Good morning!
SRW futures lead overnight losses in grain, soy futures... Outside markets and global economic concerns weighed on grain and soy markets overnight. As of 6:30 a.m. CT, corn futures are trading 4 to 5 cents lower, soybeans are 6 to 8 cents lower, SRW wheat is 12 to 13 cents lower, HRW wheat is 6 to 19 cents lower and HRS wheat is mostly 7 to 9 cents lower. Front-month crude oil futures are around 80 cents lower and the U.S. dollar index is more than 550 points higher, scoring a fresh 20-year high.
OECD: World economy to slow more than anticipated... Global economic growth is expected to slow sharply to 2.2% next year, revised down from a forecast in June of 2.8%, and compared with a 3.0% expansion projected for 2022, says the Organization for Economic Cooperation and Development (OECD). The Paris-based policy forum said disruptions to energy supplies due to the war in Ukraine and the generalized tightening of monetary policy are weakening the economic outlook, as inflation remains high for longer than expected. Euro zone GDP is seen easing to 0.3% in 2023 (versus the June forecast of 1.6%) from 3.1% this year, with Germany’s Russian-gas dependent economy contracting 0.7% (versus the June forecast of 1.7%). The U.S. economy should grow 0.5% next year (versus the June forecast of 1.2%), compared to 1.5% in 2022. China’s GDP should advance 4.7% (versus the June forecast of 4.9%) after advancing 3.2% this year amid shutdowns related to the pandemic and property market weakness.
China’s soymeal prices hit record-high... Soymeal prices in China are at record highs as rising demand from farmers follows months of lackluster soybean imports. Chinese soymeal prices surged to an average of 5,352 yuan ($747.94) per metric ton on Friday. China’s soybean crushers have scaled back purchases of soybeans in recent months due to high global prices and poor demand from the livestock industry. Some plants, especially in northeast China, have halted operations due to a shortage of beans, said a Beijing-based soybean trader told Reuters. Soymeal stocks have fallen for 10 consecutive weeks to 493,000 MT in the week ended Sept. 17, well below the five-year average of 845,000 MT, according to Shanghai JC Intelligence Co Ltd.
China attempts to halt yuan slump... The People’s Bank of China (PBOC) said it would raise the foreign exchange risk reserves for financial institutions when purchasing FX through currency forwards to 20% from the current zero, starting on Sept. 28, to “stabilize FX market expectations and strengthen macro prudential management.” The move to resume FX risk reserves would effectively raise the cost of shorting the yuan. Spot yuan hardly budged on the announcement. PBOC again set firmer-than-expected official guidance for the 23rd straight trading session, at 7.0298 per dollar – the weakest level since July 7, 2020.
Wall Street Journal: Worst year for buying the dip since the 1930s... Instead of rebounding after a tumble, stocks have kept falling, burning investors who stepped in to try to buy shares on price declines. The S&P 500 has dropped 1.2% on average this year in the week after a one-day loss of at least 1%, the biggest such decline since 1931. In the days ahead, data on consumer spending will provide investors with clues on how high prices are shaping Americans’ behavior and the extent to which interest-rate increases are rippling through the economy.
The week ahead in Washington... Congress has until Friday to pass a continuing resolution (CR) to keep the government operating after the new fiscal year begins on Saturday, Oct. 1. Expect the usual up-and-down pattern on this topic, with lawmakers eventually avoiding a government shutdown. The economic focus this week will be on a myriad of speeches by Fed officials and Friday’s release of the personal consumption expenditures price index, which is expected to show prices are still rising at an uncomfortably rapid pace. Key agricultural reports will be Thursday’s Hogs & Pigs Report and Friday’s Quarterly Grain Stocks Report and Small Grains Summary.
Disaster aid doesn’t appear to be hitching a ride on CR... Despite President Joe Biden’s request for $6.5 billion in emergency funds ($1.5 billion for ag disasters) it doesn’t appear that will be part of the coming CR. Senate Appropriations Vice Chairman Richard Shelby (R-Ala.) said the request for emergency aid could likely wait until December negotiations on a full-year funding bill. That would likely include funds for Puerto Rico, which was hit by Hurricane Fiona, and funds to help those affected by flooding in Senate Minority Leader Mitch McConnell’s home state of Kentucky. Ag disaster funding is also expected.
U.S., UK seek UN human rights debate about China’s Xinjiang... Countries including the United States and the United Kingdom are calling for a debate at the United Nations Human Rights Council to discuss concerns about China’s treatment of Uyghurs and other Muslims in the far western region of Xinjiang. A group of countries had been considering action at the ongoing council meeting in Geneva following the release of a much-anticipated UN report published last month which stipulates that “serious human rights violations have been committed” in Xinjiang that may amount to crimes against humanity. The so-called “draft decision” reviewed by Reuters seeks a debate during the council’s next session that begins in February.
Glyphosate interim decision withdrawn... EPA withdrew an interim decision for glyphosate, the active ingredient in Roundup. EPA said it will complete its registration review in 2026. The decision followed a June opinion from the U.S. Court of Appeals for the 9th Circuit that vacated the human health portion of EPA’s interim decision after finding the cancer analysis was flawed. It also remanded, but did not vacate, the agency’s ecological risk assessment after finding that the interim decision should not have been issued without an “effects determination” detailing impacts on threatened and endangered species. EPA says withdrawing doesn’t mean it’s necessarily changing its position on the human-health assessment. However, the agency said it intends to “revisit and better explain” its evaluation of glyphosate’s potential carcinogenic effects on people. “It’s important for farmers to know that label restrictions for glyphosate are not changing right now,” said Laura Campbell, senior conservation and regulatory relations specialist for Michigan Farm Bureau. “We’ll be watching this closely and make sure that the EPA is hearing from stakeholders in agriculture about the safety of glyphosate, the protective measures we use for the environment and the devastating impacts that further restrictions would have.”
Is the U.S. actually running out of land to build homes?... The U.S., despite being a country of wide open spaces, is short on land. Or at least land where people can live, says a Wall Street Journal reports. Reasons: Land-use restrictions and a lack of public investment in roads, rail and other infrastructure have made it harder than ever for developers to find sites near big population centers to build homes. In the Sunbelt, the average price of vacant land per acre more than doubled in the past two years through the second quarter, according to Land.com, a land-listing website owned by real-estate firm CoStar Group. The lack of supply and the strong demand mean land prices will likely continue to rise in the long term. The story relates how this is putting more focus on the move to buy farmland for other purposes.
Cattle on Feed Report mostly neutral... USDA’s Cattle on Feed Report showed the Sept. 1 feedlot inventory up 0.4%, with August placements also 0.4% higher than year-ago, while marketings climbed 6.4%. The data won’t likely have much impact on prices, though there could be some bull spreading (nearby contracts firmer and deferred futures lower) in live cattle futures with both marketings and placements near the top end of the pre-report range of estimates.
Cash hog fundamentals weaken... Lean hog futures finished on their weekly lows last Friday amid pressure from technical selling and weakening cash fundamentals. The national direct cash hog price fell $7.69 on Friday, while the CME lean hog index is down 42 cents today (as of Sept. 22). October lean hog futures finished Friday nearly $5 below the cash index, suggesting traders expect more near-term pressure on the cash hog market.
Weekend demand news... South Korea purchased 135,000 MT of corn from unspecified origins. Taiwan tendered to buy 51,800 MT of U.S. milling wheat. The UN World Food Program tendered to buy 100,000 MT of milling wheat to be donated to poorer countries.
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. Export Inspections — AMS
- 2:00 p.m. Peanut Stocks and Processing — NASS
- 3:00 p.m. Crop Progress — NASS