Good morning!
Firmer price tone this morning... Wheat futures built on Wednesday’s gains overnight amid global supply worries, while the corn and soybean markets followed to the upside. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are mostly 3 to 6 cents higher and wheat futures are 11 to 15 cents higher. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is more than 300 points higher this morning.
Russia warns West: We can target your commercial satellites... A senior Russian foreign ministry official said commercial satellites from the U.S. and its allies could become legitimate targets for Russia if they were involved in the war in Ukraine. Konstantin Vorontsov, deputy director of the Russian foreign ministry’s department for non-proliferation and arms control, told the United Nations the U.S. and its allies were trying to use space to enforce Western dominance. Vorontsov, reading from notes, said the use of Western satellites to aid the Ukrainian war effort was “an extremely dangerous trend… Quasi-civilian infrastructure may be a legitimate target for a retaliatory strike,” Vorontsov told the UN First Committee, adding the West’s use of such satellites to support Ukraine was “provocative.”
Russia: Extension of grain export deal depends on provisions of Russian exports... Russia on Thursday said that provisions of the Black Sea grain deal to ease Russian agricultural and fertilizer exports were not being met, and that Moscow was yet to make a decision on whether the agreement should be extended beyond the Nov. 19 deadline. Foreign Ministry Spokeswoman Maria Zakharova told reporters the West had not taken sufficient steps to ease sanctions to facilitate Russian exports.
Xi softens tone, willing to work with U.S. for mutual benefit... Chinese President Xi Jinping said Beijing is willing to work with the U.S. to find ways to get along to the benefit of both, Chinese state television reported on Thursday, ahead of a possible meeting with President Joe Biden in Indonesia next month. As major powers, China and the United States should strengthen communication and cooperation to help provide stability to the world, Xi said. The two countries have been at odds over China’s policy toward Taiwan, Beijing’s relationship with Russia and more recently, U.S. efforts to prevent its semiconductor companies selling technology to Chinese companies. Biden on Wednesday said “the United State does not seek conflict with China.” Xi and Biden are expected to attend a G20 summit in Bali, Indonesia, in November, but no information has been officially released on the possibility of a meeting between them. Meanwhile, China’s defense ministry says it is willing to communicate with U.S. military but “red lines” should be respected, an apparent reference to Taiwan.
Weekly Export Sales Report out this morning... For the week ended Oct. 20, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 350,000-1,000,000 | 408,310 |
Wheat | 100,000-450,000 | 163,128 |
Soybeans | 800,000-1,600,000 | 2,335,554 |
Soymeal | 150,000-600,000 | 542,340 |
Soyoil | 0-20,000 | 9,317 |
U.S. mulls boost to diesel fuel reserve... The Biden administration is mulling options to increase the Northeast Home Heating Oil Reserve, which contains 1 million barrels of ultra-low sulfur distillate in four locations in New Jersey, Connecticut and Massachusetts. Bloomberg cites unnamed sources saying two options would require congressional action — removing the statutory cap on how much can be in the reserve and requiring companies to hold minimum inventory levels. Limiting exports of diesel is another option, the report said, one that could be done via executive action. No decisions have been made. Supplies of diesel are at their lowest level on record and some East Coast suppliers are starting to ration the fuel. This comes as exports of gasoline and diesel have increased with U.S. petroleum exports hitting a new record last week, according to the Energy Information Administration. Exports have risen due in part to Jones Act requirements that make it costly to ship fuels to the U.S. East Coast. The administration is already working on new rules that could allow them to boost emergency supplies of gasoline and diesel.
China warns of weakening external demand... China’s economy is facing growing risks of slowing external demand in the fourth quarter, a commerce ministry spokesperson said. As the world economy loses momentum and central banks tighten monetary policy to tame inflation and curb demand, the environment for trade is getting increasingly complex for China. “Looking into the fourth quarter, the risk of slowing external demand is expected to increase,” the official said. Despite the challenges, conditions were still favorable for stable growth in trade between China and other countries, the ministry spokesperson said.
New British PM delays economic plan... Rishi Sunak, Britain’s new prime minister, delayed the announcement of a major economic plan, saying he needed time to make the “right decisions.” Sunak is expected to announce tax increases and spending cuts to help balance a budget deficit. That will reassure investors but it will make it harder to put in place the kind of policies necessary to boost productivity and growth.
China continues wheat auctions... China will auction another 40,000 MT of wheat from state-owned reserves on Nov. 2. China sold the entire volume of wheat put up for sale during the first two auctions earlier this month. It has not released results yet for yesterday’s auction.
Another railroad union rejects deal... Union members of the National Brotherhood of Railway Signalmen overwhelmingly voted down the collective bargaining proposal Wednesday. The parties agreed to a status quo period until early December, preventing the unions from walking off the job, according to the National Carriers’ Conference Committee, which represents freight-rail companies. Five more unions are scheduled to vote on contract proposals by mid-November. A sixth union, the Brotherhood of Maintenance Way Employees, rejected the agreement earlier this month and is renegotiating terms. A railroad strike, perhaps as soon as December, could add to supply-chain woes at the height of the holiday shopping season.
Slow developing cash cattle trade... A limited number of cattle have changed hands this week at mostly $1 higher prices, though volume wasn’t enough to be considered a true test. Packers are slow playing cash negotiations after aggressively raising bids last week and buying a lot of cattle. While traders widely expect higher cash trade to eventually develop, they have been cautious buyers awaiting actual trade.
Pork cutout testing fall low... The pork cutout value dropped 75 cents on Wednesday to $97.74, just 15 cents above the Sept. 30 low. The fall low typically doesn’t come until November or December as pork production reaches its peak. For the September low to hold, ham prices likely have to stabilize after dropping more than $4 over the past week. That’s possible as retailers may be looking for holiday replacements for turkey given tight supplies.
Overnight demand news... Taiwan purchased 38,515 MT of U.S. 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
- 7:30 a.m. Weekly Export Sales — FAS
- 2:00 p.m. Tree Nuts: World Markets and Trade — FAS