Good morning!
Corn and beans firmer, wheat mixed this morning... Corn and soybean futures firmed amid light corrective buying overnight. Wheat traded on both sides of unchanged overnight. As of 6:30 a.m. CT, corn futures are trading mostly a penny higher, soybeans are 6 to 7 cents higher, winter wheat markets are 1 to 2 cents lower and spring wheat is narrowly mixed. Front-month crude oil futures are more than $1.50 higher and the U.S. dollar index is more than 200 points higher.
Update on spending measure to avert gov’t shutdown... The Senate’s bipartisan stopgap funding bill, which cleared a procedural vote last night (77-19) would keep federal agencies open until Nov. 17. The White House-endorsed bill includes around $6 billion in new economic and military aid for Ukraine, plus another $6 billion for disaster relief. There is no border security money, nor spending cuts that some House GOP lawmakers have been incessantly demanding. However, Sen. Rand Paul (R-Ky.) says he won’t give consent for speedy passage of the continuing resolution (CR). That means the Senate could potentially vote on final passage of the CR as late as Sunday, which is after government funding expires. Of note: The Senate’s nearly seven-week CR provides a fraction of what President Joe Biden sought for Ukraine in the remainder of 2023. In the House, Speaker Kevin McCarthy (R-Calif.) aims to amend the Senate’s CR with HR 2, a bill related to border security from the House of Representatives. This move is intended to frame the debate as being about border security issues and the deteriorating situation at the U.S./Mexico border. By framing the debate this way, McCarthy and House GOP leaders are attempting to divert attention away from the deep spending cuts that House Republicans are advocating for in various social programs. Bottom line: McCarthy faces key challenges among House Republicans as they seek to influence the content of the Senate’s CR and shape the narrative around key issues like border security, spending cuts and aid to Ukraine. If McCarthy is unable to pass a stopgap with just Republican votes, passing the Senate’s bill appears to be the only way for him to avoid a government shutdown Oct. 1 – or at least keep it brief.
House to debate four spending measures... The House Tuesday evening cleared a rule allowing four spending measures to proceed to debate, though that does not guarantee eventual passage on any. The four bills would fund the Departments of State, Homeland Security, Defense and Agriculture. The vote was 216-212, with several Republicans changing their votes to “yea” from previous attempts in appreciation for GOP leaders’ work to get the individual spending bills moving again. Key will be amendments; several of them would impact ag and food policy. But the bill is going nowhere in the Senate.
Poland, Ukraine make progress in grain trade talks... Poland and Ukraine are making strides in their discussions to resolve the ongoing disagreement regarding Poland’s ban on Ukrainian grain imports. Polish Agriculture Minister Robert Telus said both sides are actively engaged in dialogue and are working to establish future mechanisms while addressing emotional aspects of the dispute. The Ukrainian Agriculture Ministry has announced that its chief, Muykola Solsky, will meet with Telus in a week to discuss Ukraine’s proposed licensing system, which aims to implement import licenses for corn, rapeseed, sunflower seed and wheat destined for five eastern European countries within the European Union. Additionally, Telus has urged Ukraine to withdraw its complaint filed at the World Trade Organization (WTO), where Kyiv initiated a dispute settlement process against bans imposed by Poland, Hungary and Slovakia.
China raises minimum purchase price for 2024-crop wheat... China raised the minimum purchase price for third-grade wheat produced in 2024 to 2,360 yuan ($323) per metric ton from 2,340 yuan this year, according to the state planner. A maximum of 37 MMT of wheat would be purchased at the new minimum price. The decision to raise the price was based on production costs, supply and demand, local and global market prices and other factors.
China will hold additional sales of sugar reserves... China, which is holding its first sale of state-owned sugar reserves since 2016, says it will hold additional auctions of its sugar stockpiles in the near future to ensure the stability of domestic price and supply.
China’s industrial profits jump in August but still weak... China’s industrial profits jumped 17.2% from last year in August after a 6.7% drop in July, buoyed by early signs of economic stabilization. During the first eight months of this year, China’s industrial profits fell 11.7% from the same period last year.
PBOC adviser: ‘No Japanification’ for Chinese economy... China is expected to achieve economic growth of slightly more than 5% this year, an adviser to the central bank said. While some economists contend China’s economic situation could be worse than Japan’s lost decade of the 1990s, Wang Yiming, a member of the Monetary Policy Committee of the People’s Bank of China (PBOC), said: “There is no Japanification in China, we are still in the medium-to-high growth stage.” PBOC said it would step up policy adjustments and implement monetary policy in a “precise and forceful” manner to support an economy whose recovery was improving with “increasing momentum.”
Concerns with China’s Evergrande build... The chairman of China Evergrande Group has been placed under police surveillance, Bloomberg News reported, raising more doubts about the embattled real estate developer’s future as it grapples with mounting prospects of liquidation. It was not clear why Hui was placed under residential surveillance, Bloomberg said, adding the move was a type of police action that falls short of formal detention or arrest and does not mean Hui will be charged with a crime.
USDA launches ELRP effort for 2022 losses and Phase 2 of 2021 ELRP... USDA initiated two relief programs: the Emergency Livestock Relief Program (ELRP) for 2022 losses stemming from drought or wildfires and Phase 2 of the 2021 ELRP. Funds for these programs, totaling just under $495 million, were allocated from the Disaster Relief Supplemental Appropriations Act of 2023, which amounted to $3.74 billion. For the 2022 ELRP, data from the Livestock Forage Disaster Program (LRP) will be utilized to determine payments. These payments will be calculated based on the number of animal units, with consideration given to available grazing acreage in eligible drought-affected counties. Payments will be set at 90% of the LFP payments for underserved producers and 75% for all other producers. Importantly, producers who have already received LFP payments for their losses will not need to resubmit information to receive the 2022 ELRP payments. Regarding the 2021 ELRP Phase 2, it aims to aid eligible livestock producers who suffered losses in the value of winter forage due to qualifying drought or wildfire during the 2021 normal grazing period. This situation has been further exacerbated by continued precipitation deficits. USDA had previously announced Phase 1 of the ELRP effort in April, which utilized 2021 LFP data to expedite payments. Phase 1 payments were calculated at 90% of the gross LFP payment for underserved farmers and ranchers, and 75% for all other producers. Phase 2 payments will be based on 20% of ELRP Phase 1 payments and will cover a percentage (ranging from 44% to 52%) of the estimated losses in the value of winter forage. Producers do not need to resubmit information for the Phase 2 payment. Both programs will commence implementation today.
Macros drive corrective selling in cattle... Live cattle and feeders faced heavy selling pressure on Tuesday, tied largely to macroeconomic concerns as a government shutdown looms at the end of the month if lawmakers can’t agree on a short-term spending measure. While the cash cattle market is well supported by tight market-ready supplies, prices could slip this week. Plus, Choice boxed beef fell below $300.00 for the first time since May.
Pork movement surges... The pork cutout value fell 58 cents to $98.28 on Tuesday, though movement improved to 360.6 loads, signaling there is strong retailer buying under the market. But with pork supplies building seasonally, the cutout value could face heavier pressure if retailer demand doesn’t prove to be consistently strong.
Overnight demand news... Egypt tendered to buy an unspecified amount of wheat from multiple origins. South Korea tendered to buy 50,100 MT of rice – 49,200 MT from the U.S. and 900 MT from Vietnam.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Peanut Stocks and Processing — NASS
- 2:00 p.m. Potatoes — NASS
- 2:00 p.m. Turkeys Raised — NASS