Good morning!
Beans and wheat firmer, corn mildly weaker... Soybeans and wheat are pulling support from outside markets, while corn is mildly favoring the downside. As of 6:30 a.m. CT, corn futures are trading steady to a penny lower, soybeans are mostly 3 to 5 cents higher, SRW wheat is 1 to 2 cents higher, HRW wheat is 6 to 8 cents higher and HRS wheat is 5 to 9 cents higher. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is more than 500 points lower.
Annexations will add ‘at least’ 5 MMT to Russia’s grain production... Russia’s grain harvest is set to grow by about 5 MMT a year thanks to its incorporation of four Ukrainian territories, Agriculture Minister Dmitry Patrushev said. “Considering the arable land that exists there, I think at least 5 MMT of grain will be added to the Russian savings box. I also think that we’ll get other crops,” he was quoted as saying by the state news agency TASS. The Kremlin said President Vladimir Putin was likely to sign laws on Tuesday to annex the Donetsk, Luhansk, Kherson and Zaporizhzhia regions, representing about 18% of Ukraine’s internationally recognized territory.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Oct. 2.
- Corn: 96% dented (97% average), 75% mature (75% average), 20% harvested (22% average), 52% good/average (52% last week).
- Soybeans: 81% dropping leaves (79% average), harvested 22% (25% average), 55% good/excellent (55% last week).
- Cotton: 77% bolls opening (73% average), 22% harvested (17% average), 31% good/excellent (31% last week).
- Winter wheat: 40% planted (44% average), emerged 15% (17% average).
Mexican food producers, retailers sign onto anti-inflation plan... More than a dozen Mexican foodmakers and retailers have signed onto an anti-inflation plan to keep prices of basic foodstuffs affordable, Mexican Finance Minister Rogelio Ramirez de la O said on Monday. Companies including Walmart, tortilla maker Gruma and egg and chicken producer Bachoco are part of the deal, which will waive certain import requirements, Ramirez said. As part of the agreement, the Mexican government will deliver special universal licenses to companies that will exempt them from carrying out some procedures, requesting permits, undergoing verification acts and paying taxes for the importation of both goods and food, among other measures. The government also announced additional measures that include the temporary cancellation of exports of goods such as white corn, beans, sardines and steel, as well as the freezing of highway tariffs until February 2023.
Euro zone Aug producer prices surge... The euro zone producer price index (PPI) surged 43.3% annually in August, mainly due to soaring energy costs. However, excluding energy, the euro zone’s PPI was still up 14.5% compared with last year.
Ukraine wheat seeding well behind year-ago... Ukrainian farmers had seeded 1.1 million hectares of winter wheat as of Oct. 3, according to the country’s ag ministry, down from 3.1 million hectares on the same date last year. Local officials and analysts said rains across most of the country and a lack of funds are the main reasons for the delay. The ag ministry did not provide a forecast of the 2023 winter wheat area, although Agriculture Minister Mykola Solsky told Reuters in August planted area could fall to 3.8 million hectares from 4.6 million a year earlier because of Russia’s invasion. Farmers had also sown 96,000 hectares of winter barley and 35,000 hectares of rye, 14% and 41% of expected plantings, respectively.
Indonesia plans extension of palm oil export levy waiver to year-end... Indonesia may extend an export levy waiver on the edible oil to the end of this year, its chief economic minister said on Tuesday. Indonesia waived levies imposed on exports of palm oil products starting in mid-July to help reduce supplies that accumulated after a three-week export ban in late April, which was designed to stabilize local cooking oil prices. The levy waiver policy is currently scheduled to end after Oct. 31.
China reselling U.S. LNG to Europe for hefty profits... Chinese companies that have signed long-term contracts to buy U.S. liquefied natural gas have been selling their excess inventories to Europe and reaping big profits from the sales due to weak demand in China, the Wall Street Journal (WSJ) reports, echoing what others have been saying for several months. WSJ reports that just 19 LNG vessels from the U.S. docked in China in the first eight months of the year, versus 133 recorded for last year’s comparable period. China’s key buyers are located in Europe, Japan and South Korea.
IEA: Global gas markets to remain tight through 2023... The International Energy Agency (IEA) predicted global gas markets will remain tight next year as Russian piped supplies dwindle despite demand falling in Europe in response to high prices and energy saving measures. According to the agency, global natural gas markets have been tightening since 2021 despite global gas consumption declining by 0.8% this year because of a record 10% contraction in Europe and flat demand in the Asia Pacific region. However, global gas consumption is forecast to inch up by 0.4% next year.
Another slight rise in ERP payouts... Payments under the Emergency Relief Program (ERP) rose to $6.99 billion as of Oct. 2, up from $6.91 billion the prior week, with non-specialty crop payments now at $6.01 billion ($5.94 billion prior). Specialty crop payments increased to $984.1 million ($961.5 million prior).
Positive cattle/beef markets to open the week... Cattle futures posted moderate corrective gains Monday, while wholesale beef prices traded sharply higher. After a modest 16-cent decline in the average cash cattle price last week, traders expect generally steady cash trade again this week. But those expectations could increase if futures and wholesale beef prices build on Monday’s strength.
Cash hog index continues modest price decline... The seasonal decline in the CME lean hog index has been persistent, but there haven’t been any days with major losses. Today’s quote (as of Sept. 30) is down 58 cents to $94.33. October hog futures finished Monday $5.555 below that level, suggesting traders anticipate the price decline to persist.
Overnight demand news... South Korea purchased 65,000 MT of Australian feed wheat. Japan is seeking 97,343 MT of milling wheat in its weekly tender. Algeria tendered to buy a nominal 50,000 MT of durum wheat from unspecified origins.
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
- 2:00 p.m. Dairy Products — NASS