Good morning!
Grains firmer overnight... Wheat futures extended Tuesday’s gains overnight, while the corn and soybean markets rebounded from their losses. As of 6:30 a.m. CT, corn futures are trading 2 cents higher, soybeans are 7 to 8 cents higher and wheat futures are mostly 7 to 9 cents higher. The U.S. dollar index is mildly firmer, while front-month crude oil futures are modestly weaker.
Hurricane Milton roars toward Florida... Hurricane Milton is on track to make landfall late Wednesday night or early Thursday along the west-central Florida Gulf Coast, according to the U.S. National Hurricane Center. Milton’s center is headed just south of Tampa – an epicenter for U.S. phosphate production. The U.S. is the world’s third largest phosphate producer, with Florida accounting for nearly two-thirds of the American total, according to The Fertilizer Institute.
Another sizable ag trade deficit in August... U.S. agricultural exports totaled $13.01 billion in August against imports of $17.19 billion, resulting in a monthly trade deficit of $4.18 billion. So far in fiscal year (FY) 2024, exports totaled $161.30 billion compared to imports of $188.82 billion, creating a cumulative deficit of $27.52 billion. The sector has recorded monthly deficits in 10 out of 11 months in FY 2024, with three months seeing deficits of $4 billion or more. USDA forecasts FY 2024 ag exports at $173.5 billion and imports at a record $204 billion for a projected record deficit of $30.5 billion, which would be up sharply from $17.1 billion in FY 2023.
Vilsack warns of urgency for farm bill deal before year-end... USDA Secretary Tom Vilsack during a White House ag event on Tuesday stressed the need for Congress to pass the over $1.5 trillion farm bill before the end of 2024 to avoid disruptions for farmers. If lawmakers fail to reach an agreement by the end of December, new legislation could be delayed for an extended period, particularly with a new Congress and administration taking office. Vilsack also noted that farmers impacted by Hurricane Helene could see crop insurance payouts by early November. Conservation funding and its use, a key debate in the farm bill, remains unresolved, with Democrats opposing Republican proposals to broaden conservation fund applications.
Russian winter grain seeding ‘going according to plan’... Russian farmers have planted 13 million hectares of winter grain so far this year out of the expected 20 million hectares in total, Agriculture Minister Oksana Lut said. “On the whole, the winter sowing campaign is going according to plan,” Lut told Russia’s upper house of parliament. “The total area under winter grain will be 20 million hectares, which corresponds to last year’s level,” she added. Lut mentioned that in the central regions of Russia, the winter grain sowing campaign is complicated by a lack of soil moisture. Black Sea consultancy SovEcon said the rate of winter wheat seeding fell to an 11-year low as of late September.
China’s stock market falls the most in more than four years... China’s benchmark equities indexes notched their biggest daily losses since the beginning of the Covid-19 pandemic, as investors were disappointed officials didn’t deliver further details of Beijing’s massive stimulus measures at the highly anticipated National Development and Reform Commission press conference on Tuesday. China’s finance ministry is scheduled to hold a news conference on fiscal policy on Saturday, the State Council Information Office said, addressing the “intensifying countercyclical adjustment of fiscal policy to promote high-quality economic development.”
FOMC minutes, Fed speeches in focus today... The Federal Open Market Committee (FOMC) will release minutes from its September meeting today, while several Federal Reserve officials are scheduled to speak on the economy and monetary policy. Interest-rate futures market pricing currently implies a nearly 90% likelihood of a quarter-point decrease in the Fed-funds rate at the Nov. 6-7 FOMC meeting, with the balance of odds favoring a pause.
Iowa Supreme Court hears arguments in Summit pipeline land access case... The Iowa Supreme Court heard arguments on Tuesday regarding Summit Carbon Solutions’ right to access private land for surveying its proposed carbon capture pipeline. The case stems from a Hardin County landowner’s refusal to allow Summit access to his farm. While a district court granted Summit injunctive relief, the landowner’s attorney argues Summit does not qualify as a pipeline company under state law and the relevant code is unconstitutional. The Iowa Utilities Commission issued a permit and granted eminent domain for the project in August, but the legal dispute began before that decision. The case mirrors similar legal challenges in other states, with a South Dakota ruling questioning Summit’s status as a common carrier. A ruling from the Iowa court is expected before June 2025, though many expect it will come sooner.
U.S., China commerce chiefs discuss semiconductor tensions, trade restrictions... Chinese Commerce Minister Wang Wentao and U.S. Commerce Secretary Gina Raimondo held a call Tuesday, where Wang voiced concerns over U.S. semiconductor policies and restrictions on Chinese-connected vehicles. Wang stressed the need for clear boundaries on national security in trade to ensure global supply chain stability and cooperation. He urged the U.S. to lift sanctions on Chinese firms and improve the business environment. Raimondo, however, reiterated that U.S. national security is non-negotiable, highlighting the “small yard, high fence” approach to targeted controls. It remains unclear if she discussed potential updates to the U.S. semiconductor restrictions from 2022, which may be influenced by industry lobbying.
Choice beef continues to firm... Wholesale beef prices were mixed on Tuesday, with Choice up 91 cents to $306.84 while Select fell 72 cents to $288.61. Choice beef prices have firmed nearly $10.50 from the Sept. 26 low. While packer margins remain in the red, they have improved with the jump in Choice beef.
Cash hog index, pork cutout decline... The CME lean hog index is down 4 cents to $84.22 as of Oct. 7. The pork cutout fell $1.24 to $94.81 on Tuesday as losses in loins, butts, picnics and bellies more than offset gains in ribs and hams. Daily Livestock Report notes, “The share of negotiated hogs is down to just 1% and the share of hogs sold on a swine or pork market formula is down to 28.5%, i.e. less than 30% of the overall market. As industry has changed, so has pricing, with the pork cutout becoming increasingly more important in influencing the CME index.”
Overnight demand news... South Korea purchased 30,000 MT of U.S. milling wheat. Algeria purchased between 510,000 and 570,000 MT of optional origin milling wheat, the bulk of which is expected to be sourced from the Black Sea region. Japan tendered to buy 65,000 MT of feed wheat and 25,000 MT of feed barley. Jordan tendered to buy up to 120,000 MT of optional origin 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
· 9:30 a.m. Weekly Ethanol Production — EIA
· 11:00 a.m. Livestock and Meat International Trade Data — ERS
· 2:00 p.m. Broiler Hatchery — NASS