Good morning!
Corrective buying in grains overnight... Corn, soybeans and wheat mildly rebounded overnight from poor closes last Friday. As of 6:30 a.m. CT, corn futures are trading 2 cents higher, soybeans are 6 to 8 cents higher, winter wheat markets are 3 to 5 cents higher and spring wheat is 2 to 3 cents higher. Front-month crude oil futures are around $1.50 higher and the U.S. dollar index is 130 points higher.
Little drought relief HRW areas, Black Sea region... Rain developed as expected in the Central and Southwestern Plains during the weekend, with the greatest amounts in southeastern Colorado and eastern New Mexico, but very little relief from drought occurred in the key wheat production areas of Kansas, Oklahoma or the Texas Panhandle. Additional rains are expected early this week in HRW areas, though World Weather Inc. says serious drought relief is not likely in the heart of HRW areas. Russia’s Southern Region, eastern Ukraine and western Kazakhstan received “some” needed rain during the weekend, but the 10-day forecast is warm and dry.
Brazil gets some needed rains... Brazil weekend rainfall was greatest from Goias to southern Minas Gerais and northern Sao Paulo. World Weather says Brazil’s weather is expected to be “erratic” over the next 10 days, with the greatest rainfall in dry center-west and center-south areas, though amounts may be lighter than some computer forecast models suggest, especially in center-west areas.
Updated Treasury guidance on SAF 40B credit... The Treasury Department has specified that those using the 40BSAF-GREET 2024 model to calculate emissions reduction percentages must now use the October 2024 version of the model. This update addresses a calculation issue in the previous April 2024 version, specifically related to catalyst inputs for Alcohol to Jet (ATJ) SAF pathways. The change in the model lowers the emissions associated with catalyst input for ATJ SAF pathways. This adjustment could potentially affect the eligibility of certain fuels for the credit. To qualify for the SAF credit, which ranges from $1.25 to $1.75 per gallon, the fuel must demonstrate a minimum reduction of 50% in lifecycle greenhouse gas emissions. The 40B SAF credit is only available through the end of 2024, so this update comes relatively late in the credit’s lifecycle. The Biden administration is working on the details of the new 45Z Clean Fuels Production credit, but there is uncertainty about whether it will be available before taking effect on Jan. 1, 2025. This could potentially create challenges for producers planning to claim the credit in early 2025.
Best week for Brazil’s soybean planting but pace still lags... Brazil’s soybean planting advanced 10 percentage points to 18% as of last Thursday, according to AgRural, though that was still well behind 30% on that date last year and the slowest pace since 2020-21. Soybean planting in Paraná and Mato Grosso do Sul are both on the fastest planting pace since 2017-18, while Mato Grosso is running at the slowest rate since 2020-21. Brazil’s corn planting reached 48%, two points ahead of last year.
Gold rally to record highs continues amid rate cuts, geopolitical tensions and election uncertainty... Gold rallied for a fifth straight day on Monday, hitting a record high on uncertainties with the U.S. election, ongoing Middle East tensions and expectations of central banks’ interest rate cuts. Analysts project further price growth, with UBS strategist Joni Teves setting a $3,000 target for 2025. Silver has also rallied, hitting its highest levels in nearly 12 years.
Chinese soybean imports from U.S. surge but Brazil still top supplier... Of China’s 11.37 MMT of soybean imports in September, 8.45 MMT originated from Brazil, while 1.71 MMT came from the U.S., a 13-fold surge from last year. For the January-September period, soybean imports from Brazil rose 13% from the same period last year to 62.24 MMT, while arrivals from the U.S. fell 15% to 14.55 MMT.
China cuts key lending rates... The People’s Bank of China (PBOC) cut benchmark lending rates by 25 basis points. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, was lowered to 3.10%. The five-year LPR, a reference for property mortgages, was cut to 3.6%.
China conducts first operations under swap facility to bolster stock market... PBOC said it conducted its first operations under a swap facility designed to bolster the stock market, exchanging assets worth 50 billion yuan ($7.03 billion) with brokerages, fund companies and insurers on Monday. PBOC said 20 institutions participated in the swap operations with a fee rate of 20 basis points. Separately, more than 20 Chinese listed companies, including China Petroleum and Chemical Corp (Sinopec) and China Merchants Port Group announced plans to tap special central bank lending for share buybacks and purchases.
The week ahead in Washington... Congress is out and won’t return until Nov. 12 for a lame-duck session that will try to complete work on must-have issues. The fate of the remaining weeks of Congress will depend on election results, which in the case of the House and perhaps the presidency, may take a while to officially determine. The economic focus will be the annual meetings of the International Monetary Fund and World Bank in Washington, which will be highlighted by their updated global economic forecasts. Key agricultural data will be USDA’s updated Food Price Outlook Friday morning and the Cattle on Feed and Cold Storage Reports Friday afternoon.
West Coast ports surge amid tariff, labor uncertainty and record trade volumes... The ports of Los Angeles and Long Beach just wrapped up their busiest peak season ever, breaking records set during the pandemic-driven shipping frenzy of 2021. The surge comes as businesses race to avoid a concern of new tariffs, a potential East and Gulf Coast port shutdown ahead of the 2025 Lunar New Year and the U.S. presidential transition.
USDA’s new poultry payment rule sent to OMB for review... USDA has submitted a final rule on poultry grower payment systems and capital improvements to the Office of Management and Budget (OMB) for review, with release expected in November. The rule aims to address payment disparities and transparency concerns in poultry production. The final rule would propose amendments to address what USDA labels “certain problematic practices related to poultry grower payment systems and capital improvement programs” including “payment disparities and reductions that are unconnected to commoditized flock performance, and transparency concerns related to additional capital investments in poultry production facilities and equipment.” However, with the presidential election nearing, a potential Republican administration could alter or halt its implementation.
Wholesale beef rally continues... Wholesale beef prices firmed $1.39 for Choice and 68 cents for Select on Friday, while movement totaled 126 loads. The rally in wholesale beef has resulted in packer margins running solidly in the black despite the six-week string of gains in cash cattle prices.
Cash hog index, pork cutout inch up... The CME lean hog index is up 11 cents to $83.96 as of Oct. 17. December lean hog futures finished last Friday $6.135 below today’s cash quote. The pork cutout firmed 18 cents on Friday to $96.59, driven by strong gains in primal bellies and ribs.
Weekend demand news... South Korea purchased 65,000 MT of corn expected to be sourced from the U.S. Israel tendered to buy up to 120,000 MT of corn from Brazil, EU or Black Sea region and up to 120,000 MT of feed barley from the EU or Black Sea region. Bangladesh tendered to buy 50,000 MT of optional origin non-basmati parboiled rice.
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
· 10:00 a.m. Weekly Export Inspections — AMS
· 2:00 p.m. U.S. Bioenergy Statistics — ERS
· 2:00 p.m. Chickens and Eggs — NASS
· 2:00 p.m. Milk Production — NASS
· 3:00 p.m. Crop Progress — NASS