Good morning!
Grains lower overnight... Selling pressure built in the grain markets overnight, with soybeans leading losses early this morning. As of 6:30 a.m. CT, corn futures are trading 2 cents lower, soybeans are 8 to 9 cents lower, winter wheat markets are 1 to 3 cents lower and spring wheat is 5 to 6 cents lower. The U.S. dollar index is modestly firmer and front-month crude oil futures are about 90 cents lower.
Intensity of Helene building, ag damage likely... Tropical Storm Helene produced heavy rain in the northeast Yucatan Peninsula early this morning. The storm will become a Category 3 hurricane in the next 24 to 30 hours and landfall is expected Thursday night over the western coast of Apalachee Bay, Florida. The storm will remain intense as it passes through northern Florida and Georgia, with serious agricultural damage expected. World Weather Inc. says, “Cotton in southwest Georgia is expected to be severely damaged with some complete losses possible. Soybeans and peanuts may also be impacted with crops in low-lying areas most impacted.” Remnant rain from Helene is expected to reach into parts of the Ohio River Basin as it merges with an upper level low pressure center over the Delta and Tennessee River Basin area.
Argentine grain, soy exports could hit four-year high... Argentina’s grain and soybean production could reach 143 MMT in the current growing season under normal weather conditions, according to the Rosario Grain Exchange. If conditions are drier, production could fall to 128.8 MMT. Given normal weather, the exchange says grain and soy exports in 2024-25 could total 101.5 MMT, the highest since 2020-21. It said soil moisture conditions are adequate in Argentina’s agricultural core, but western and northern areas are in urgent need of rainfall.
Strike looms at East and Gulf Coast ports as labor contract expiration approaches... The labor contract for 45,000 members of the International Longshoremen’s Association (ILA) nears expiration on Sept. 30, with no deal in sight. The Biden administration is monitoring the situation but has not directly intervened. A strike could significantly disrupt U.S. supply chains, as the affected ports handle about 43% of U.S. imports. Estimates suggest that even a one-week strike could take until mid-November to recover, while a two-week strike might extend port backlogs into 2025. The House Committee on Transportation and Infrastructure has written a letter to President Biden, urging the administration to aid in negotiations and find a resolution to the contract disputes. They’ve asked the president to “utilize every authority at its disposal” to ensure the continued flow of goods.
China cuts one-year policy rate by most ever... The People’s Bank of China (PBOC) cut the rate on 300 billion yuan ($42.66 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 30 basis points 2.00%, as signaled on Tuesday. The 30-basis-point cut was the biggest since the bank began using the monetary tool to guide market interest rates in 2016. This is part of China’s most comprehensive economic stimulus measures since 2015 to revive the economy and restore market confidence amid ongoing economic headwinds. PBOC also withdrew a net 291 billion yuan, the largest liquidity drainage since December 2021, as it shifts toward a short-term policy tool.
OECD sees global growth stabilizing at 3.2%... Global economic growth is in the process of stabilizing as the drag from central bank rate hikes fades and falling inflation boosts households’ incomes, the Organization for Economic Cooperation and Development (OECD) said. It now forecasts the world economy will grow 3.2% this year, up 0.1 point from its prior outlook. OECD kept its 2025 global GDP forecast at 3.2%. U.S. growth is now projected to slow from 2.6% this year to 1.6% in 2025 though interest rate cuts could help cushion the slowdown, OECD said, trimming its 2025 forecast from 1.8% in May. The Chinese economy is seen slowing from 4.9% in 2024 to 4.5% next year as government stimulus spending is offset by flagging consumer demand and the property sector slump. OECD projects the euro zone economy will nearly double from 0.7% growth this year to 1.3% in 2025.
CFTC finalizes guidance on carbon credits for climate-smart agriculture... The Commodity Futures Trading Commission (CFTC) has approved final guidance for listing voluntary carbon credit (VCC) derivative contracts, a crucial step in promoting climate-smart agriculture efforts. This guidance aims to foster the development of carbon credit markets while ensuring transparency and market integrity. The guidance sets clear expectations and requirements for designated contract markets (DCMs) trading or listing voluntary carbon credits. The guidance supports efforts like USDA’s $3.1 billion Partnerships for Climate Smart Commodities (PCSC) program. This initiative aims to help farmers and ranchers implement emissions-reducing practices and generate additional revenue from carbon credits. Click here for more details.
Mexico takes over avocado inspections for shipments to America... Mexico’s government announced it will now handle avocado inspections for shipments to the U.S., citing an agreement with USDA. This shift ends USDA’s oversight in Mexican orchards and packing facilities. The California Avocado Commission raised concerns over potential risks to the U.S. avocado industry, as the change could impact pest prevention measures. Previous U.S. inspections had been suspended due to threats and assaults on USDA inspectors in Mexico.
EPA finalizes national standards to protect U.S. waterways from vessel pollutants... EPA issued new national discharge standards to regulate pollutants and invasive species from 85,000 vessels in U.S. waters. The rules aim to protect waterways by addressing harmful discharges from large vessels, while reducing the spread of invasive species like zebra mussels. The rule introduces a new federal requirement for future “Lakers” (large vessels operating in the Great Lakes) to operate ballast water management systems, helping to reduce the spread of invasive species in the Great Lakes.
Packers planning small cattle slaughter... With margins back in the red, packers have slowed throughput and are expected to slaughter less than 600,000 head of cattle this week, which would be the smallest for the week since 2015. Reduced kills have helped Choice beef stabilize after briefly dipping below $300.00 last week, though that may not be enough to get packers to actively bid for cattle as their accumulated inventory is likely sufficient given the reduced slaughter runs.
Cash hog fundamentals inch lower... The CME lean hog index is down 8 cents to $84.21 as of Sept. 23, marking a new low on the seasonal decline. The pork cutout slipped 18 cents to $93.96 on Tuesday as all cuts except loins and hams weakened, though that’s still $1.05 above the mid-September low.
Overnight demand news... Taiwan purchased 65,000 MT of corn expected to be sourced from Brazil. Thailand bought 65,000 MT of feed wheat expected to be sourced from the Black Sea region or Australia. Indonesia purchased about 450,000 MT of rice from Myanmar, Vietnam and Thailand. Algeria tendered to buy up to 240,000 MT of corn from Brazil or Argentina. Jordan tendered to buy up to 120,000 MT of optional origin milling wheat.
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 Price Outlook — ERS
· 9:30 a.m. Weekly Ethanol Production — EIA
· 2:00 p.m. Broiler Hatchery — NASS
· 2:00 p.m. Peanut Stocks and Processing — NASS
· 2:00 p.m. Poultry Slaughter — NASS