Good morning!
Grain, soy futures firmer overnight... Corn and soybean futures found followthrough buying overnight while wheat futures rebounded as markets were supported by the recent sharp pullback in the U.S. dollar. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny higher, soybeans are 10 to 11 cents higher and wheat futures are 3 to 5 cents higher. Front-month crude oil futures are around 80 cents higher and the U.S. dollar index is nearly 800 points lower this morning.
Dollar eases to five-week low... The U.S. dollar index fell to its lowest level since Sept. 20 overnight in a continuation of the recent pullback as weak U.S. economic data drove speculation the Fed will slow its interest rate hikes after November. The euro climbed back above parity against the dollar for the first time in a month, while other major currencies also reached multi-week highs against the greenback. Still, the dollar around 110 is historically strong and up around 15% for the year.
Biden: ‘Incredibly serious mistake’ if Russia uses tactical nuclear weapon... President Joe Biden said it would be an “incredibly serious mistake” for Russia to use a tactical nuclear weapon in Ukraine. The comment came after increased tensions and rhetoric between Russia and Ukraine this week over the potential use of a “dirty bomb.” Russian President Vladimir Putin on Wednesday observed exercises by Russia’s strategic nuclear forces, state-owned news agency RIA reported.
Ukraine braces for winter energy strain... Ukraine’s Deputy Prime Minister Iryna Vereshchuk asked Ukrainians sheltering abroad not to return home until spring to ease the strain on the country’s energy infrastructure, which has been crippled by Russian missiles. The grid “won’t survive” should refugees return, she said. Ukrainian President Volodymyr Zelenskyy urged the West to help rebuild the country. Russia has been bombing Ukraine’s civilian infrastructure, leaving much of the country with intermittent electricity as winter approaches. He estimates the war has wiped out at least 35% of the country’s economy and asked for a $17 billion relief package and $1.5 billion a month from the European Commission and another $1.5 billion from the United States.
Attaché forecasts smaller Argentine wheat crop... The ag attaché in Buenos Aires cut its 2022-23 Argentine wheat crop peg to 15.5 MMT, 2 MMT less than USDA’s official forecast earlier this month, citing “dry conditions.” The post lowered its 2022-23 Argentine wheat export outlook to 10 MMT, also 2 MMT less than USDA’s forecast.
Belarus expects record grain crop... Belarus expects a record grain crop of about 11 MMT this year, the country’s ag minister said. To date, Belarusian farmers have harvested 9.8 MMT of grain, including rapeseed. The ag minister said the country will have sufficient supplies to meet domestic needs and export surplus supplies onto the world market.
Suit filed against U.K. gov’t over imports of cotton from Xinjiang... A lawsuit was filed in London by the World Uyghur Congress (WUC) against the U.K. government for failing to launch an investigation of imports of cotton products made using forced labor in Xinjiang. WUC said the U.K. should have confiscated cotton imports from Xinjiang and launched a criminal investigation under the Proceeds of Crime Act, which holds companies liable for benefiting from any actions that would constitute a crime in the U.K. WUC also filed suit along with others against the Irish government over the issue and they have plans to launch further actions across Europe. The situation has already altered global trade as Xinjiang accounts for 80% of China’s cotton production.
Britain’s new prime minister unveils cabinet... New U.K. Prime Minister Rishi Sunak kept Jeremy Hunt as his chancellor of the exchequer. Hunt had reversed most of the disastrous “mini-budget” that caused the downfall of the previous PM Liz Truss. Both main opposition parties called for an investigation into Suella Braverman, who was re-appointed as home secretary a week after she resigned over a breach of ministerial conduct. Kimi Badenoch was reappointed as trade minister, the same role she held in the brief Truss regime.
GM’s EVs to qualify for full federal credit within three years... General Motors will be able to meet all requirements in three years for buyers of its electric vehicles (EVs) to get the full $7,500 federal tax credit, Chief Executive Officer Mary Barra told Wall Street analysts Tuesday. To be eligible for the full credit under the Inflation Reduction Act passed in August, EVs must be assembled in North America and contain batteries made from raw materials sourced in countries where the U.S. has free-trade agreements.
Climate commitments falling short... Countries are failing to meet their climate commitments, according to a report released on Wednesday ahead of COP27, the Unite Nations summit in Egypt in November. The UN’s climate body found that only 24 out of 193 countries increased their ambitions this year, despite all promising they would. If countries make good on their current pledges, the world will warm by roughly 2.5°C above pre-industrial levels by 2100, with disastrous consequences.
U.S. 30-year mortgage rate tops 7%... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) in the U.S. jumped by 22 basis points to 7.16% in the week ended Oct. 21, the highest reading since 2001, data from the Mortgage Bankers Association (MBA) showed. A year earlier, mortgage rates were around 3%.
Cattle futures get healthy breather... Live cattle futures pulled back Tuesday despite bullish fundamentals. While the market is still short-term overbought, Tuesday’s corrective selling gave bulls a short-term breather and did no technical damage. That could open the door for the next push to the upside amid firming cash cattle and boxed beef prices and bullish technicals.
Cash hog index continues to strengthen... The CME lean hog index is up another 14 cents to $94.81 (as of Oct. 24), the highest level since Sept. 29. The index has risen $2.32 from the Oct. 11 low and is higher eight of the last nine days. That’s encouraging some speculation the cash index may have posted an early seasonal low, though we feel it’s too early to say that’s definitely the case.
Overnight demand news... Algeria bought 80,000 MT of optional origin milling wheat, with additional purchases possible. South Korea tendered to buy 128,000 MT of milling wheat to be sourced from the U.S., Australia and Canada.
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
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Peanut Stocks and Processing — NASS