Good morning!
Grains firmer to start the week... Corn, soybeans and wheat traded solidly higher overnight, led by double-digit gains in the soybean market. As of 6:30 a.m. CT, corn futures are trading 4 to 5 cents higher, soybeans are 11 to 12 cents higher and wheat futures are 7 to 10 cents higher. The U.S. dollar index is more than 200 points higher and front-month crude oil futures are modestly firmer this morning.
Northern states remain dry, wetter pattern for southern areas... The Northern and west-central Plains and upper Midwest will be dry this week. The Southern Plains, lower Midwest, Delta and Southeast will trend wetter than normal this week. Temperatures will be close to normal in the Southern Plains and Delta, while temps will trend cooler than normal in other areas.
Potential dockworker strike could disrupt us supply chains ahead of election... A possible strike by 45,000 dockworkers at major ports along the U.S. East and Gulf coasts threatens to cause significant supply-chain disruptions just weeks before the election, Bloomberg reports. Labor talks have stalled, with workers prepared to strike starting Oct. 1. A weeklong strike could halt the flow of goods such as auto parts, fresh meat and fruit, potentially costing the U.S. a $4.5 billion to $7.5 billion hit, according to Grace Zwemmer at Oxford Economics. Zwemmer expects that the drag would be made up once the strike is resolved and ports process any backlogs.
The week ahead in Washington... House Republicans introduced a 49-page bill to extend federal funding for 12 weeks, aiming to prevent a partial government shutdown. The stopgap measure, which would continue current funding levels through Dec. 20, is expected to receive strong bipartisan support in both chambers of Congress. The House will consider the bill this week, with the Senate expected to act shortly after. House Speaker Mike Johnson (R-La.) plans to bring a rule for consideration to the floor by Wednesday. Congress must act by the end of September to avoid a shutdown. A flurry of Federal Reserve officials speak this week, which could add perspective on last week’s 50-basis-point cut to interest rates. Key economic data this week will be Friday’s PCE price index data, the Fed’s preferred inflation gauge. Key agricultural reports include Wednesday’s USDA update on food price outlook and Thursday’s Hogs & Pigs and Cold Storage Reports.
New farm bill saga continues, but many farmers are focusing on other things... The House Ag Committee on May 23 passed its farm bill. At the time, Ag Chairman Glenn “GT” Thompson (R-Pa.) said he would urge House GOP leadership to hold a vote in September. Still nothing on the House agenda regarding a new farm bill. Senate Ag Chair Debbie Stabenow (D-Mich.) has still not released official text of her version, and thus the Congressional Budget Office cannot score it, at least officially. It’s the equivalent of a basement approach in writing a new farm bill. Stabenow now says rather than pushing ad hoc disaster/financial aid for the ag sector, it’s better to push for a new farm bill. While portions of the current farm bill expire on Sept. 30, lawmakers have until Dec. 31 before funding for farm and nutrition programs runs out. House Ag ranking member David Scott (D-Ga.) confirmed that leaders had agreed not to seek an extension in the continuing resolution, with the aim of passing a full five-year reauthorization. A growing number of farmers are not focusing on the farm bill but (1) Seeking guidance for the 45Z biofuel tax credit program and (2) Pushing ag disaster and financial aid yet this year. Farmers know that even if a new farm bill is completed this calendar year, the first of any Title I payments would come October 2026.
House rejects Biden’s EV mandate as eight Democrats join GOP in vote... The House voted 215-191 for a joint resolution to overturn the Biden administration’s EPA vehicle emissions rule, which effectively mandates electric vehicle (EV) adoption. Eight Democrats joined Republicans in opposing the rule, citing concerns about its impact on U.S. manufacturers and jobs, especially in states like Michigan. EPA’s standards require a significant increase in EV sales by 2032, raising concerns over production costs and market readiness. Despite opposition, three Democratic Senate candidates, including Michigan’s Elissa Slotkin, supported the mandate, fueling debate ahead of the elections. President Joe Biden has promised to veto the resolution, which is unlikely to override the veto.
PBOC injects cash, lowers 14-day reverse repo rate... The People’s Bank of China (PBOC) injected 234.6 billion yuan ($33.29 billion) into the banking system through open market operations, saying it wanted to “keep quarter-end liquidity adequate at a reasonable level in the banking system.” PBOC added 160.1 billion yuan via 7-day reverse repos at 1.70%, it said in a statement. It also injected 74.5 billion yuan via 14-day reverse repos at 1.85%, compared with 1.95% during the previous injection. Monday’s injection comes ahead of China’s National Day holidays starting Oct.1, and the cut in rates aligns the 14-day repo rate with the shorter 7-day repo rate which was cut in July. Authorities announced PBOC Governor Pan Gongsheng will hold a press conference tomorrow on financial support for economic development, alongside two other officials, fueling speculation China is preparing to ramp up economic stimulus.
Euro zone PMI contracts in September... The preliminary HCOB composite purchasing managers index (PMI) for the euro zone compiled by S&P Global fell to 48.9 this month from 51.0 in August. That’s the fourth consecutive monthly decline and the lowest reading since January. Manufacturing PMI fell to 44.8 while services PMI dropped to 50.5.
EU challenges China’s dairy product probe at WTO... The European Commission launched a challenge at the World Trade Organization (WTO) against China’s investigation into EU dairy products. China initiated its anti-subsidy investigation on Aug. 21, targeting EU liquid milk, cream with a fat content above 10% and various types of cheeses. The commission said it was confident EU dairy subsidy schemes are fully in line with international rules and not causing injury to China’s dairy sector. This is the first time the EU has taken such action at the start of an investigation, rather than wait for it to result in trade measures against the bloc. Proceedings at the WTO start with a mandatory period of 60 days for the parties to consult each other. The commission said it would ask the WTO to set up an adjudicating panel if the consultations did not lead to a satisfactory solution.
Neutral Cattle on Feed Report... USDA estimated there were 11.198 million head of cattle in large feedlots (1,000-plus head) as of Sept. 1, up 71,000 head (0.6%) from last year. August placements declined 1.4%, while marketings fell 3.6% from year-ago levels. All of the categories were close to the average pre-report estimates, so there should be limited market reaction.
Cash cattle optimism... Cash cattle traded as much as $2.00 higher late last week, though official data won’t be released until later this morning. The expected uptick in the average cash cattle price gives bulls optimism for higher cash prices again this week.
Uptick in cash hog index proves short-lived... The CME lean hog index is down 2 cents to $84.36 as of Sept. 19, following a one-day 16 cent uptick. October lean hog futures finished Friday at a $2.135 discount to today’s cash quote.
Weekend demand news... Algeria purchased an unspecified amount of corn expected to be sourced from Brazil or Argentina. Indian refiners cancelled 100,000 MT of palm oil purchases for delivery between October and December.
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. Weekly Export Inspections — AMS
· 11:00 a.m. Cotton Ginnings — NASS
· 2:00 p.m. Chickens and Eggs — NASS
· 3:00 p.m. Crop Progress — NASS