Good morning!
Corrective pullback overnight... Corn, soybeans and wheat pulled back from Monday’s gains amid corrective selling and weakness in the crude oil market. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 1 to 3 cents lower and wheat futures are 14 to 18 cents lower. Front-month crude oil futures are around $2.25 lower and the U.S. dollar index is nearly 250 points lower.
UN calls for faster inspections of Ukrainian grain shipments... On Monday, 97 ships loaded with around 2.1 MMT of Ukrainian grain were waiting for inspection at Istanbul, prompting the United Nations official overseeing the process to call on Russia and other parties to end “full-blown” inspections of outgoing vessels. Amir Abdulla, UN Coordinator for the Black Sea Grain Initiative, said he had proposed quicker, targeted checks of ships arriving from Ukrainian ports. “There will need to be a change and I hope we can negotiate a better way of doing (inspections)” as part of the talks to extend the grain export deal beyond its Nov. 19 deadline, Abdulla told Reuters.
Russia considers abolishing grain export quota... Russia is considering abolishing its grain export quota, Interfax news agency reported on Tuesday, citing Russian Deputy Prime Minister Viktoria Abramchenko. Russia usually sets grain export quotas from mid-February and until the end of June based on supplies. Russia expects this year’s grain crop to be a record 150 MMT, including 100 MMT of wheat.
Aussie wheat crop quality at risk due to heavy rains... Widespread rains in Australia’s eastern grain producing states is likely to hurt quality of the wheat crop. “Nearly half the wheat crop, or around 6 MMT to 7 MMT, is at risk of quality downgrades in NSW [New South Wales],” said Ole Houe, director of advisory services at IKON Commodities in Sydney, told Reuters. We could end up having large volumes of feed quality wheat on the east coast,” he noted.
China continues to sell soybeans from state reserves... China will auction 500,000 MT of imported soybeans from its state reserves on Oct. 14. Beijing has been regularly selling state-owned soybean reserves into the domestic market to boost supplies since March.
IMF will lower global growth forecast today... The International Monetary Fund (IMF) is due to release its latest World Economic Outlook later this morning. IMF managing director Kristalina Georgieva said last week the global growth forecast for 2023 will be downgraded due to the triple threat of lingering Covid disruptions, Russia’s invasion of Ukraine and climate disasters.
BOE buying inflation-linked bonds amid market ‘dysfunction’... The Bank of England (BOE) acted again on Tuesday to stem a sharp selloff in Britain’s 2.1 trillion-pound ($2.31 trillion) government bond market by announcing the purchase of inflation-linked debt until the end of this week. Citing “material risk” to financial stability arising from a rout in British government bonds, BOE said it would buy up to 5 billion pounds ($5.51 billion) of index-linked debt per day, starting today. Rather than increase the existing commitment to buy up to 10 billion pounds of gilts each day, as announced on Monday, the purchases will run alongside existing purchases of long-dated conventional bonds, now worth up to 5 billion pounds. “Dysfunction in this market, and the prospect of self-reinforcing ‘fire sale’ dynamics pose a material risk to UK financial stability,” BOE said.
ERP payments top $7 billion... Payments under the Emergency Relief Program (ERP) increased to $7.03 billion as of Oct. 9. Non-specialty crop payments stood at $6.04 billion with $991.3 million in specialty crop payments.
SCOTUS hears Prop 12 case today... In a Supreme Court (SCOTUS) hearing today, pork industry groups will challenge California’s Proposition 12 (Prop 12), which defines the minimum amount of space that mother pigs, baby cows, and laying hens must be given. According to Prop 12, a seller shall not “knowingly cause any covered animal to be confined in a cruel manner.” In the case of pigs, this means each mother and offspring must have at least 24 square feet of living space. The key issue is whether Prop 12 violates the constitution’s “dormant commerce clause” by imposing an unreasonable burden on interstate trade. Several states ban gestation crates within their borders, but California takes the ban a step further — targeting the sale of products derived from animals born in gestation crates affects not just domestic production, but the entire pork industry. It will “transform the pork industry nationwide,” the National Pork Producers Council and American Farm Bureau Federation argue. Given that almost all of the pork sold in the state is produced outside, Prop 12’s “practical effects are almost entirely extraterritorial.”
New yearly high for cash cattle possible this week... Last week’s average cash cattle price was $146.23, just 65 cents shy of this year’s high set in August. With packers continuing to run big slaughters and market-ready supplies tightening, the cash market is expected to firm again this week and could push out to a new high for the year. October live cattle futures are trading below the cash market, while December live cattle hold just a small premium.
Cash hog index firms... The CME lean hog index is 33 cents higher at $92.98 (as of Oct. 7), breaking the recent string of declines. October lean hog futures finished 77 cents above today’s cash quote. While that isn’t a big premium, it suggests traders sense the cash market will firm a little more over the next week ahead of the October contract’s settlement on Oct. 18. December lean hog futures narrowed their discount to the cash index to $13.38, though that’s nearly $5.50 more than the five-year average seasonal decline from now until the contract’s mid-December settlement.
Overnight demand news... Taiwan tendered to buy up to 65,000 MT of corn from the U.S., Brazil, Argentina or South Africa. Japan is seeking 94,140 MT of milling wheat in its weekly tender.
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
- 8:00 a.m. Commodity Costs and Returns — ERS
- 10:00 a.m. Export Inspections — AMS
- 3:00 p.m. Crop Progress — NASS