Good morning!
Corn and wheat weaker, soybeans firmer overnight... Markets reversed their price trends from Thursday in overnight trade, as corn and wheat pulled back while soybeans firmed. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 3 to 4 cents higher and wheat futures are 3 to 7 cents lower. Front-month crude oil futures are around $1.20 lower and the U.S. dollar index is nearly 600 points higher this morning.
Russia wants Turkey to serve as gas hub... Russian President Vladimir Putin touted Turkey as the best route for redirecting gas supplies to the European Union after Nord Stream pipeline leaks. Turkish President Tayyip Erdogan ordered his country’s energy ministry to immediately begin work on building a gas hub in Turkey following talks yesterday with the Russian leader. Meanwhile, European leaders focused on efforts to cut energy consumption.
Biden: New action on U.S. gasoline prices coming next week... President Joe Biden again criticized high U.S. gas prices and said he would announce new actions next week to combat what he described as a key driver of inflation. The White House didn’t elaborate on the plans. According to AAA, the national average price for regular unleaded gasoline stood at $3.903 today, up 20 cents (5.4%) from a month ago and 60.6 cents (18.4%) higher than last year at this time.
Weekly Export Sales Report out this morning... For the week ended Oct. 6, traders expect:
| 2021-22 expectations (in MT) | 2021-22 last week | 2022-23 expectations (in MT) | 2022-23 last week |
Corn | NA | NA | 300,000-900,000 | 227,045 |
Wheat | NA | NA | 200,000-500,000 | 229,400 |
Soybeans | NA | NA | 600,000-1,400,000 | 777,123 |
Soymeal | (50,000)-0 | (19,520) | 100,000-300,000 | 139,901 |
Soyoil | (10,000)-0 | 898 | 0-20,000 | 55 |
Chinese consumer inflation hits 29-month high, producer prices ease... China’s consumer price index rose 2.8% versus year-ago in September, up from a rise of 2.5% the previous month and the highest reading since April. Food prices jumped to a 25-month high of 8.8% above year-ago, driven by a 36.0% surge in pork prices. Non-food inflation eased to 1.5%. China’s producer price index fell to a 20-month low of 0.9% in September.
China to step up economic policy support... China will step up implementation of prudent monetary policy and provide stronger support for the country’s economy, the People’s Bank of China (PBOC) announced ahead of the Communist Party Congress on Sunday. PBOC will put emphasis on supporting infrastructure construction and quicken the pace to utilize loans to deliver home projects. The central bank also will support financial institutions to issue loans for equipment upgrade to key sectors, including manufacturing. PBOC has increasingly relied on structural, or targeted policy tools, including low-cost loans, to support the slowing economy, as it faces limited room to cut interest rates for fear of fueling capital flight and inflation.
Reports signal UK doing fiscal policy U-turn... Reports suggest the United Kingdom government is going to roll back part of its controversial tax and spending plans that has roiled financial markets the past two weeks. Sky News, citing sources, said discussions were under way over whether to scrap elements of the plan. The Sun newspaper said Liz Truss was considering allowing a rise in corporation tax next April, something she promised to halt in her bid to be prime minister. There are also reports Truss will fire her finance minister Kwasi Kwarteng in a bid to survive the market and political pressure unleashed by their fiscal plan.
Malaysia keeps crude palm oil export duty at maximum 8%... Malaysia reduced its reference price for crude palm oil in November, but that will keep the export tax at the maximum 8%. The calculated reference price for November is 3,575.80 ringgit ($760.81) per metric ton, compared to 4,033.51 ringgit ($858.19) in October. The export tax structure starts at 3% when crude palm oil is in the 2,250 to 2,400 ringgit range. The maximum tax rate is set at 8% when prices exceed 3,450 ringgit per metric ton.
EU wants to work quickly with U.S. on concerns over climate law... The European Union is ready to engage in ad hoc talks with the U.S. to prevent its concerns over Biden’s tax and climate legislation spiraling into a trade dispute, the bloc’s trade commissioner said. Speaking on the sidelines of the International Monetary Fund Meetings in Washington, Valdis Dombrovskis said the EU is concerned that several provisions in the recently passed Inflation Reduction Act discriminate against European companies. Provisions related to tax credits for American-made electric vehicles are the thorniest issue since many EU nations have set up subsidies and tax credits that have no requirements for local production. Dombrovskis said the disputes are too urgent to wait until the next meeting of the Trade and Technology Council the U.S. and EU set up last year.
Mortgage rates hit 20-year high and could push sharply higher... U.S. mortgage rates may push toward 8.5% if they breach 7%, according to the chief economist of the National Association of Realtors (NAR). Rates on 30-year fixed mortgages have hit 20-year high at 6.92%. The 8.5% possibility is based on a technical analysis of mortgage rates from NAR’s Lawrence Yun, who studied key levels of resistance that borrowing costs will face after Thursday’s news that a closely watched measure of inflation hit a 40-year high. “[Thursday’s] inflation rate report is going to test that 7% level,” Yun said during a presentation at the National Association of Real Estate Investors in Atlanta. “Once it’s broken, the next level of resistance is 8.5%, which would be another big shock to the housing market.”
Cash cattle trade higher... Cash cattle trade got started around $145 in the Southern Plains on Thursday, about $1 above last week, though some feedlots held out for even higher prices. Northern feedlots were seeking at least $1 higher prices for this week’s supplies. Based on the initial trade, the cash market will make a new high for the year, which would be the highest level since 2015.
More signs of short-term stabilization in cash hog index... The CME lean hog index is 18 cents higher to $92.67 (as of Oct. 12). That’s the second day in the past four prices have firmed, suggesting the cash index has stabilized for now. The cash market is likely to face pressure through year-end, but there is a possibility an early seasonal low will be posted.
Overnight demand news... Exporters reported no sales or tenders.
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
- 11:00 a.m. Cotton and Wool Outlook: October 2022 — ERS
- 11:00 a.m. Oil Crops Outlook: October 2022 — ERS
- 2:00 p.m. Feed Outlook: October 2022 — ERS
- 2:00 p.m. Rice Outlook: October 2022 — ERS
- 2:00 p.m. Wheat Outlook: October 2022 — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Turkey Hatchery — NASS
- 2:30 p.m. Commitments of Traders — CFTC