Good morning!
Followthrough selling in grains overnight... Corn, soybean and wheat futures faced followthrough selling to Monday’s losses during overnight trade. As of 6:30 a.m. CT, corn futures are trading mostly 3 cents lower, soybeans are 4 to 5 cents lower, the winter wheat markets are 6 to 10 cents lower and spring wheat is 5 to 6 cents lower. Front-month crude oil futures are around 90 cents higher and the U.S. dollar index is about 275 points lower.
Cordonnier leaves yield estimates unchanged... Crop consultant Dr. Michael Cordonnier left his corn and soybean yield estimates at 173 bu. and 49.5 bu. per acre, respectively, and adopted USDA’s harvested acreage figures. He now estimates production at 15.06 billion bu. for corn and 4.09 billion bu. for soybeans. Cordonnier has a neutral to lower bias toward both crops.
Corn, soybean CCI ratings continue late-season deterioration... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 3.2 points to 332.9, which was 4.0 points (1.2%) below year-ago at this point. The soybean crop declined 2.1 points to 331.3, down 7.6 points (2.3%) from last year in mid-September. Illinois accounted for the bulk of the decline for both crops over the past week. Click here for details.
Crop progress report highlights… Following are highlights from USDA’s crop progress and condition update as of Sept. 17.
- Corn: 90% dented (87% average); 54% mature (44% average); 9% harvested (7% average); 51% good/excellent (52% last week).
- Soybeans: 54% dropping leaves (43% average); 5% harvested (4% average); 52% good/excellent (52% last week).
- Cotton: 55% bolls opening (52% average); 9% harvested (10% average); 29% good/excellent (29% last week).
- Spring wheat: 93% harvested (93% average).
- Winter wheat: 15% planted (16% average).
First grain cargo leaves Ukrainian port since grain deal ended... A cargo vessel carrying grain has left the Ukrainian Black Sea port of Chornomorsk for the first time since a grain deal expired in mid-July. “Resilient Africa” was loaded with 3,000 MT of wheat. “Aroyat” is still moored in Chornomorsk and is being loaded with wheat for Egypt.
Republican vs. Republican in House battle over CR... The House Rules Committee passed the rule Monday night for the GOP-drafted continuing resolution (CR), which was designed to keep federal agencies open until Nov. 1 while cutting spending and implementing harsh border security measures. The House will vote on this rule today; there is doubt any rule can pass. Many believe there will be at least a brief shutdown starting Oct. 1, though it’s not clear what the exit strategy would be or what would possibly convince House Speaker Kevin McCarthy’s (R-Calif.) detractors to shelve their objections and allow government funding to resume. Meanwhile, Rep. Jodey Arrington (R-Texas) is going to review his proposed FY 2024 budget resolution. That measure will be voted on in the Budget Committee on Wednesday.
Senate could hold cloture vote on three-bill appropriations package... Senate Democrats moved to overcome a procedural blockade of a three-bill fiscal 2024 appropriations package Monday as a small group of conservatives who want to consider bills one at a time continued to hold up the process. Senate Appropriations Chair Patty Murray (D-Wash.), moved to suspend a Senate rule and filed cloture on that motion to limit debate, paving the way for a potential cloture vote on Wednesday. The $279 billion package combines the Senate Agriculture, Military Construction-VA and Transportation-HUD measures. The vote for cloture will require 60 affirmative votes, while the vote on the motion to suspend Rule XVI will require a two-thirds majority. Rule XVI requires amendments to appropriations bills to be germane. Adding the Agriculture and Transportation-HUD bills to the House-passed Military Construction-VA measure would not be considered germane under the rule, thereby requiring the rule to be suspended. The last time the Senate voted on a motion to suspend Rule XVI was 20 years ago, on a fiscal 2004 foreign aid appropriations bill.
OECD: Global economic slowdown amid interest rate increases, China’s weak rebound... The Organization for Economic Cooperation and Development (OECD) forecasts a global economic slowdown as rising interest rates dampen economic activity and China’s post-pandemic recovery falls short of expectations. According to the latest OECD forecasts, global economic growth is expected to ease to 2.7% in 2024, following an already lackluster expansion of 3% this year. This projection, except for the pandemic-hit year of 2020, would represent the weakest annual growth since the global financial crisis. OECD cautioned the risks to its prediction lean toward the downside and highlighted China’s economic struggles as a “key risk” to global output. OECD expects the U.S. economy to grow 2.2% this year and slow to 1.3% in 2024, up 0.6% and 0.3%, respectively, from its prior forecasts. It now expects China’s economy to expand 5.1% this year and 4.6% next year, down 0.3% and 0.5%, respectively, from its prior outlook. The euro zone is forecast to grow 0.6% this year and 1.1% next year, down 0.3% and 0.4%, respectively, from its previous outlook.
Chinese developers reach debt restructuring deals... Chinese developers Sunac China Holdings Ltd. and Country Garden brought some relief to China’s property sector after forging debt deals with creditors. Creditors of Sunac approved its $9 billion offshore debt restructuring plan. Country Garden won approval from creditors to extend repayment on another onshore bond, the last of eight bonds it has been seeking extensions for. Even amid the debt restructuring and measures by Beijing to prop up the property sector, house prices have continued to decline, leaving a cloud of uncertainty.
Euro zone inflation revised down a little... Euro zone consumer inflation in August was slightly lower than initially estimated. Headline inflation rose 5.2% annually in August, down from the flash estimate of 5.3%. Core inflation, which excludes food and energy prices, rose 6.2%, in line with the initial estimate.
Wholesale beef market remains rather sluggish... The average cash cattle price firmed $1.76 to $184.04 last week, while front-month cattle futures scored an all-time high on the continuation chart. While the cash market and futures are supported by bullish supply fundamentals, the wholesale market remains rather stagnant, with Choice down 39 cents on Monday and Select 29 cents higher. Sluggish retailer demand could somewhat limit a fall rally in cash and futures.
Pork cutout strengthens... Wholesale pork prices were unable to hold all of their impressive gains from Monday morning but still finished $2.67 higher on the day as all cuts except butts firmed. That pushed the cutout value back above $100.00, though that’s a level packers have struggled to sustain.
Overnight demand news... Taiwan purchased around 65,000 MT of corn that is expected to be sourced from Brazil. South Korea purchased 136,000 MT of corn that is expected to be sourced from South America or South Africa. Japan is seeking 89,940 MT of milling wheat in its weekly tender.
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. Food Expenditure Series — ERS
- 2:00 p.m. Stone Fruit: World Markets and Trade — FAS