Good morning!
Price pressure overnight... Corn and soybeans faced followthrough selling overnight while wheat retreated from Wednesday’s gains amid pressure from outside markets and building global recessionary concerns. As of 6:30 a.m. CT, corn futures are trading 8 to 10 cents lower, soybeans are 16 to 19 cents lower and wheat futures are mostly 5 to 11 cents lower. Front-month crude oil futures are around $1.75 lower and the U.S. dollar index is nearly 400 points higher this morning.
No weekly export sales data today... USDA Foreign Agricultural Service Administrator Daniel Whitley said late Wednesday afternoon, “As a result of unanticipated difficulties with the launch of the new Export Sales Reporting and Maintenance System, USDA’s Foreign Agricultural Service will temporarily revert to the legacy system while we work to fully resolve the issues with the new system. FAS will be unable to publish weekly export sales data on Thursday, Sept. 1 or Thursday, Sept. 8, but we expect to resume regular reporting on Thursday, Sept. 15. Since the system relies on data submissions by exporters, FAS is working closely with individual exporters to ensure that past, current, and future export sales data are accurate. Our staff will continue to conduct outreach and provide support to both data reporters and data users in anticipation of the re-launch of the new system.”
Soy, grain crush reports out this afternoon... Traders expect USDA to report July soybean crush totaled 180.8 million bu., according to a Bloomberg survey. That would be up 3.8% from June and 8.7% greater than July 2021. Traders expect corn-for-ethanol use to total 448.3 million bu., which would be up 1.4% from June and 0.4% above last year’s level.
Gas prices continue to fall as crude oil weakens and gas demand slows... Gas prices dropped for the 11th week in a row, and the national average price was $3.829 per gallon Thursday, according to AAA. While plunging from a June peak of $5.01 per gallon, regular unleaded is still 66 cents (20.8%) higher than a year ago ahead of the busy Labor Day travel weekend. “Gas prices are now $1.20 per gallon lower than mid-June with Americans spending $450 million less on gasoline every day as a result,” said Patrick De Haan, head of petroleum analysis at GasBuddy. Front-month crude oil futures are trading below $88 per barrel and near the lowest levels since January that were posted in mid-August. Implied gasoline demand released by the U.S. Energy Information Administration on Wednesday was 6% below last year.
U.S., allies planning to limit the price of Russian oil... Western nations will set out a plan Friday to reduce Russian energy revenues without increasing global oil prices.
Fighting not impacting Ukraine’s Black Sea grain export corridor... The Black Sea corridor to export Ukrainian grain is working as normal despite Russia’s attacks and Kyiv’s counter-offensive in southern areas of the country, Ukraine’s southern military command said on Thursday. “The work of the grain corridors is working according to the previously agreed plan,” southern command spokesperson Natalia Humeniuk said.
Ukraine’s 2023 wheat crop expected to sharply decline... Ukraine’s 2023 wheat seedings area may fall by 30% to 40% due to lack of funds and production is unlikely to exceed 15 MMT, a deputy chair of the Ukrainian Agrarian Council said on Thursday. Besides lower planted acreage, fertilizer use could be decreased, which would likely limit yields. The country will harvest around 19 MMT of wheat this year after a record crop of 32.2 MMT in 2021.
Kazakhstan scraps restrictions on wheat, flour exports... Kazakhstan will lift restrictions on wheat and flour exports from Sept. 10, the government said on Thursday. The country introduced wheat export limits in May to keep the domestic market stocked and cool inflation linked to rising global food prices, but it expects a strong crop this year. The country’s cabinet announced it was introducing quotas on livestock exports, though it didn’t give details.
More contraction in China’s factory sector... China’s Caixin/Markit manufacturing purchasing managers index (PMI) declined to 49.5 in August, signaling the first contraction in smaller, privately owned factories since May. The latest reading reflected the impact of widespread Covid lockdowns and electricity shortages. On Wednesday, China’s official manufacturing PMI showed larger, state-owned factories contracted for a second straight month in August.
China to publish detailed economic policy measures soon... Beijing will publish detailed steps for newly announced economic policy measures in early September, suggesting an urgency for policymakers to revive the country’s sluggish economy. The government will lay out detailed plans to implement the 19 new policies it announced last week to support growth as recent factory activity surveys pointed to a further loss in momentum in the world’s second-largest economy in August. China will guide commercial banks to provide medium- and long-term loans to key projects and equipment upgrading, state media quoted the cabinet as saying on Wednesday, after a meeting chaired by Premier Li Keqiang. To prop up the weak property market, China will also support rigid housing demand, state media reported.
China wants some sort of rebuke of Pelosi before talking on climate... The Chinese move comes in retribution for House Speaker Nancy Pelosi’s (D-Calif.) visit to Taiwan in August before it reengages in climate talks. “The U.S. side should dispel the negative influence of Pelosi scuttling to Taiwan, this is an indispensable condition of China/U.S. climate change cooperation,” China’s foreign ministry said in a statement to Reuters. China was reacting to Climate Envoy John Kerry’s remarks that he hoped talks would resume before the November COP27 climate summit in Sharm el-Sheikh. In January, Chinese leader Xi Jinping said bluntly he wouldn’t allow the goal of reducing carbon emissions to disturb the economy and that the country must “overcome the notion of rapid success” on climate change.
U.N. report finds ‘serious human rights violations’ in Xinjiang... The United Nations Human Rights Office of the High Commissioner released a report detailing “crimes against humanity” in Xinjiang against Uyghurs and other ethnic minorities and called for “urgent attention” from the UN, the world community and China itself to address them. China denounced the long-delayed report. In a sternly worded protest the UN posted with its report, China’s diplomatic mission in Geneva said it firmly opposed the release of the UN assessment, which it said ignores human rights achievements made in Xinjiang and the damage caused by terrorism and extremism to the population.
Slow developing cash cattle market... Cash cattle trade so far this week has been a trickle. It appears, as we expected, packers slow played cash negotiations as they awaited fresh contract supplies for September to become available today. While the prices recorded so far have been a little firmer than last week, they weren’t enough for a good test and we still expect the cash market will soften.
Cash hog fundamentals continue to weaken... The national direct cash hog price fell $2.02 on Wednesday, with much of the pressure in the Iowa/Minnesota market, which was down $3.73. The CME lean hog index is down another $1.74 today (as of Aug. 30) to $107.62 – the lowest level since June 10. With packer margins solidly in the red, additional cash weakness is expected as slaughter supplies build seasonally into the end of the year.
Overnight demand news... Japan purchased 95,497 MT of milling wheat from its weekly tender, including 67,967 U.S. and 27,530 Canadian. South Korea purchased 63,000 MT of feed wheat that is expected to be sourced from Australia.
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
- 10:00 a.m. Highlights From the September 2022 Farm Income Forecast — 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