Good morning!
Soybeans lead overnight price strength... Soybean futures posted double-digit gains overnight, while corn and wheat traded modestly higher. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are 12 to 13 cents higher, winter wheat futures are 2 to 3 cents higher and spring wheat is unchanged to fractionally higher. The U.S. dollar index is modestly weaker and front-month crude oil futures are about $1.00 lower.
Fed pivot starts today; focus on next steps... The Fed will start cutting interest rates at the conclusion of its two-day policy meeting this afternoon, pivoting to easing monetary policy. The main question is whether the Fed starts with a 25-basis-point cut or opts for a bigger reduction – and the path it intends to take from there. Markets will pay close attention to the so-called “dot-plot” economic projections and Chair Jerome Powell’s post-meeting press conference.
France slashes wheat export forecast... France’s ag ministry slashed the country’s 2024-25 soft wheat export forecast outside the EU by 3.5 MMT to 4 MMT, which would be 61% below last year due to the smallest crop since 1986. The export forecast within the bloc was cut 500,000 MT to 6 MMT, now expected to be 4.5% below 2023-24.
Ukraine’s exportable grain surplus plunges nearly 15%... Ukraine’s exportable grain surplus is seen at 43.2 MMT for 2024-25, Ukrainian state news agency Ukrinform quoted the ag minister as saying. That would be down 7.5 MMT (14.8%) from 2023-24. Exporters have already shipped nearly 9 MMT of grains since the beginning of July, including almost 5 MMT of wheat, 2.53 MMT of corn and 1.17 MMT of barley. The ministry said an additional 11.5 MMT of wheat, 19.2 MMT of corn and 1.5 MMT of barley could be exported through June 2025.
SovEcon cuts Russian grain crop forecast... Black Sea consulting firm SovEcon cut its 2024 Russian grain production forecast by 4 MMT to 124.4 MMT. As we reported yesterday, SovEcon raised its Russian wheat crop forecast by 400,000 MT to 82.9 MMT. SovEcon expects Russia to export 48.1 MMT of wheat in 2024-25, down from its estimate of 52.4 MMT last year. The firm expects Moscow to impose wheat export quotas for the second half of the year, though it doesn’t know how restrictive it will be.
Calls for India to release wheat reserves ahead of demand peak... India’s reductions on the amount of wheat traders and processors can hold are not enough to ease domestic wheat prices during festival season, and the government needs to release stocks to augment supplies, industry officials said. The market is awaiting the government to begin auctioning wheat to private firms as demand is set to rise next month due to festivals amid limited supplies. India initially planned to sell wheat from its state reserves to bulk consumers from July, but it was delayed and there has been no update.
India to consider easing curbs on non-basmati rice exports... India would consider easing curbs on non-basmati rice exports, the country’s food secretary said on Wednesday, as rice inventories have surged. The country imposed various curbs on rice exports in 2023 and continued them in 2024 in an effort to keep local prices in check ahead of the general elections held in April-June. Last week, the government removed a floor price for basmati rice exports to assist farmers and boost shipments. India is also considering revising ethanol rates and the minimum sale price of sugar.
China expands food security focus beyond staple grains... China’s State Council released guidelines broadening the country’s food security framework, following President Xi Jinping’s push to reflect the modern Chinese diet. The new approach includes expanding orchards for fruits and nuts, boosting domestic forage production and developing sustainable aquaculture. Innovation in agricultural biotechnology and novel protein sources for livestock feeds is also emphasized. Despite these advancements, the guidelines still prioritize increasing staple crop production by 50 MMT by 2030, signaling that traditional crops will continue to dominate local priorities.
China: EU’s EV tariffs will damage Germany, China... China’s commerce minister said the European Union’s imposition of tariffs on electric vehicles (EV) will “seriously interfere” with trade and investment cooperation and hurt both China and Germany. In talks on Tuesday with German Vice Chancellor and Economic Minister Robert Habeck, Chinese Commerce Minister Wang Wentao said he hoped to reach a solution in line with World Trade Organization rules as soon as possible and avoid the escalation of China/EU economic and trade frictions. Habeck said that Germany supports free trade, welcomes Chinese auto and parts companies to invest in Europe, and will urge the European Commission to find an appropriate solution with Beijing and make every effort to avoid trade conflicts.
House to vote on CR with voting provision, likely to fail... The House is scheduled to vote today on a continuing resolution (CR) to fund the government for six months, including a provision requiring proof of citizenship to vote (SAFE Act). Speaker Mike Johnson (R-La.) pulled the bill last week and is struggling to gain enough support. He will not get it. With no clear backup plan, the measure is expected to fail due to opposition over its length and voting requirements. If it fails, Johnson could propose a clean CR running through mid-December, but a vote on that would not likely occur until early next week. Meanwhile, the Senate is working on its own CR without the voting provision, set to run until Dec. 13.
Farm bill extension likely absent from government funding bill... The House’s proposed six-month CR to prevent a government shutdown does not include an extension of the 2018 Farm Bill, and the Senate’s version is also expected to omit it in its coming clean CR. Lawmakers aim to keep pressure on for a deal during a post-election lame-duck session. While many provisions expire this month, key components are authorized through year-end. Challenges remain, including funding issues and updates to farmer safety net programs, with ad hoc efforts underway to provide aid to farmers amid falling crop prices and high costs.
EU consumer inflation falls to more than three-year low... Consumer inflation in the euro zone eased to 2.2% above year-ago in August, the lowest since July 2021. Core inflation, minus food, energy, alcohol and tobacco prices, eased to 2.8% from 2.9% in July.
UK consumer inflation stable but core prices rise in August... Annual consumer inflation in the UK held at 2.2% in August. Core inflation, minus food, energy and tobacco costs, increased to 3.6%, the highest in four months.
China’s pork imports jump in August but still below year-ago... China imported 200,000 MT of pork in August, up sharply from only 90,000 MT in July but still 2.3% below year-ago. Through the first eight months of this year, China imported 1.5 MMT of pork, down 23.1% from the same period last year.
Cattle futures narrow discount to cash market... October live cattle futures narrowed the discount to last week’s average cash cattle price to $3.31 on Tuesday. Cash cattle firmed last week, breaking a six-week string of declines, and are expected to be steady/firmer this week as packer margins remain in the black.
Hog futures firm despite falling cash... October lean hog futures posted strong gains Tuesday, strengthening for a second straight day, despite seasonally weakening cash hog prices. The lead contract finished Tuesday at a $2.44 discount to today’s CME lean hog index quote of $84.22 as of Sept. 16.
Overnight demand news... Algeria tendered to buy up to 80,000 MT of corn to be sourced from Argentina or Brazil. Tunisia tendered to buy 125,000 MT of soft milling wheat and 100,000 MT of durum – all optional origin.
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
· 1:00 p.m. FOMC Meeting Concludes — Fed
· 2:00 p.m. Broiler Hatchery — NASS
· 2:00 p.m. Livestock, Dairy, and Poultry Outlook: September 2024 — ERS
· 2:00 p.m. Sugar and Sweeteners Outlook: September 2024 — ERS
· 2:00 p.m. Hop Stocks — NASS