Good morning!
Grains mostly firmer overnight... Soybeans and wheat posted mild gains during the overnight session, while corn held near unchanged. As of 6:30 a.m. CT, corn futures are trading unchanged in most contracts, soybeans are 2 cents higher and wheat futures are 3 to 6 cents higher. The U.S. dollar index is almost 250 points higher and front-month crude oil futures are around 30 cents lower.
Brazil continues to dominate soybean exports to China... Of the record 12.14 MMT of soybeans China imported in August, 10.24 MMT (84.3%) originated from Brazil. U.S. soybeans accounted for 202,383 MT (1.7%) of China’s August imports. Through the first eight months of this year, China imported 53.8 MMT of soybeans from Brazil (up 217% from the same period last year) and 12.8 MMT from the U.S. (down 73%).
Coceral slashes EU wheat production forecast... Grain trade association Coceral slashed its estimate for this year’s soft wheat production in the European Union and Britain to 126 MMT, down 8.5 MMT from its June forecast and 10% below year-ago. It also lowered its outlook for 2024 barley production in the EU and Britain to 57.6 MMT from 59.9 MMT previously and cut its corn production forecast to 60.3 MMT from 64.8 MMT.
Dry weather lowers outlook for Western Australia’s wheat crop... A lack of spring rain across Western Australia is expected to crimp wheat production in the nation’s top growing state, the Grain Industry Association of Western Australia said in its monthly report. The association forecast Western Australia wheat production at 9.3 MMT, down 7% from last month. Without further rain in the next two weeks, production potential will decline further, it noted.
Ukraine cuts wheat plantings... Ukraine’s ag ministry lowered its winter wheat seedings forecast by 210,000 hectares to 4.48 million hectares. Record high temperatures and a lack of rain almost throughout the country in recent months have created unfavorable conditions for sowing winter crops. As of Sept. 19, farmers had seeded 360,300 hectares to winter grains, including 340,300 hectares of winter wheat.
Thai rice exports to top target this year, fall in 2025... Thailand’s rice exports could reach 8.5 MMT target this year, before falling to 6.5 MMT in 2025, the country’s rice exporters association said. The association had targeted 8.2 MMT of rice exports this year, but nearly 70% of that total was already shipped during the first seven months.
Delay in 45Z credit rules stalls renewable fuel investments... The delayed finalization of the 45Z Clean Fuel Production Credit is hindering renewable fuel investments, leading to concerns over plant shutdowns, delayed climate-friendly projects, and hesitation in customer purchases. Industry leaders are seeking clarity as companies hold back on major investments. Treasury spokesperson Michael Martinez indicated Treasury and IRS are working to implement all tax credits from the 2022 tax-and-climate law, but did not provide a specific timeline for the release of the rules. USDA Secretary Tom Vilsack recently predicted it would be finalized by the time the Biden administration leaves office in January 2025. The credit is to take effect Jan. 1. In the meantime, biofuel producers are exploring alternative credits and considering reduced operations for 2025 if guidance remains unclear. Lawmakers are pushing for quicker resolution to prevent further disruption.
Tariff math... Even if Donald Trump returns to office and rolls out a 10-20% tariff on all imports and higher levies still on Chinese imports, it won’t be enough to pay for his plans, economists say. A new Bloomberg Economics study finds that a 20% universal tariff and a 60% tax on Chinese imports would bring in $300 billion to $400 billion in revenues annually, up from the $83 billion duties collected in 2023. The Peterson Institute for International Economics separately puts likely revenues from a 10% tariff and higher China duties at around $225 billion. Neither estimate would be sufficient to match the as-much-as $6.9 trillion cost over a decade that the Penn Wharton Budget Model says Trump’s fiscal promises would add to the U.S. federal budget deficit.
China unexpectedly leaves lending rates unchanged... The People’s Bank of China (PBOC) kept its key lending rates unchanged this month. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, was maintained at 3.35%. The five-year rate, a reference for property mortgages, was held at 3.85%. PBOC delayed the medium-term lending facility (MLF) operation for the second time in two months, as it planned to let short-term rates play a bigger role in guiding markets. Markets anticipated PBOC would cut lending rates following the 50-basis-point reduction by the Fed earlier this week. Still, market watchers believe the Fed action paves the way for Beijing to roll out more stimulus measures soon.
China state banks buying dollars as yuan hits 16-month high... China’s major state-owned banks purchased dollars in the onshore spot foreign exchange market on Friday to prevent the yuan from appreciating too fast after it hit a 16-month high, two people with knowledge of the matter told Reuters. Rapid yuan gains could hurt China’s export competitiveness at a time when signs of slowdown weigh on the world’s second-largest economy, market watchers said.
Japan keeps rates unchanged... The Bank of Japan (BOJ) unanimously retained its key short-term interest rate at around 0.25%, keeping it at the highest level since 2008, as expected. BOJ Governor Kazuo Ueda said it could afford to spend time eyeing the fallout from global economic uncertainties, signaling it was in no rush to raise rates. Meanwhile, the annual consumer inflation rate rose to 3.0% in August, up from 2.8% in July and the highest since October 2023. Core consumer inflation, minus food and energy prices, rose to 2.8%, the highest since February.
Smaller cattle placements expected in Cattle on Feed Report... Analysts expect USDA’s Cattle on Feed Report this afternoon to show the large feedlot (1,000-plus head) inventory up 0.9% from year-ago at 11.194 million head. After a 5.8% jump in placements during July, the report is expected to show a 1.0% decline in the number of cattle moved into feedlots last month. Marketings are expected to decline 3.4% from August 2023.
Choice beef falls below $300... Wholesale beef prices continued their seasonal descent on Thursday as Choice fell $1.82 to $299.56 and Select dropped $1.49 to $286.26. That’s the first time Choice beef has been below the $300.00 mark since May 13.
Cash hog index rises... The CME lean hog index is up 16 cents to $84.38 as of Sept. 18, the first increase in two weeks. The discount October lean hog futures hold to the index shrunk to $2.13 on Thursday.
Overnight demand news... Taiwan tendered to buy up to 65,000 MT of corn to be sourced from the U.S., Brazil or South Africa.
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
· 2:00 p.m. Cattle on Feed — NASS
· 2:00 p.m. Milk Production — NASS
· 2:00 p.m. Peanut Prices — NASS
· 2:30 p.m. Commitments of Traders — CFTC