Good morning!
Grains weaker this morning... Corn and soybean futures pulled back from recent corrective gains, while wheat extended its price slide during overnight trade. As of 6:30 a.m. CT, corn futures are trading a penny lower, soybeans are 6 to 8 cents lower, SRW wheat futures are fractionally lower, HRW wheat is 2 to 3 cents lower and HRS wheat is 1 to 2 cents lower. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is more than 300 points lower.
Gov’t shutdown looms as House Republicans reject Senate funding plan... The possibility of a government shutdown has increased as House Republicans declined to consider a bipartisan Senate proposal aimed at extending government funding beyond the Sept. 30 deadline. In response to the congressional standoff, the White House Office of Management and Budget directed federal agencies to prepare for the possibility of notifying employees about the status of government funding. Both the Senate and the House are pursuing separate approaches to extend government funding beyond Sept. 30 and there are no ongoing negotiations between the two for a short-term spending bill agreeable to both chambers. Instead, each chamber plans to advance its legislation and challenge the other to accept or reject it. Bottom line: As the weekend deadline approaches, the risk of a government shutdown is growing, with significant differences between the House and Senate on how to address the issue.
Weekly Export Sales Report out this morning... For the week ended Sept. 21, traders expect:
| 2023-24 expectations (in MT) | Last week (in MT) |
Corn | 475,000-1,200,000 | 566,857 |
Wheat | 250,000-500,000 | 307,704 |
Soybeans | 500,000-1,200,000 | 434,065 |
Soymeal | 225,000-550,000 | 439,056 |
Soyoil | 0-10,000 | 15 |
El Niño to reduce Indonesian production, increase palm oil prices... Crude palm oil (CPO) prices in 2024 are likely to average at least 11% more than this year as El Nino weather patterns are expected to reduce output in top producer Indonesia, the Indonesian Palm Oil Association (GAPKI) said. In 2024, average CPO prices, including cost, freight, and insurance (CIF Rotterdam), could rise to $1,000 per metric ton from around $900 in the current year, said Fadhil Hasan, head of foreign affairs division at GAPKI. Meanwhile, Malaysia’s palm oil production is likely to rise next year as more plentiful labor and the maturation of plantations for harvesting offset the impact of the El Niño weather pattern, the Malaysian Palm Oil Board said.
Euro zone economic sentiment deteriorates... Economic sentiment in the euro zone dropped to 93.3 in September, down from 93.6 the previous month. This marked the lowest reading since November 2020, reflecting the ongoing impact of inflationary pressures within the bloc and the European Central Bank’s aggressive policy tightening, which continued to dampen overall morale.
UAW strike expansion... The United Auto Workers (UAW) union is planning to expand its strike against Detroit automakers on Friday unless there is substantial progress made in negotiations. The UAW started a walkout at General Motors, Stellantis and Ford plants on Sept. 15 and expanded that a week later at plants run by the former pair.
Corteva accuses Inari of illicitly modifying and patenting its technology... Corteva Inc. filed a lawsuit in a U.S. federal court against Inari Agriculture, accusing Inari of obtaining Corteva’s protected seeds from a U.S. depository and unlawfully shipping them to Europe. Corteva alleges Inari went further by making slight genetic modifications to the biotech traits of the seeds and is now seeking U.S. patents for these modified traits. While Inari typically partners with seed manufacturers to utilize its gene editing technology for enhancing products, Corteva stated in its lawsuit it has never engaged in any partnership with Inari nor granted the company permission to modify any of its seeds. The lawsuit clarifies that Inari has not yet sold any gene-edited products derived from Corteva’s seeds. However, Corteva asserts that Inari intends to commercialize these products in the future. As a result, Corteva is pursuing legal action seeking both damages and a permanent injunction against Inari.
H&P Report out this afternoon... USDA’s Hogs & Pigs Report at 2:00 p.m. CT is expected to show the hog herd down 0.8% from last year as of Sept. 1. Market hogs are expected to decline 0.7%, while the breeding herd is anticipated to be 1.3% smaller. Analysts expect summer farrowings to come in 3.4% smaller than last year, while fall and winter farrowing intentions are anticipated to be down 3.5% and 2.1%, respectively. Also key will be revisions to past data, which are likely after summer slaughter consistently ran above levels implied in the June report.
China’s sow herd declines... China’s sow herd totaled 42.41 million head at the end of August, according to the country’s ag ministry, down 0.7% from July and 1.9% smaller than last year. Hog slaughter surged 22.1% from year-ago in August.
Choice beef finds buyers under $300... Choice boxed beef prices didn’t spend much time below $300.00, rallying $1.41 on Wednesday to $300.95. Just as importantly, movement totaled 149 loads, marking the second straight day of strong retailer buying. While the market appears to have found an inflection point, key now will be whether retailer demand remains strong if packers try to push Choice prices much above $300.00.
Cash hog index continues to slip... The CME lean hog index is down 17 cents to $86.14 (as of Sept. 26), marking the fourth straight daily decline, though that’s still above the Sept. 5 low of $86.01. Traders wonder if the cash market has started what’s likely to be an extended decline into winter as slaughter supplies build seasonally.
Overnight demand news... Algeria purchased 60,000 MT of corn to be sourced from Brazil or Argentina. Iran purchased “several cargoes” of corn (sourced from Brazil, Europe, Russia, Ukraine or elsewhere in the Black Sea region) and 120,000 MT of soymeal (sourced from Brazil, Argentina or India).
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 2023 — ERS
- 2:00 p.m. Egg Products — NASS
- 2:00 p.m. Hogs and Pigs — NASS