Good morning!
Followthrough buying in soybeans, wheat... Soybeans and wheat extended Wednesday’s gains during the overnight session, while corn struggled to find buyer interest. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are mostly a nickel higher and wheat futures are mostly 2 to 4 cents higher. The U.S. dollar index is modestly weaker and front-month crude oil futures are around $1.75 lower this morning.
Helene expected to make landfall this evening with devastating impacts to Southeast... Helene will make landfall this evening in the northern Apalachee Bay south of Tallahassee, Florida, as Category 3 hurricane, with potential to become a Category 4 storm. As it moves northward inland, Helene may experience the Fujiwara Effect, when two low pressure systems collide and rotate around each other and then merge. World Weather Inc. says the impact of Helene on the Southeast may be comparable to that of Hurricane Michael in early October 2018.
Weekly Export Sales Report out this morning... For the week ended Sept. 19, traders expect:
| 2023-24 expectations (in MT) | 2023-24 last week | 2024-25 expectations (in MT) | 2024-25 last week |
Corn | NA | NA | 600,000-1,300,000 | 847,350 |
Wheat | NA | NA | 200,000-600,000 | 246,327 |
Soybeans | NA | NA | 900,000-2,000,000 | 1,748,077 |
Soymeal | (50,000)-100,000 | (2,901) | 150,000-450,000 | 283,048 |
Soyoil | (4,000)-10,000 | 46,699 | 0-16,000 | 252 |
U.S. railroads halt grain shipments to Mexico amid growing backlog... BNSF Railway and Union Pacific Railroad have suspended grain shipments to Mexico due to Ferromex’s inability to handle rising demand. The embargoes, driven by Mexico’s rail network congestion, have caused delays at key Texas border crossings. Mexico, the largest export market for U.S. agricultural goods, relies heavily on rail for two-thirds of its grain imports. The Surface Transportation Board is monitoring the situation as stakeholders seek a resolution.
Cold temps nip Aussie wheat crop... Severe frosts have threatened wheat fields in Australia’s south and southeast, compounding concerns over dryness in western regions. Temperatures this month fell to negative 2C (28F) across almost 1.2 million hectares of wheat fields that were mostly located in New South Wales, according to crop forecaster Digital Agricultural Services. The area was initially expected to produce 3.2 MMT of wheat, but that could be slashed by between 10% and 60%, the company said. Crop quality was also likely to decrease. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimated the Aussie wheat crop at 31.8 MMT, though the combination of dryness in Western Australia and recent frost could trim output to less than 29 MMT, according to Digital Agricultural Services.
IKAR lowers Russian wheat production forecast... IKAR consultancy lowered its 2024 Russian wheat production forecast by 400,000 MT to 81.8 MMT. Its total grain production forecast was cut 500,000 MT to 124.5 MMT.
China sets 2025 TRQs for wheat, corn, rice and cotton imports... China set its import tariff rate quotas (TRQs) for 2025 at about 9.64 MMT for wheat, 7.2 MMT for corn, 5.32 MMT for rice and 894,000 MT for cotton. Those levels are unchanged from previous years. TRQs allow the designated quantity of imports at a reduced duty.
Congress passes stopgap spending bill, heads into recess early... Congress cleared a continuing resolution to avoid a partial government shutdown, sending lawmakers into recess two days ahead of schedule. The bill is mostly a clean extension of current spending levels to Dec. 20. It includes an extra $231 million for Secret Service protection accounts and frees up $20 billion for the Federal Emergency Management Agency (FEMA) for disaster relief starting Oct. 1. The stopgap measure allows for a pause to reassess fiscal year (FY) 2025 appropriations post-November elections. While some Republican leaders aim to delay final spending decisions, critical issues like additional disaster aid and Ukraine support remain unresolved.
China vows ‘necessary fiscal spending’ to hit economic growth target... Chinese leaders pledged to deploy “necessary fiscal spending” to meet this year’s economic growth target of roughly 5%, acknowledging “new situations and problems. That raises market expectations for fresh stimulus on top of measures announced this week. The remarks, which included guidance to the government to support household consumption and stabilize the troubled real estate market, came in an official readout of a monthly meeting of top Communist Party officials, the Politburo. The September meeting is not usually a forum for macroeconomic discussions, which suggests growing anxiety over slowing growth momentum. “New situations and problems” demand a sense of “responsibility and urgency,” state media reported, citing the Politburo meeting.
China weighs major capital injection into top banks... China is considering injecting up to 1 trillion yuan ($142 billion) of capital into its biggest state banks to increase their capacity to support the struggling economy, Bloomberg reported, citing people familiar with the matter. The funding will mainly come from the issuance of new special sovereign bonds, the people said. Reuters reported the issuance of special sovereign bonds could be doubled to 2 trillion yuan ($284 billion) via two equal tranches. Such moves would be the first time since the global financial crisis in 2008 that Beijing has injected capital into its big banks.
China targets Canadian tariffs with anti-discriminatory probe... China has launched an anti-discriminatory investigation against restrictive measures taken by Canada, including additional tariffs on Chinese electric vehicles (EVs), steel and aluminum products, its commerce ministry said. Canada joined the U.S. and EU in putting in place tariffs of 100% on Chinese EVs and 25% on Chinese aluminum and steel. China said it strongly deplored and firmly opposed Canada’s “discriminatory unilateral restrictive measures” and it had requested talks with Canada at the World Trade Organization about the tariffs. Separately, China’s commerce ministry urged the U.S. to “promptly” remove all additional tariffs on Chinese goods.
China to stabilize beef, dairy sectors to aid farmers... China’s agriculture ministry said it would stabilize beef and dairy production, shore up consumption and assist farmers amid falling prices. The ministry’s plan called for the promotion of beef and milk consumption and support for farmers by offering loan extensions and lowering feed costs. The plan said localities would be required to accelerate the expansion of herds, while promoting higher quality cows. Vouchers will be used to push more milk consumption. The ministry called for prevention and control of disease in cow herds and said more targeted support policies would eventually be rolled out for agriculture and other sectors. China’s beef prices have fallen to the lowest level in five years.
H&P Report expected to show marginally larger hog herd... Analysts expect USDA’s Hogs & Pigs Report this afternoon to show the U.S. hog herd grew 0.2% from year-ago to 76.285 million head as of Sept. 1. Market hog inventories are expected to be up 0.4%, while the breeding herd is anticipated to be down 2.1%. Analysts expect USDA to report a 0.9% smaller summer pig crop despite ongoing record litter sizes, as summer farrowings likely declined 1.4%. Looking forward, analysts expect farmers to farrow 0.4% fewer sows during fall but 0.1% more this winter. As always, revisions to past data will be key.
Cold Storage Report also out this afternoon... USDA will detail frozen meat stocks at the end of August. The five-year average is a 5.1-million-lb. increase in beef stocks and a 5.3-million-lb. rise in pork stocks during the month.
Wholesale beef prices plunge... Wholesale beef prices faced heavy pressure on Wednesday, with Choice down $3.72 to $298.17 and Select $3.59 lower to $283.28. That’s the lowest Choice price since May 10. While movement stayed strong at 171 loads, indicating strong retailer demand under the market, falling wholesale prices maintained packer margins solidly in the red and will likely make them reluctant to raise cash cattle prices for a third straight week.
Cash hog index continues to bleed... The CME lean hog index is down another 16 cents to $84.05 as of Sept. 24. While pressure hasn’t been strong, the persistent slide in the cash index is likely to limit buying in futures. October lean hog futures finished Wednesday $1.575 below today’s cash quote.
Overnight demand news... Japan purchased 112,580 MT of milling wheat via its weekly tender, including 64,510 MT U.S., 23,310 MT Canadian and 24,760 MT Australian. South Korea tendered to buy up to 70,000 MT of corn from South America 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
· 7:30 a.m. Weekly Export Sales — FAS
· 2:00 p.m. Fruit and Tree Nuts Outlook: September 2024 — ERS
· 2:00 p.m. Cold Storage — NASS
· 2:00 p.m. Hogs and Pigs — NASS
· 2:00 p.m. Potatoes — NASS