Good morning!
Grains mostly firmer overnight... Corn and soybeans built on Wednesday’s corrective gains overnight, while the wheat market traded on both sides of unchanged. As of 6:30 a.m. CT, corn futures are trading 2 cents higher, soybeans are 6 to 8 cents higher and wheat futures are 2 cents lower to 2 cents higher. The U.S. dollar index is more than 225 points lower and front-month crude oil futures are around 65 cents higher.
Weekly Export Sales Report out this morning... For the week ended Oct. 17, traders expect:
| 2024-25 expectations (in MT) | Last week (in MT) |
Corn | 2,200,000-3,300,000 | 2,225,716 |
Wheat | 350,000-650,000 | 504,112 |
Soybeans | 1,200,000-2,400,000 | 1,702,727 |
Soymeal | 150,000-350,000 | 251,401 |
Soyoil | 0-30,000 | 403 |
Attaché forecasts smaller Aussie wheat crop... The U.S. ag attaché in Australia estimates the country’s 2024-25 wheat production at 28.5 MMT, 1.9 MMT below the 10-year average and 3.5 MMT lower than USDA’s forecast in the October WASDE Report. The new forecast is also lower than the official forecast of 31.8 MMT from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) in early September but in line with many private crop watchers. The attaché expects Australia to export 20 MMT of wheat in 2024-25, down 1.2 MMT from last year but slightly above the 10-year average of 19.2 MMT.
EU assessing tariff hikes on more Russian ag goods... The European Union is debating whether to hike tariffs on more Russian agricultural and food products, as well as fertilizers, Bloomberg reported, citing people familiar with the matter. Several member states eager to limit Moscow’s revenues have been urging the bloc to impose sweeping levies on agricultural and fish imports from Russia and Belarus into the EU, on top of the higher duties on grain products set earlier this year. Others have urged caution, asking to assess the impact of any measures on European imports and food prices first, the people said. Separately, work is ongoing on a new sanctions package, according to the people.
Russia proposes new global payment system... At the BRICS summit in Kazan, Russia, Russian President Vladimir Putin introduced a new international payments framework aimed at reducing reliance on the U.S. dollar, which he accused of being used as a “weapon” by Western powers. The proposed system, known as “BRICS Bridge,” would utilize blockchain, tokens and digital currencies as an alternative to the SWIFT system. This initiative reflects a broader interest among non-Western countries to avoid potential exclusion from global financial systems dominated by the United States. Despite the ambitious proposal, practical implementation remains uncertain. The U.S. has warned that cooperating with Russia’s financial system could result in losing access to the dollar, complicating efforts to establish a sanctions-proof network. Meanwhile, Chinese President Xi Jinping said Beijing supports more global south countries joining the BRICS group as he called on the bloc to take the lead in reforming the global economic governance system.
USTR warns Brazil of Belt and Road risks amid China’s growing influence... At the Bloomberg B20 event in São Paulo, U.S. Trade Representative (USTR) Katherine Tai urged Brazil to weigh the risks of joining China’s Belt and Road Initiative (BRI). Tai encouraged Brazil to assess the economic impact through a risk management perspective, emphasizing the importance of economic resilience. This comes as Brazil considers joining the initiative to counter protectionist policies from the U.S. and EU. China’s growing influence in Latin America, highlighted by upcoming state visits from President Xi Jinping, has heightened U.S. concerns. Joining the BRI could provide Brazil with access to significant financing and infrastructure projects, which are appealing prospects for the country’s development goals. Of note: Tai also discussed trade priorities with Mexico and plans to review the U.S.-Mexico-Canada Agreement (USMCA), noting China’s expanding presence in Mexico’s manufacturing sector.
China asks carmakers to halt Europe expansion over tariff spat... China is pressuring its automakers to pause expansion in the European Union due to the escalating trade conflict over electric vehicles (EVs), people familiar with the matter told Bloomberg. Beijing is telling manufacturers to put on hold active searches for production sites in the region and signing of new deals, and generally keep a low profile while negotiations over EU tariffs on Chinese EVs are ongoing. Still, Europe remains attractive for China’s carmakers because they can generally command higher prices there than the Chinese market.
Euro zone business activity remains subdued... Business activity in the euro zone contracted for a second straight month as domestic and export demand weakened. The HCOB flash euro zone composite purchasing managers index (PMI) compiled by S&P Global inched up to 49.7 in October from a seven-month low of 49.6 the previous month but was lower than expected. The services sector failed to offset the ongoing slump in manufacturing, though the latter reading improved in October.
McDonald’s E. coli outbreak investigation continues... McDonald’s has taken Quarter Pounders off the menu in about a fifth of its stores as a precautionary measure as an investigation into the cause of the E. coli outbreak continues. The company has stopped using the slivered onions as well as quarter-pound beef patties in several states – Colorado, Kansas, Utah and Wyoming, as well as portions of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico and Oklahoma – while the investigation continues. According to The U.S. Centers for Disease Control and Prevention (CDC), the beef patties are used only for Quarter Pounders, and the slivered onions are used primarily for the Quarter Pounder and not other items. USDA said it is continuing to verify the safety of ground beef used in Quarter Pounders, indicating a state partner has collected samples from the chain’s ground beef patties for testing. However, USDA echoed the indications from CDC and FDA that slivered onions on the tainted burgers are suspected as the likely source of illnesses.
Brazil to fight deforestation with new cattle-tracking system... Brazil is pressing ahead with plans to track its cattle herds as the world’s largest beef producer contends with international pressure to prevent deforestation caused by commodity production. The Brazilian government is working with the private sector to launch a data platform that will allow meat packers to fully trace their supplies starting in 2027, Agriculture Minister Carlos Fávaro said in an interview at the Bloomberg B20 event in Sao Paulo. That will allow Brazilian beef to be completely traceable by 2032, he said. While companies including JBS SA, Marfrig SA and Minerva SA say they have advanced in monitoring direct suppliers, a government-backed program would allow a more robust tracing of indirect suppliers as well.
Slow developing cash cattle negotiations... After six straight weeks of higher prices, packers have been slow to establish cash cattle bids while feedlots are confidently pricing cattle higher. Given strong packer margins, cash prices are eventually expected to trade steady/firmer barring a major decline in futures, though active trade may not occur until after Friday afternoon’s Cattle on Feed Report.
Contra-seasonal climb in hogs, pork continues... December lean hog futures posted a high of $80.225 and closed at $80.175 on Wednesday, just below the contract high of $80.65 from June 2023 right after the contract moved onto the board. The contra-seasonal gains in futures are being fueled by strength in the cash and product markets. The CME lean hog index firmed another 32 cents to $84.66 as of Oct. 22, the four straight daily gain. The pork cutout firmed 95 cents to $98.22, fueled by strong gains in picnics and bellies.
Overnight demand news... Indonesia canceled its tender to buy 240,000 MT of 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
· 7:30 a.m. Weekly Export Sales — FAS
· 2:00 p.m. Tree Nuts: World Markets and Trade — FAS
· 2:00 p.m. Livestock Slaughter — NASS
· 2:00 p.m. Poultry Slaughter — NASS