Good morning!
Price pressure overnight... Corn, soybean and wheat futures faced solid selling pressure overnight and are near their session lows this morning. As of 6:30 a.m. CT, corn futures are trading 4 to 5 cents lower, soybeans are 5 to 6 cents lower, winter wheat futures are 4 to 7 cents lower and spring wheat is 1 to 4 cents lower. Front-month crude oil futures are trading just below unchanged, while the U.S. dollar index is around 225 points higher.
Chinese hog producers looking at alternatives to soymeal amid shortages, high prices... Shipping delays from the U.S. due to low water levels on the Mississippi River will further tighten Chinese soybean supplies and push soymeal prices higher. As a result, Chinese hog producers are looking for alternative protein sources. Cash soymeal prices in Dongguan, Guangdong province climbed to an all-time high of 5,680 yuan ($789) per metric ton last week, compared with 3,500 yuan ($486) at this time last year. China’s soybean imports are likely to fall to their lowest in more than two years this month, having dropped in September and August.
Russian missiles targeting energy infrastructure... A series of Russian attacks starting early last week has “destroyed” 30% of Ukraine’s power stations, resulting in “massive blackouts across the country,” President Volodymyr Zelenskyy tweeted on Tuesday. Ukrainian officials said a power-supply facility outside the capital, Kyiv, had been hit. A facility in the Zaporizhia region was hit by drones, according to the regional governor. Several EU foreign ministers called for fresh sanctions against Iran over its transfer of such “kamikaze” drones to Russia. Britain and France were joined by the U.S. in complaining that Iran and Russia violated terms of the United Nations Security Council resolution that endorsed the nuclear deal of 2015, which the U.S. scotched in 2018.
China planning unification with Taiwan on a ‘much faster timeline’ than previously thought... That’s according to U.S. Secretary of State Antony Blinken, who suggested China may achieve unification by force, but said America would honor its commitment to help Taiwan defend itself. At Sunday’s opening of the Communist Party National Congress President Xi Jinping said “complete reunification of our country must and will be realized.”
Consultant adjusts corn, soybean crop forecasts... Crop consultant Dr. Michael Cordonnier raised his corn yield by 1 bu. to 170 bu. per acre and matched USDA’s harvested area at 80.84 million acres, which increased his production estimate to 13.74 billion bushels. He trimmed his soybean yield by 0.4 bu. per acre to 49.6 bu. per acre and kept harvested area at 86.63 million acres, which lowered his production estimate to 4.29 billion bushels.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Oct. 16.
- Corn: 94% mature (92% average), 45% harvested (40% average), 53% good/average (54% last week).
- Soybeans: 96% dropping leaves (94% average), harvested 63% (52% average), 57% good/excellent (57% last week).
- Cotton: 89% bolls opening (87% average), 37% harvested (32% average), 31% good/excellent (30% last week).
- Winter wheat: 69% planted (68% average), emerged 38% (44% average).
India raises local wheat purchase price... India raised the price at which it will buy 2023-crop wheat from local farmers by 110 rupees to 2,125 rupees ($25.84) per 100 kilograms. It’s hoped the higher purchase price will encourage farmers to boost wheat output.
India examining proposal to raise palm oil import tax... India is examining whether there is a need to raise palm oil import taxes, government and trade sources said, as part of efforts to help millions of its farmers reeling from lower oilseed prices. Earlier this year, India abolished the basic import tax on crude palm oil (CPO) to keep a lid on prices, though a special 5% duty remains. India also levies a 12.5% import tax on refined, bleached and deodorized (RBD) palm oil. “We are going through a proposal to bring back the duty on crude palm and raise the RBD duty,” said a government source told Reuters. “We are going to keep in mind the interests of both farmers and consumers.” The head of India’s Solvent Extractors’ Association says should raise the CPO and RBD import taxes by at least 10% to support falling oilseed prices, and the duty differential between CPO and RBD should at least be 12% to 13% to encourage local refining.
Natural gas bills expected to spike this winter... Americans who use natural gas for heat will pay an average of $931 for the fuel from October to March, according to the U.S. Energy Information Administration. That’s a 28% hike over last winter, the agency forecast in data released Monday. Higher retail natural gas prices, colder temperatures expected this winter across the country, and slightly more natural gas consumption for households that primarily use natural gas for heat will drive the increases.
DHS grants ‘temporary and targeted’ Jones Act waiver to get LNG to Puerto Rico... The Department of Homeland Security (DHS) issued a “temporary and targeted” waiver of the Jones Act to allow liquefied natural gas (LNG) to be transported to Puerto Rico as the island struggles with the impacts of Hurricane Fiona. DHS previously approved a waiver of the Jones Act for a shipment of 300,000 gallons of diesel fuel. Another impact of the Jones Act: Imports of LNG can make up more than one-third of New England’s natural-gas supply during periods of peak demand because the region lacks pipeline capacity. Jones Act restrictions on vessel transports between U.S. ports makes maritime delivery of domestic supplies economically unviable, so the region relies on gas produced abroad.
Specialty crop ERP payments near $1 billion; total payouts $7.06 billion... Payments under the Emergency Relief Program (ERP) totaled $7.06 billion as of Oct. 16, up from $7.03 billion the prior week. Specialty crop payments rose to $999.8 million ($991.3 million prior) with non-specialty crop payouts at $6.06 billion (unchanged). A USDA official on Monday was murky on what she could say relative to Phase 2 of ERP payouts and additional Phase 1 payments, just saying they were nearing an announcement.
Bullish technicals and fundamentals for cattle... October live cattle futures surged to a contract high Monday and posted the highest price for a front-month contract since August 2015. Besides the bullish technicals, the cash market strengthened again last week and appears headed for more gains as packers continue to run heavy slaughters while market-ready supplies are tightening. Not only is the near-term bullish for cattle, but so is the longer-term outlook. The uncertainty is the health of the global economy and what impact that could have on beef demand.
U.S. nears record poultry deaths from bird flu; Europe hit hard too... More than 47 million birds in the U.S. have died due to avian influenza and related cullings, just behind the record 50.5 million birds that died in 2015, the deadliest U.S. outbreak. The outbreak has infected flocks in 42 states since February, twice as many as in 2015, USDA records show. Nearly 50 million birds also have been culled in Europe, which is suffering from an outbreak of the same subtype of the H5N1 strain of the virus known as the goose/Guangdong lineage. Officials are finding the subtype in a broader range of wild birds, such as ducks, than in the past and it seems to live in the birds longer, Rosemary Sifford, chief veterinary officer at USDA told Reuters. “This virus could be present in wild birds for the foreseeable future,” Sifford said. “This one is certainly different.”
December hogs still at big discount to cash index... The CME lean hog index is 26 cents higher to $93.35 (as of Oct. 14), the fourth gain in the past six days. December lean hog futures finished Monday $8.40 below today’s cash index quote, which is virtually in line with the average seasonal decline in prices over the past five years. Strong corrective gains in futures over the past nine trading sessions have erased traders’ pessimistic stance.
Overnight demand news... South Korea purchased 77,000 MT of U.S. milling wheat from two tenders. Japan is seeking 97,482 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
- 10:00 a.m. Fruit and Tree Nuts Data — ERS
- 10:00 a.m. Vegetables and Pulses Data — ERS
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: October 2022 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: October 2022 — ERS