Good morning!
Beans firmer, corn and wheat weaker this morning... Soybeans are firmer early this morning, while corn and wheat have weakened after two-sided trade overnight. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are 3 to 4 cents higher and wheat is mostly 5 to 7 cents lower. The U.S. dollar index is down around 125 points and front-month crude oil futures are about 85 cents higher.
Germany expects EU to reach agreement with China on EV tariffs... As we reported in “Evening Report” on Tuesday, the European Union will impose higher tariffs of up to 45.3% on electric vehicles (EVs) from China, starting today. A German government spokesperson said today there were “clear expectations” for the European Commission to reach an agreement with China on punitive tariffs on EVs.
Gold surges to another new high... Gold surged to a record high on Wednesday as uncertainty surrounding the U.S. presidential race spurred demand for safe-haven assets, while traders awaited cues on interest rate cuts.
Wasserman’s election forecasts... We met with David Wasserman, election analyst for the Cook Political Report with Amy Walter. He predicts a GOP sweep of the White House (Trump 60%/40% vs. Harris), Senate (51-54 seats) and House (219-216 control). It may take a few days or longer to decide some elections, especially in the House. If so, that could delay Congress’ timeline for key year-end items. It may take a few days or longer to decide some elections, especially in the House. If so, that could delay Congress’ timeline for key items.
Democrats plan for another huge increase in TFP... We have learned USDA has developed its methodology for the 2026 Thrifty Food Plan (TFP) update. If they have not already, USDA-Office of Inspector General is initiating its subject inspection, including whether Food and Nutrition Service officials incorporated recommendations from a Government Accountability Office (GAO) 2022 report. There is the prospect of increased SNAP spending either before year end or in the first 100 days if Kamala Harris wins the presidency. GAO found USDA’s prior huge increase through executive action violated the Congressional Review Act, which requires agencies to submit significant policy updates to Congress. Supporters of the increase argue it was necessary to provide adequate nutrition for low-income families, while critics contend it was an unlawful and fiscally irresponsible expansion of the welfare state without proper Congressional oversight or approval.
USDA awards $239 million to boost domestic biofuels across 18 states... USDA Deputy Secretary Xochitl Torres Small announced $239 million in grants to support domestic biofuel production. Of this, $200 million comes from the Biobased Market Access and Development Program, funded by the Commodity Credit Corporation and the Inflation Reduction Act (IRA/Climate Act). The remaining $39 million will be distributed through the Higher Blends Infrastructure Incentive Program (HBIIP).
China unveils guidance to boost renewable energy use... China’s state planner issued guidance on increasing the use of renewable energy as part of efforts to achieve dual carbon targets. By 2025, renewable energy consumption is projected to exceed 1.1 billion metric tons of standard coal equivalent, reaching over 1.5 billion by 2030, according to a statement from the National Development and Reform Commission. China will develop biogas, biodiesel and bio-jet fuel based on local conditions, while actively promoting the orderly development of renewable energy hydrogen production, the statement showed.
China’s big banks post rise in Q3 profits as margins deteriorate... China’s largest lenders posted a rise in third-quarter profits on Wednesday, although margins were slimmer for some. Agricultural Bank of China reported a 5.88% rise in third quarter net profit. The world’s largest commercial lender by assets Industrial and Commercial Bank of China reported net profit grew 3.8% annually in the third quarter. Bank of China, the Bank of Communications and China Construction Bank Corp reported profits of 4.38%, 1.2% and 3.79%, respectively. However, three lenders reported a squeeze on net interest margins (NIM) – a key gauge of profitability – and analysts said pressure will continue as government policy initiatives come into play.
China mandates banks to work on 2-year and 5-year offshore yuan bonds... China mandated investment banks to work on a dual-tranche offshore yuan bond deal, according to a term sheet reviewed by Reuters. The bonds will be issued in two and five-year tranches if the deal goes ahead, the term sheet said. The net proceeds would be used by the ministry of finance for general government purposes, according to the term sheet.
Euro zone GDP hits two-year high in Q3... The euro zone’s economy grew 0.4% in the third quarter, according to the flash estimate, the highest quarterly growth rate in two years and surpassing forecasts of 0.2%. Key contributors included Germany (0.2%), France (0.4%), Spain (0.8%) and Ireland, which posted a significant 2% jump. However, Italy’s economy stagnated, and Latvia was the only member to report a contraction (-0.4%).
Euro zone economic sentiment deteriorates in October... A reading of economic sentiment in the euro zone dropped to 95.6 in October from 96.3 the previous month. That matched the April reading for the second lowest of the year behind February’s 95.5. Industrial sentiment fell to -13.0, the lowest since July 2020. Sentiment in the services sector held at 7.1, the highest since January.
McDonald’s sees 10% drop in visits amid E. coli outbreak... McDonald’s experienced a 10% decline in nationwide visits and a 33% drop in Colorado following an E. coli outbreak that sickened dozens, with cases linked to onions on its Quarter Pounder burger. However, the fast food chain expects a recovery, planning to attract customers with $5 value meals and Big Macs with chicken. Quarter Pounders will return to menus this week after Colorado authorities confirmed the patties tested negative for E. coli.
Cattle, beef markets correct; cash could be next... December live cattle futures posted a bearish reversal after reaching the highest intraday price since early July on Tuesday. Wholesale beef prices also pulled back, as Choice fell $3.09 to $320.41 and Select dropped $2.22 to $289.96. Followthorugh pressure on futures and wholesale prices could end the string of cash cattle strength after seven weeks of gains – even with packer margins solidly in the black.
Traders narrow Dec. hogs discount to cash index... The CME lean hog index is up another 18 cents to $85.73 as of Oct. 28, the eighth straight daily gain. After strong gains and a contract high on Tuesday, December lean hog futures held a $2.905 discount to today’s cash quote.
Overnight demand news... South Korea purchased 131,000 MT of corn expected to be sourced from the U.S., South America or South Africa. South Korea tendered to buy 101,000 MT of rice – 40,000 MT of U.S. non-glutinous milled medium and long grain rice, 30,000 MT of non-glutinous brewers’ milled rice grade from Vietnam, 6,000 MT of various grades from Thailand and the rest optional origin. Jordan tendered to buy up to 120,000 MT of optional origin 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
· 9:30 a.m. Weekly Ethanol Production — EIA
· 2:00 p.m. Broiler Hatchery — NASS
· 2:00 p.m. Egg Products — NASS