Good morning!
Followthrough selling in corn and beans, wheat rebounds... Soybean futures extended Tuesday’s losses overnight, while corn traded lower for a fourth straight day. Wheat futures rebounded from Tuesday’s losses. As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents lower, soybeans are mostly 10 to 12 cents lower and wheat futures are mostly 4 to 6 cents higher. Front-month crude oil futures are around 75 cents higher and the U.S. dollar index is more than 750 points higher this morning.
Russian planes fly over ‘neutral waters,’ attacks on Ukrainian energy infrastructure continue... Russia’s defense ministry said on Tuesday two of its Tu-95MS strategic bombers had conducted a flight of more than 12 hours over the Pacific Ocean, the Bering Sea and the Sea of Okhotsk. It described the mission as “a scheduled flight over neutral waters,” in line with international airspace rules. The ministry did not specify the route, but a flight path over the Sea of Okhotsk and the Bering Sea would have passed close to Japan and the United States. Meanwhile, the defense ministry said the country new strikes against military and energy targets in Ukraine today.
Biden to announce plan for oil reserve release, SPR rebuild... President Joe Biden today will announce a plan to sell off the last portion of his release from the U.S. emergency oil reserve by year’s end and detail a strategy to refill the stockpile when prices drop, a senior administration official said. The plan is intended to add enough supply to prevent oil price spikes that could hurt consumers and businesses, while also assuring the country’s drillers the government will swoop into the market as a buyer if prices plunge too low. The final 15 million barrels of 180 million barrels Biden released from the Strategic Petroleum Reserve (SPR) will be put up for bidding for delivery in December, a senior administration official said. Biden will also lay out a plan to refill the SPR in the upcoming years, but only at prices at or below a range of $67 to $72 a barrel for West Texas Intermediate. Asked about the possibility of restricting fuel exports during a call with reporters, the official said the administration was keeping all of it options open but did not explicitly endorse or condemn the idea.
Russia ag ministry proposes 25.5 MMT grain export quota... Russia’s agriculture ministry has proposed setting the country’s grain export quota at 25.5 MMT from mid-February until the end of June, Interfax news agency reported. The quota is equal to the one proposed by the Russian Grain Union earlier this month, when it said such a level would be not restrictive to shipments. The ministry didn’t give a breakdown by commodity, though wheat would be the bulk of the quota.
UK inflation at 40-year high... The United Kingdom consumer price index (CPI) increased 10.1% versus year-ago in September, matching a 40-year high hit in July. Food and non-alcoholic beverage prices were the biggest driver of inflation as they rose by 14.5%, the biggest jump since April 1980. Core inflation, excluding volatile food and energy prices, hit a 30-year high of 6.5%.
Euro zone inflation revised down, but still record high... The European Union’s statistics office Eurostat said consumer prices in the 19 countries sharing the euro rose 1.2% month-on-month for a 9.9% annual surge, revising down its earlier estimate of a 10% year-on-year reading. Surging energy prices were responsible for 4.19 percentage points of the total reading, with food adding another 2.47 points and services 1.80 points. Without volatile unprocessed food and energy costs, so-called core inflation rose 0.9% for the month and 6.0% annually.
Former dove Kashkari remains hawkish... The Fed can’t pause its campaign of monetary policy tightening once its benchmark interest rate reaches 4.5% to 4.75% if “underlying” inflation is still accelerating, Minneapolis Fed President Neel Kashkari said. “Core services inflation — which is the stickiest of all —keeps climbing, and we keep getting surprised on the upside,” Kashkari said Tuesday during a panel discussion hosted by the Women Corporate Directors Minnesota Chapter. Investors currently see a peak around 4.9% early next year, according to prices of futures contracts. The Minneapolis Fed chief, who before the pandemic was known as the Fed’s most outspoken dove, has emerged this year as its biggest hawk.
Hyundai pleads case to ease U.S. rule on EVs, saying sales at risk... Hyundai Motor and the South Korean government are ratcheting up lobbying to loosen restrictions that Sen. Joe Manchin (D-W.Va.) fought to include in this year’s U.S. climate law, arguing the rules could blunt the automaker’s rapid growth in the market. At issue is a requirement to limit a $7,500 consumer tax credit to electric vehicles (EVs) built in North America, since Hyundai won’t have an EV plant there until 2025.
China to sell more pork stocks... China will sell another 20,000 MT amount of pork from state-owned reserves on Oct. 21 – the sixth batch of pork released from state stockpiles. The National Development and Reform Commission said it would work on securing hog supplies and stabilizing prices, and continue to release pork reserves.
All indications point toward notably higher cash cattle trade... Cash sources signaled some feedlots in Nebraska passed on bids in the $150 to $151 range, which were up from an average price of nearly $148 in the state last week. While there has been no trade yet, all indications point to solidly higher – and potentially sharply higher – cash cattle trade this week.
Hogs continue their charge higher... December lean hog futures have rallied $13.50 from their Oct. 4 low, with nearly $6.00 of that price surge coming the past three days. While cash fundamentals have perked up, the market is now short-term overbought, which could lead to some near-term corrective selling pressure. Traders’ longer-term attitudes seem to have shifted amid hopes China will buy more U.S. pork to tame its surging domestic prices.
Overnight demand news... South Korea passed on a tender to buy up to 95,000 MT of optional origin feed wheat but purchased 30,000 MT of optional origin feed barley. Pakistan tendered to buy 500,000 MT of optional origin wheat. Iraq tendered for a nominal 50,000 MT of optional origin (excluding Russia) hard milling wheat. Japan received no offers to its tender to buy 70,000 MT of feed wheat and 40,000 MT of feed barley.
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. Food Expenditure Series — ERS
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS