Good morning!
Grains weaker overnight... Corn and soybeans pulled back overnight from corrective gains the two previous days, while wheat more than erased Tuesday’s price strength. As of 6:30 a.m. CT, corn futures are trading mostly a penny lower, soybeans are 3 to 5 cents lower, winter wheat markets are 7 to 8 cents lower and spring wheat is 4 to 5 cents lower. The U.S. dollar index is nearly 350 points higher and front-month crude oil futures are around $1.35 lower.
Putin hails BRICS summit as sign of emerging ‘multipolar world’... Russian President Vladimir Putin declared the expansion of the BRICS group (Brazil, China, Egypt, Ethiopia, India, Iran, Russia, Saudi Arabia, South Africa and the United Arab Emirates) signifies the creation of a “multipolar world,” challenging the U.S.-led global order. As we alerted last week, Russian President Vladimir Putin officially proposed the creation of a BRICS grain exchange, which could later be transformed to other commodities, including energies. Putin told the leaders of BRICS countries at a summit in Russia such an exchange would help protect trade between the bloc as well as other countries in the Global South from external interference and excessive price volatility. Putin also advocated for BRICS nations to reduce reliance on the U.S. dollar by increasing trade in national currencies. While some BRICS members support this shift, others like India, South Africa and the UAE are cautious about any anti-U.S. perception.
Brazil considers joining China’s Belt and Road Initiative amid global trade tensions... Brazilian Agriculture Minister Carlos Favaro has advocated for the country to join China’s Belt and Road Initiative (BRI) as a strategy to counteract protectionist measures from the U.S. and European Union, Bloomberg reports. This proposal to participate in China’s major global trade and infrastructure program has divided opinions within President Luiz Inacio Lula da Silva’s administration. Some ministers see it as essential for securing substantial new investments, while others worry it might strain Brazil’s existing relationships with the U.S. and EU.
UK warns of food threat after Russia steps up attacks on Ukrainian ports... An increase in Russian attacks on Ukrainian port infrastructure in recent weeks threatens food shipments to needy destinations from Gaza to southern Africa, the UK warned. British intelligence detected a “noticeable increase in Russian risk appetite,” leading to at least four merchant ships being damaged during attacks on Black Sea ports between Oct. 5 and Oct. 14, UK Prime Minister Keir Starmer’s office said. The UK, which alongside Norway is leading efforts to protect a maritime corridor in the Black Sea, described the affected shipments as “collateral damage” in Russian President Vladimir Putin’s campaign against Ukraine. On Tuesday, Ukrainian Infrastructure Minister Oleksiy Kuleba said the government will strengthen defense measures in every Black Sea port.
Kazakhstan aims to export 12 MMT of grains and oilseeds... Kazakhstan officials say the country plans to export 12 MMT of the roughly 26.5 MMT of grain and oilseed production in 2024-25. That would include 7 MMT to 7.5 MMT of wheat, 1.3 MMT to 1.4 MMT of barley, 300,000 MT of corn and 1 MMT of oilseeds. The country has not published official data on exports for 2023-24, but USDA estimated them at 10.5 MMT. Nearby Central Asian countries and Afghanistan will remain the main export markets, but Kazakhstan also wants to increase exports to Europe, Middle East and China, and reach the markets of Southeast Asia. Kazakhstan is also promoting its wheat to Pakistan, Indonesia, Brazil and Malaysia.
Grassley skeptical about passing new farm bill this year... Sen. Chuck Grassley (R-Iowa) expressed skepticism about the likelihood of passing a new farm bill in 2024, suggesting that it might be more realistic to expect a new bill in 2025 or later. This delay is attributed to several factors, including political dynamics and legislative priorities in Congress. One major issue is the upcoming elections, which could significantly alter the composition of Congress, potentially bringing in new lawmakers and shifting party control. Such changes often lead to delays as new members take time to settle into their roles and committee assignments are restructured. Additionally, the current political climate, marked by contentious negotiations and potential government shutdowns, complicates efforts to pass significant legislation like the farm bill. If progress on the farm bill is not made soon, another extension of the 2018 Farm Bill would be necessary. This would provide some level of continuity for farmers but would not address current economic challenges or update safety net programs to reflect modern conditions.
China’s stimulus measures not enough, Yellen and IMF chief economist say... China’s latest stimulus measures will not meaningfully boost domestic demand, U.S. Treasury Secretary Janet Yellen and International Monetary Fund chief economist Pierre-Olivier Gourinchas said. The two said separately they had not seen any announcement so far from China’s central bank and its finance ministry that would boost demand enough to absorb excess production and boost growth.
China think tank proposes major stock market stabilization fund... A Chinese policy think tank has called for Beijing to issue 2 trillion yuan ($280 billion) of special treasury bonds to set up a stock market stabilization fund, the 21st Century Business Herald reported. Such a fund could steady the market through buying and selling blue-chips and exchange-traded funds (ETFs), according to the proposal by the Institute of Finance & Banking, affiliated to the Chinese Academy of Social Sciences (CASS). The proposal is part of a quarterly report by the institute on China’s economy.
EPA bans DCPA... EPA has banned the herbicide Dacthal, also known as DCPA, due to its significant health risks, particularly to unborn babies. This decision marks the first time in nearly 40 years EPA has used its emergency powers to halt the use of a pesticide. It is primarily applied to vegetables such as broccoli, brussels sprouts, cabbage, onions, cilantro, kale and mustard greens. Additionally, DCPA has been found on other crops like collard greens and green onions. EPA said its decision was driven by robust scientific evidence showing thyroid toxicity linked to DCPA. The agency highlighted that even with protective measures, exposure levels could be unsafe for pregnant women and their unborn children. Following the emergency suspension, AMVAC Chemical Corporation, the sole manufacturer of DCPA, announced its intention to voluntarily cancel all remaining pesticide products containing DCPA.
CDC issues safety alert over McDonald’s Quarter Pounders... U.S. health officials said McDonald’s Quarter Pounders have been linked to E. coli outbreaks in at least 10 states. They said 49 people have become sick and one person has died in connection with the outbreak. Most of the illnesses have been reported in Nebraska and Colorado. The Centers for Disease Control and Prevention (CDC) said, so far, it appears onions used as a topping on the burgers are the likeliest source of the outbreak. McDonald’s has stopped using the onions and is not serving Quarter Pounders in affected states.
USDA weakened order to prevent spread of H5N1 in dairy cattle after industry pushback... USDA weakened an emergency order last spring designed to prevent the spread of the H5N1 virus among the nation’s dairy cattle after pushback from state and industry officials, according to state and federal records seen by Reuters. USDA’s order, released in April after H5N1 cases were discovered in cows in eight states, requires milk-producing dairy cattle moving across state lines to secure a negative test no more than seven days prior to travel. It also allows non-producing cattle headed to slaughter to cross state lines without a veterinarian’s clean bill of health. USDA had initially contemplated more stringent requirements, including a three-day time frame for testing, but responded to industry feedback urging leniency before releasing the order, according to documents contained in the records request. Relaxing the order may have enabled more spread of the virus, two veterinarians and one dairy industry representative told Reuters. They noted logistical constraints to testing animals in the shorter window.
Choice beef continues higher... Choice boxed beef prices firmed another $1.10 to $323.96 on Tuesday, while Select fell $1.41 to $294.80. Movement totaled 142 loads, including 87.5 loads of Choice beef. Strong retailer demand for Choice beef continue to strengthen packer margins, giving cash sources hopes of steady/firmer cash cattle prices for a seventh consecutive week.
Traders narrowing hog discount to cash index... The CME lean hog index is up 11 cents to $84.34 as of Oct. 21, marking the third straight daily gain. After Tuesday’s gains, the discount December lean hog futures hold to the cash index declined to $5.215.
Overnight demand news... Jordan tendered to buy up to 120,000 MT of optional origin milling wheat. Bangladesh tendered to buy 50,000 MT of optional origin milling wheat.
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
· 9:30 a.m. Weekly Ethanol Production — EIA
· 11:00 a.m. Rice Stocks — NASS
· 2:00 p.m. Broiler Hatchery — NASS