Good morning!
Grains weaker to open the week... Corn, soybeans and wheat faced mild followthrough selling overnight after weak closes last Friday. As of 6:30 a.m. CT, corn futures are trading 2 cents lower, soybeans are 3 to 4 cents lower and wheat futures are mostly 1 to 2 cents lower. The U.S. dollar index is around 280 points higher and front-month crude oil futures are about $1.75 lower.
China announces stimulus measures, but details lacking... China’s Finance Minister Lan Fo’an held a news conference on Saturday to outline plans for increased fiscal support and economic stimulus. However, the announcement lacked specific details on the overall size of the stimulus package, which disappointed investors. The stimulus plans include several components: Increased aid to help ease local government debt burdens; Issuance of special treasury bonds to increase capital for state-owned banks; Use of local government funding to address the property market downturn; Increased financial aid and scholarships for students to encourage spending; allowing local governments to swap more “hidden debt” to help manage credit risks. Lan hinted at a deficit increase, saying the central government has “rather large” room for a deficit increase but noted that policy discussions are still underway. While the announcement signaled Beijing’s intent to support its economy, many investors and analysts are still waiting for more concrete details, which may come in the upcoming meeting of China’s legislature.
Goldman Sachs upgrades China growth forecasts... Goldman Sachs upgraded its forecasts for China’s economic growth in 2024 and 2025 after Beijing unveiled a series of measures to shore up its economy. The bank expects China’s GDP to expand 4.9% this year, up from 4.7% previously. It also lifted its growth prediction for next year to 4.7% from 4.3%.
China’s soybean imports slip from all-time high in August... China imported 11.37 MMT of soybeans in September, down 770,000 MT (6.3%) from the all-time record in August but up 4.22 MMT (59.0%) from year-ago. Through the first nine months of this year, China imported 81.85 MMT of soybeans, up 8.1% from the same period last year.
China’s exports growth slows in September... China’s exports rose 2.4% from year-ago in September to $303.71 billion, the weakest gain since April. Imports increased 0.3% to $222.0 billion. That left China with an $81.71 billion trade surplus, down from $91.02 billion in August. The trade surplus with the U.S. narrowed to $33.33 billion in September from $33.81 billion in August.
China’s deflationary pressures build in September... China’s consumer inflation cooled to 0.4% above year-ago in September, the eighth straight month of annual gains though the lowest since June. Food prices increased 3.3%, the steepest rise since January 2023, driven by vegetables (up 22.9%) and pork (up 16.2%). China’s producer prices fell 2.8% from year-ago last month, the 24th consecutive month of producer deflation and the sharpest contraction since March, driven by persistently weak domestic demand despite Beijing’s continued efforts to reverse the trend.
China’s ‘hidden’ subsidies drive export surge, raising global concerns... China is increasingly using tax rebates and other indirect subsidies to give its strategic industries, such as electric vehicles (EVs) and semiconductors, a competitive advantage globally. Tax refunds to Chinese companies have surged 400% over the past decade, outpacing export growth and fueling concerns about market distortions in the U.S. and Europe, Nikkei Asia reports. These rebates, which reached $34 billion in 2023, come on top of direct government subsidies for research and development. Chinese companies are leveraging these advantages to dominate industries like solar panels and EVs, further intensifying the global economic competition.
China: Major disagreements persist with EU over EV tariffs... China urged the European Union to avoid negotiating tariffs with individual EV manufacturers after eight rounds of talks in Brussels failed to reach an agreement. The EU plans to raise tariffs on Chinese EVs to 45%, citing unfair subsidies, while China denies the claim and has threatened retaliatory tariffs on European goods. Significant disagreements remain, and China has requested the EU send a technical team for further negotiations. Of note: Germany is considering fresh subsidies on EVs amid intensifying competition from China and weaker demand.
APK-Inform cuts Ukraine 2024 grain export forecast... Analyst APK-Inform lowered its Ukraine 2024-25 grain export forecast by 1.9 MMT to 37.2 MMT, mostly due to a smaller-than-expected corn exports. The firm cut its corn export forecast by 2 MMT to 20 MMT after reducing corn production by 2.8 MMT. APK-Inform slightly raised Ukraine’s 2024 wheat harvest outlook to 21.5 million tons from 21.2 million tons, and exports to 14.4 million tons from 13.8 million tons.
Kazakhstan on track for biggest grain crop in 13 years... Kazakh farmers have harvested 25.2 MMT of grain from 98% of the sown area, Agriculture Minister Aidarbek Saparov said. The figures mean Kazakhstan is on track to post its biggest grain harvest since 2011 when production totaled 27 MMT.
The week ahead in Washington... It will be quiet in Washington as lawmakers are on recess as they campaign ahead of the Nov. 5 elections. U.S. government offices are closed today for Columbus Day while markets are open except for the bond market which will be closed for the holiday. It’s also a quiet week for U.S. economic data. For agriculture, due to today’s government holiday, weekly crop progress/condition data is pushed to Tuesday and weekly export sales data will be released Friday.
Will cash cattle rally persist?... Cash cattle prices firmed for a fifth consecutive week, though the official price won’t be known until later. With Choice wholesale beef prices strengthening, packer margins have improved to the point where some cash sources expect the string of cash market strength to continue.
Cash hog index, pork cutout remain choppy... The CME lean hog index is down 18 cents to $84.29 as of Oct. 10, remaining within the short-term choppy range from the September low of $84.01 to this month’s high of $84.90. The pork cutout dropped 40 cents to $94.47, holding within the short-term choppy range from the September low of $92.91 to this month’s high of $96.31.
Weekend demand news... Saudi Arabia purchased 360,000 MT of wheat from unspecified origins. Egypt tendered to buy an unspecified amount of vegoils from multiple destinations.
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
· No reports scheduled. Gov’t offices closed for Columbus Day.