import duties and fees, has sparked concerns among U.S. retailers, especially as it benefits Chinese-founded online retailers. Retailers are seeking changes to the rule to level the playing field and ensure fair competition in the industry.
U.S, China to hold economic meetings this week... Treasury Secretary Janet Yellen will meet with Chinese Vice Premier He Lifeng in San Francisco this week to try to deepen a fledgling economic dialogue between the world’s two largest economies. The meetings on Thursday and Friday will take place just before the Biden administration hosts ministers and leaders of Asia Pacific Economic Cooperation countries from Nov. 11-17 – a gathering during which President Joe Biden is aiming to meet with Chinese President Xi Jinping. A senior U.S. Treasury official downplayed the idea that there would be specific “deliverables” from the Yellen/He meetings, saying it was not a “policy trade” situation “where we trade one thing for another.”
China records first quarterly deficit in foreign direct investment signals West’s ‘de-risking’... China recorded its first-ever quarterly deficit in foreign direct investment (FDI), according to balance of payments data, underscoring Beijing’s challenge in wooing overseas companies in the wake of a “de-risking” move by Western governments. Direct investment liabilities – a measure of FDI – were a deficit of $11.8 billion during the July-September period, according to preliminary data of China’s balance of payments released late on Friday. That’s the first quarterly shortfall since China’s foreign exchange regulator began compiling the data in 1998, which could be linked to the impact of “de-risking” by Western countries from China amid growing geopolitical tensions. Gallup, a prominent polling and consulting group based in Washington, has decided to withdraw from China, becoming the latest foreign company to do so amid increasing scrutiny of western consultancies and growing geopolitical tensions.
India to extend free food program by five years... India plans to extend its free food grains program by five years, Prime Minister Narendra Modi said on Saturday, as the government tries to shield consumers from rising food prices ahead of a general election early next year. The extension will offer relief to consumers, but it will also lead to higher government spending and require New Delhi to procure more wheat and rice from farmers to sustain the welfare program. However, a government source contended there will not be a major fiscal impact in 2024 and 2025 because of the extension, calling the situation “manageable.”
Indonesia announces rice measures... Indonesia extended until June 2024 its monthly rice handout program involving 21.3 million lower-income households. The program, aimed at protecting the poor from rising rice prices, was previously set to last until December. A senior government official also said Indonesia will remove import duties on some types of rice.
Euro zone recession fears heighten... HCOB’s composite purchasing managers index (PMI), compiled by S&P Global, fell to 46.5 in October from September’s 47.2, its lowest reading since November 2020. The more pronounced downturn in activity was primarily driven by a deterioration in the performance of service providers, while the reduction in factory production levels remained consistent with what was observed in September. The data paints a bleak picture for the euro zone economy, which contracted 0.1% in the third quarter and started the fourth quarter on shaky footing.
Saudi, Russia stick to planned oil cuts... Saudi Arabia and Russia reaffirmed they will stick with oil supply curbs of more than 1 million barrels a day until the end of the year, even as turmoil in the Middle East roils global markets.
Bigger cattle showlists this week... Cash cattle traded steady/firmer on Friday, though traders will have to wait until late this morning to get the official average cash price. Some feedlots passed on steady bids, opting to carry cattle forward to this week, which will increase showlist numbers. Packers also have November contract supplies to pull from. But there’s an underlying belief among some cash sources cash cattle prices will firm this week.
Cash hog decline continues... The CME lean hog index is down another 39 cents to $76.45 (as of Nov. 2), extending the seasonal decline. December lean hog futures finished Friday at $71.75, a $4.70 discount to the cash index. The pork cutout value softened 13 cents on Friday, though the wholesale price seems to have stabilized in the mid-$80 range.
Weekend demand news... Algeria tendered to buy 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
- 3:00 p.m. Crop Progress — NASS