Good morning!
Grains lower overnight... Selling pressure mounted during the overnight session, with corn, soybeans and wheat trading near session lows early this morning. As of 6:30 a.m. CT, corn futures are trading 3 cents lower, soybeans are 6 to 9 cents lower, winter wheat markets are 7 to 8 cents lower and spring wheat is 2 to 5 cents lower. The U.S. dollar index is trading just above unchanged and front-month crude oil futures are around 60 cents higher.
China boasts record grain production but supply and demand still tight... China’s grain output is set to exceed a record 700 million metric tons this year, a top agriculture ministry official said, up approximately 0.7% from last year. However, China remains highly reliant on soybean imports, while corn plantings continue to fall short of needed levels. “National food supply and demand is in a tight balance, with no substantial change, and so efforts to ensure a stable and safe supply of grains cannot be relaxed,” the official said. State stockpiler Sinograin would increase the scale of its corn purchases, which would help boost both farmer income and planting, helping China ensure national food security. The ministry also plans to develop high-oil and high-yielding soybean varieties and measures for soybean processing subsidies and stockpiling acquisitions.
Russia’s wheat export tax jumps again... Russia’s tax on wheat exports jumped to
2,272.9 rubles ($23.53) per metric ton for the week of Oct. 30-Nov. 5 up from 2,121.2
rubles ($21.96) the previous week. The export tax has surged 71.1% the last three weeks and is 151% above the mid-September level.
Russia’s ag ministry has reportedly asked exporters to not sell wheat below a minimum price of $250 per metric ton. The tax hikes are seen as a way to curb wheat exports.
Onion recall linked to E. coli at McDonald’s expands... An E. coli outbreak has led to a sweeping onion recall. Federal regulators suspect the slivered onions used in McDonald’s Quarter Pounders were the contamination source, though investigations are ongoing. Taco Bell, KFC, Burger King and Pizza Hut have removed onions from some menu items as a precaution. Taylor Farms, the onion supplier to McDonald’s across 10 states, issued a recall of several yellow onion products. Meanwhile, McDonald’s has suspended Quarter Pounder sales in affected states.
EU, China agree to more talks on potential alternatives to EV tariffs... The European Union and China have agreed to hold further technical negotiations soon on possible alternatives to tariffs on Chinese-built electric vehicles (EVs), although significant gaps remain, the European Commission said. The EU is set to impose additional tariffs of up to 35.3% starting Nov. 1 on EVs built in China, though the two sides are looking at possible minimum price commitments from Chinese producers or investments in Europe as an alternative to tariffs.
China’s top legislative body to meet in early November... China’s top legislative body will hold a highly anticipated session in Beijing from Nov. 4-8, as investors await any approval of fiscal stimulus to revive the slowing economy. The published agenda doesn’t specifically mention any plans for fiscal stimulus, although a previous decision to raise budget deficit mid-year in 2023 was disclosed only after lawmakers approved it, Bloomberg reported. Voting on any stimulus will come on Nov. 8, three days after a U.S. election that could have far-reaching consequences on global trade and China’s exports.
China keeps short-term rate unchanged... China’s central bank kept its one-year policy rate unchanged, after slashing funding costs by a record amount last month, suggesting authorities are cautiously pacing monetary stimulus to support the economy. The People’s Bank of China (PBOC) issued 700 billion yuan ($98.4 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions at an unchanged rate of 2.00%. A total of 789 billion yuan of MLF loans are due this month, marking a net cash withdrawal of 89 billion yuan ($12.49 billion). PBOC injected 292.6 billion yuan ($41.1 billion) through the reverse repo operation and retained its rate at 1.5%. That compared with a total of 108.4 billion yuan ($15.2 billion) of the seven-day reverse repo due the same day.
Slightly smaller feedlot supplies expected... Analysts expect USDA’s Cattle on Feed Report this afternoon to show the large feedlot (1,000-plus head) inventory down 0.3% from year-ago at 11.545 million head as of Oct. 1, which would be the first year-over-year decline since June. The report is expected to show a 4.0% decline in the number of cattle moved into feedlots last month, while marketings are anticipated to be up 2.0% from September 2023.
Cold Storage Report also out this afternoon... USDA will detail frozen meat stocks at the end of September. The five-year average is a 15.1-million-lb. increase in beef stocks and a nearly 1-million-lb. decline in pork stocks during the month.
Cash cattle rally extends... Cash cattle trade actively traded at mostly $2.00 higher prices on Thursday, extending the string of weekly gains in the cash market to seven. Packers have tried to actively build slaughter inventories during that stretch to take advantage of black ink, though there are signs margins may be peaking as Choice beef retreats from its recent high.
Cash hogs continue to strengthen... The CME lean hog index is up 54 cents to $85.20 as of Oct. 23, marking five straight days of gains. That’s the longest string of gains since July when the index was rising to its seasonal peak on Aug. 1. After sharp losses on Thursday, December lean hog futures fell to a $6.55 discount to today’s cash quote.
Overnight demand news... Iran purchased 120,000 MT of corn that can be sourced from Brazil, Europe or the Black Sea region.
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 Price Outlook — ERS
· 2:00 p.m. Cattle on Feed — NASS
· 2:00 p.m. Cold Storage — NASS
· 2:00 p.m. Peanut Prices — NASS
· 2:00 p.m. Peanut Stocks and Processing — NASS
· 2:30 p.m. Commitments of Traders — CFTC