Good morning!
Firmer tone to start the week... Corn and wheat futures traded solidly higher overnight, while soybeans favored the upside in two-sided trade. As of 6:30 a.m. CT, corn futures are trading around 6 cents higher, soybeans are 1 to 2 cents higher and wheat futures are 8 to 11 cents higher. Front-month crude oil futures are around $3.50 higher and the U.S. dollar index is about 250 points higher this morning.
Concerns for credit sector mounting... There are reports and rumors swirling that investment bank Credit Suisse may be in financial trouble. Broker SP Angel this morning said in an email dispatch: “A global tightening of liquidity by central banks is hitting the credit sector, with signs of a credit crunch beginning to surface. A syndicate of banks including Barclays and Bank of America cancelled a $3.9 billion debt offering last week amid a lack of demand. Bloomberg reports a group of underwriters including Goldman Sachs, Bank of America and Credit Suisse took losses estimated at over $1 billion on a debt package to private equity firms amid higher yields and lower demand. Outflows in U.S. investment grade bonds hit their third largest outflow on record last week, following six weeks of withdrawals totaling $22.3 billion. Credit default swaps across major European banks have soared in September, with Credit Suisse’s CEO noting the bank was facing a ‘critical moment.’”
Russia may finance grain exports... Russia may start providing trade finance to importers of its grain as sanctions imposed on Moscow since it sent troops to Ukraine affect this financial instrument, Agriculture Minister Dmitry Patrushev said. Russia is working with Eximbank and the Russian agency for export credit and investment insurance “to provide financing to foreign companies for the purchase of our products,” Patrushev told the RBC business daily. “This will give us the opportunity to sell large amounts. Because there is also a problem with settlements so far,” he added. Some importers of Russian grain are currently paying in rubles or their local currency, and the number of such deals is rising every month, Patrushev said.
Nord Stream pipelines no longer leaking... Natural gas has finally stopped leaking from the Nord Stream 1 and 2 pipelines after several ruptures were discovered in the lines last week, the Danish Energy Agency said yesterday. Although a cause has not been formally identified, political leaders in Europe and the U.S. have suggested the explosions that caused the ruptures were an act of sabotage, and much of the speculation about responsibility has focused on Russia. A spokesman for Russian President Vladimir Putin dismissed the notion of Russian sabotage as “stupid” and suggested the U.S. had been behind the attacks.
Biden officials float fuel export limit in meeting with refiners... Senior Biden administration officials pressed executives from some of the largest U.S. gasoline producers to curtail overseas sales during a tense meeting Friday afternoon, suggesting that without voluntary action, the government could force the industry to stockpile more fuel in U.S. tanks, Bloomberg reports. Although billed as a discussion of refining operations and fuel supplies in the wake of Hurricanes Fiona and Ian, the storms were not a focus, according to people familiar with the matter.
China turns away from U.S. and towards Russia for LNG imports... The Wire looked at China’s changing energy trade and says Beijing’s once hefty imports of U.S. fossil fuels are dramatically lower due to Russia’s invasion of Ukraine and the expiration of the U.S./China Phase 1 trade deal that was signed back in 2020. A recent analysis of U.S./China trade data (link) by the Peterson Institute for International Economics (PIIE), a Washington D.C.-based nonprofit, shows how the energy trade has changed over the last year.
Biden may consider Cold War-era law for clean energy... The Energy Department is mulling ways to boost the domestic production of clean energy technology such as solar panels, transformers and hydrogen fuel cells using the powers of a Cold War-era law once invoked by former President Donald Trump to prop up money-losing coal plants. The agency said in a notice Monday it is seeking public input on how to use the Defense Production Act to speed up production of technology for grid reliance and clean-energy deployment.
August soy crush, ethanol grind expected to be down from July but up from year-ago... Traders expect USDA to report August soybean crush totaled 175.6 million bu., based on a Bloomberg survey, which would be down 5.7 million bu. (3.1%) from July but up 7.3 million bu. (4.3%) versus last year. Traders expect corn-for-ethanol production to fall 12.9 million bu. (2.9%) from July but be up 16.0 million bu. (3.8%) compared with August 2021.
Heavy rainfall in October could threaten India’s crops... India is likely to receive above-average rainfall in October, an official with the state-run weather office said last Friday, posing risks for some crops. Monthly rainfall is expected at 115% of the long-term average, Mrutyunjay Mohapatra, director general of the India Meteorological Department, said. Heavy rains in October could damage ripening crops such as rice, pulses, cotton and soybeans, and may delay wheat planting in parts of India.
Strategie Grains raises EU rapeseed, sunseed crop forecasts... Strategie Grains raised its forecasts for this year’s rapeseed crop in the European Union, citing better than expected harvests. The consultancy estimated the 2022 EU rapeseed crop at 19.46 MMT, up 310,000 MT from last month and now 14.5% above 2021. The consultancy increased its EU sunflower seed crop forecast to 9.25 MMT, up 80,000 MT from last month but still 10% below last year.
The week ahead in Washington... After clearing a continuing resolution to keep the government funded through Dec. 16, Congress is on recess until after the November elections. The Supreme Court will hear oral arguments this morning in a challenge to the Clean Water Act. The court is expected to narrowly define waters of the U.S. (WOTUS). Environmentalists fear such a ruling will undercut the federal government’s ability to protect waterways, while businesses groups say they would welcome a clear definition of the rule. The Biden administration is planning to issue new WOTUS regulations that will be “complementary” to the outcome of the case. The economic focus will be Friday’s employment data for September. Key ag data this week is trade figures for August.
Full-price food inflation... In U.S. supermarkets, toilet paper and noodles are back in stock, but one prepandemic staple has yet to fully return: discounts, reports the Wall Street Journal. With food inflation running at the highest rate in more than 40 years, American shoppers are finding less relief from deals like “buy one, get one free” promotions, or 99-cent two-liter bottles of soda, according to supermarket executives and analysts. Food makers, which typically provide funding to supermarkets to support discounts and special sales, said ongoing shortages and supply-chain problems are limiting their production and leaving fewer products available to be put on sale.
Wholesale beef prices still struggling... Choice boxed beef prices fell $2.33 Friday to $243.75, the lowest price since March 2021. Retailer demand for beef has slowed after the grilling season came to an unofficial end and amid rising recession concerns. Until wholesale beef prices stabilize, packers will be reluctant to raise cash cattle bids too much, despite tightening market-ready supplies.
Hog traders remain pessimistic... October lean hog futures finished mildly weaker last Friday and deferred contracts posted just modest gains, despite the bullish Hogs & Pigs Report Thursday afternoon. A falling cash hog index, which is down another 23 cents today (as of Sept. 29), and global economic concerns are driving what we believe are overly pessimistic attitudes toward the hog market.
Weekend demand news... Exporters reported no tenders or sales.
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. Commodity Costs and Returns — ERS
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Milk Cost of Production Estimates — ERS
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS
- 3:00 p.m. Crop Progress — NASS