Good morning!
Grains face pressure overnight... Corn, soybeans and wheat briefly traded higher early in the overnight session but have weakened and are near their lows early this morning. As of 6:30 a.m. CT, corn futures are trading mostly 3 cents lower, soybeans are 4 to 6 cents lower, winter wheat markets are 8 to 9 cents lower and spring wheat is 5 to 6 cents lower. The U.S. dollar index and front-month crude oil futures are both modestly firmer this morning.
Weekly Export Sales Report out this morning... For the week ended Sept. 12, traders expect:
| 2023-24 expectations (in MT) | 2023-24 last week | 2024-25 expectations (in MT) | 2024-25 last week |
Corn | NA | NA | 550,000-1,400,000 | 666,458 |
Wheat | NA | NA | 300,000-650,000 | 474,875 |
Soybeans | NA | NA | 500,000-1,600,000 | 1,474,031 |
Soymeal | (50,000)-200,000 | (2,969) | 100,000-450,000 | 279,000 |
Soyoil | 0-10,000 | (523) | 0-10,000 | 1,730 |
Port strike wouldn’t significantly impact grain export facilities; bigger impact for livestock/meat... The majority of soybean and grain exports from the Gulf or East Coast would not be impacted by a potential dock workers’ strike amid negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX). Bulk grain export facilities typically operate with different labor arrangements, such as their own employees or different labor unions. However, the strike would impact exports such as soybeans, soymeal and other agricultural products exported via containers and indirectly affect grain producers through disruptions in the livestock industry. East and Gulf Coast ports accounted for 44% of U.S. waterborne pork exports and 29% of waterborne beef exports in the first half of this year. New York/New Jersey, Wilmington and Charleston were the largest East/Gulf ports for pork exports and Houston was the largest for beef.
Argentine grains ships load less cargo as river levels near record lows... Grain ships loaded with soybeans and corn at Argentina’s major inland river ports around Rosario are hauling less cargo as water levels drop to near record lows due to a major drought upstream in Brazil. The Parana River, which carries almost 80% of Argentina’s grains and oilseeds for export, is at the second lowest level for this time of year since 1970, behind only a major decline in 2021, data from the Rosario Grain Exchange showed. The head of the Chamber of Port and Maritime Activities (CAPyM) told Reuters ships are loading approximately 15% less cargo than normal, which is pushing up costs and transport times. The exchange said the low water levels looked unlikely to improve any time soon and this could mean dozens more ships than normal would be required for the remainder of the year to transport soybeans/soy products, corn and wheat.
Ukraine’s corn exports could be halved in 2024-25... Ukraine’s corn exportable surplus is likely to fall sharply in 2024-25 amid a plunge in production due to poor weather, agricultural producers union UAC said. UAC forecasts corn production at 21 MMT to 22 MMT, with 5 MMT of that total expected to be used domestically. That would leave 15 MMT to 17 MMT for export. In 2023-24, Ukraine exported around 30 MMT of corn. The latest forecasts from Ukraine’s ag ministry put corn production at 25 MMT and exports at up to 22 MMT, both well above UAC.
Four Russian grain regions declare state of emergency due to heavy rains... Russia’s vast Krasnoyarsk region declared a state of emergency on Thursday due to heavy rains killing winter crops during sprouting time, bringing the total number of Siberian grain-producing regions under emergency conditions to four. Earlier, a state of emergency was announced in the Tomsk, Novosibirsk and Kemerovo regions. Together, the four regions accounted for about 5% of last year’s grain production.
Brazil raises wheat import quota through year-end... Brazil’s foreign trade chamber raised the quota for wheat imports through the end of the year to avoid potential shortages. The announcement didn’t specify the amount of the quota increase, though the Brazilian Wheat Industry Association (Abitrigo) proposed in June to increase it by 500,000 MT, which would bring the total quota to 1.25 MMT.
India’s rice production to increase despite heavy rains... India’s rice production this year will be higher than last year despite heavy rains and flooding in some states, Agricultural Minister Shivraj Singh Chouhan said, without providing a specific estimate. India’s monsoon season from June through September produced rainfall 7.6% above average, causing concerns about yield loss for rice in some areas. Chouhan said flooding is not widespread, impacting only a few states.
China ends tariff exemptions on some Taiwan ag imports... The Chinese Customs Tariff Commission will scrap its tariff exemption on 34 Taiwanese agricultural imports, including fruit, vegetables and fishery products, starting from Sept. 25. The monetary impact of China’s move appears to be small, Bloomberg reported, but it will ramp up pressure on the independent democracy.
China’s economic slowdown predicted to deepen, experts warn... China’s economic growth is expected to deteriorate further, with leading indicators signaling a significant downturn, according to economists Freya Beamish and Rory Green at TS Lombard. They highlight issues such as declining money supply, rising labor costs and increasing numbers of loss-making companies. Growth is projected to fall well below the 2024 target of 5%, possibly reaching as low as 1-2%, though Chinese authorities are unlikely to officially report such low figures. Nominal GDP is also expected to contract. The Fed’s decision to cut U.S. interest rates 50 basis points on Wednesday clears the way for China to increase its stimulus measures, which may help ease some of its economic slowdown.
House rejects Speaker’s temporary spending plan... The House voted down a six-month stopgap funding bill, mostly split mostly along party lines — 14 Republicans voted against the bill, and two GOP members voted “present,” effectively defeating the measure. Three Democrats voted yes. The bill, proposed by House Speaker Mike Johnson (R-La.), included a controversial provision requiring proof of citizenship to register to vote, which Democrats opposed. Johnson, who said after the vote he was “disappointed,” will likely pursue a Plan B to avoid a partial shutdown. Lawmakers must pass a new funding measure by Sept. 30 to prevent a shutdown. The Senate may propose a clean continuing resolution without riders. Democrats, and some Republicans, are pushing for a shorter extension into December. A temporary fix would allow the current Congress to hammer out a final bill after the Nov. 5 elections and get it to President Joe Biden’s desk for his signature.
BOE pauses after August rate cut... The Bank of England (BOE) maintained the benchmark interest rate at 5%, following a 25-basis point cut in August, the first reduction in over four years. One member advocated for an additional cut to 4.75%. Meanwhile, headline GDP growth is expected to return to its underlying pace of around 0.3% per quarter in the second half of the year. Additionally, BOE unanimously agreed to reduce its stock of UK government bonds by £100 billion over the next 12 months, bringing the total to £558 billion.
Extended cash cattle negotiations likely... Cash cattle trade so far this week has been too light for a true market test, though the initial activity hints at steady/firmer prices. But after recently seeing margins move into the black, packers may be reluctant to raise prices again this week as wholesale prices fell $2.53 for Choice and $2.47 for Select on Wednesday. Without an uptick in prices, feedlots may hold out until after Friday afternoon’s Cattle on Feed Report to sell this week’s supplies.
Cash hog index stabilizes... The CME lean hog index held at $84.22 as of Sept. 17, ending the string of seasonal price pressure. After additional gains in October lean hog futures on Wednesday, the discount in the front-month contract is down to $2.17. Traders will likely want to see an uptick in the cash index before tightening that much further.
Overnight demand news... Japan purchased 123,012 MT of milling wheat via its weekly tender, including 66,397 MT U.S., 31,795 MT Canadian and 24,820 MT Australian.
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
· 7:30 a.m. Weekly Export Sales — FAS
· 8:00 a.m. Food Expenditure Series — ERS
· 2:00 p.m. Livestock Slaughter — NASS