Good morning!
Grains weaker this morning... Soybeans and corn traded on either side of unchanged overnight, but are weaker early this morning, while wheat faced mild followthrough selling throughout the session. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are 1 to 2 cents lower, winter wheat futures are 4 to 5 cents lower and spring wheat is 2 to 3 cents lower. The U.S. dollar index is trading just below unchanged, while front-month crude oil futures are modestly firmer.
Helene producing damaging winds, serious flooding... Helene made landfall at 11:10 p.m. ET Thursday near the mouth of the Aucilla River in the Big Bend area of Florida’s Gulf Coast as a Category 4 hurricane. The U.S. National Hurricane Center says Helene weakened to tropical storm intensity early this morning as it moved inland through Georgia and is producing damaging winds and flooding across the Southeast. World Weather Inc. note, “The only good news for the storm from an agricultural perspective is a lower impact on cotton production areas in southwestern Georgia and immediate neighboring areas as the storm’s path veered to the east after coming inland.” Still, the timing and intensity of the storm is reminiscent of Hurricane Michael in 2018, which resulted in a 1.35-million-bale reduction to the U.S. cotton crop.
U.S. sharply raises tariffs on Chinese goods... The U.S. today will impose higher levies on a range of Chinese-made products: up to 100% on electric vehicles, 50% on solar cells and semiconductors and 25% on EV batteries, steel, critical minerals and more. The decision, which President Joe Biden’s administration first announced in May, stemmed from a review of the tariffs initially slapped on China by Donald Trump when he was in the White House.
China issues more stimulus, stocks surge the most since 2008... The People’s Bank of China (PBOC) lowered the borrowing cost of its seven-day reverse repurchase agreements by 20 basis points to 1.5%, the latest in a string of economic aid measures this week. PBOC also officially reduced the bank reserve requirement ratio by 50 basis points, a move that was signaled earlier this week without an official timeframe. The broad stimulus measures triggered the biggest weekly rally in Chinese equities since 2008. The blue-chip CSI 300 and benchmark Shanghai Composite indexes surged roughly 16% and 13%, respectively, for the week, while Hong Kong’s Hang Seng index jumped 13%.
China’s industrial profits plunge in August... China’s industrial profits plunged 17.8% in August from a year earlier, adding to a recent string of bleak business readings and spurring thoughts more economic stimulus will be needed on top of the support measures enacted by Beijing this week. During the first eight months of this year, industrial profits rose 0.5% from the same period last year to 4,652.73 billion yuan, a sharp decline from the 3.6% increase through July.
Euro zone economic sentiment drops despite lower inflation expectations... The economic sentiment indicator in the euro zone edged lower to 96.2 in September from the August reading, which was the highest in over a year. Pessimism worsened in the industrial and retail sectors, more than offsetting improvements for services, consumers and constructors. Euro zone consumers lowered their inflation expectations over the next 12 months to the lowest level in three years.
FDA advances research to ensure dairy safety amid H5N1 outbreak in dairy cattle... FDA is updating its efforts to safeguard dairy products during the H5N1 outbreak in dairy cattle. Collaborating with academic and federal partners, FDA is conducting research on inactivation methods for H5N1 in fluid milk and cheese production. Key initiatives include thermal and viral inactivation studies, virus viability testing and exploring genome-edited chickens to reduce avian virus susceptibility. FDA reassured the public the commercial milk supply remains safe, with ongoing sampling and testing. Further updates are expected in the coming months.
H&P Report may weigh on nearby futures... USDA’s Hogs & Pigs Report estimated the Sept. 1 U.S. hog herd at 76.480 million head, up 347,000 head (0.5%). The breeding herd declined 135,000 head (2.2%) to 6.044 million head. The market hog inventory increased 483,000 head (0.7%). The summer pig crop declined 265,000 head (0.8%) from last year to 35.030 million head, as a 1.7% drop in sow farrowings more than offset a 0.9% increase in the number of pigs per litter. The report data was mostly neutral compared to pre-report expectations, aside from expected near-term market hog inventories, which could weigh on nearby contracts.
Supportive frozen meat stocks data... USDA’s Cold Storage Report showed beef stocks declined contra-seasonally during August, while pork stocks rose less than average. Both imply meat demand more than kept pace with supplies last month. Beef stocks totaled 395.2 million lbs. at the end of August, down 7.4 million lbs. from July, whereas the five-year average was a 5.1-million-lb. increase for the month. Pork stocks totaled 453.6 million lbs., up 175,000 lbs. from July, less than the five-year average increase of 5.3 million lbs. for the month.
Cash cattle trade higher... Packers actively raised cash bids on Thursday and feedlots in the Southern Plains started moving cattle at mostly $2.00 higher prices. Activity was slower to develop in the northern market, though expectations are cash trade will be sharply higher there as well.
Cash hog index, pork cutout modestly higher... The CME lean hog index is up 2 cents to $84.07 as of Sept. 25. The pork cutout firmed 54 cents to $94.64 on Thursday.
Overnight demand news... South Korea passed on a tender 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
· 2:00 p.m. Agricultural Prices — NASS
· 2:00 p.m. Egg Products — NASS
· 2:00 p.m. Peanut Prices — NASS
· 2:00 p.m. Turkeys — NASS
· 2:30 p.m. Commitments of Traders — CFTC