Good morning!
Grains pause corrective rallies overnight... Corn, soybeans and wheat pulled back from recent corrective gains during the overnight session. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents lower, soybeans are a dime lower, winter wheat markets are 4 to 7 cents lower and spring wheat is 2 cents lower. The U.S. dollar index is down around 250 points and front-month crude oil futures are about 20 cents higher.
StoneX lowers corn crop estimate, raises soybean production forecast... Commodity brokerage firm StoneX lowered its corn crop estimate to 15.127 billion bu. (15.207 billion bu. last month), though the yield was raised 0.6 bu. to 182.9 bu. per acre. For soybeans, StoneX raised its production forecast to 4.575 billion bu. (4.483 billion bu. last month) on a yield of 53 bu. per acre, which increased 0.4 bu. per acre. The firm’s estimates are based on surveys of its customers and assume USDA’s harvested acreage. USDA’s initial estimates in August were 15.147 billion bu. for corn on a yield of 183.1 bu. per acre and 4.589 billion bu. for soybeans on a yield of 53.2 bu. per acre.
Improved soy crush margins could boost Chinese demand for soybeans... Recent market talk had Chinese buyers purchasing multiple cargoes of U.S. soybeans via shipment from the Gulf and PNW. An improvement in Chinese crushing margins has increased demand for soybeans as the U.S. harvest begins. While Chinese crush margins remain negative, they have recovered to levels not seen in more than two months, according to Shanghai JC Intelligence Co.
Low waters on lower Mississippi River impacting barge traffic... Low water conditions have led to several barges running aground along a key stretch of the lower Mississippi River, the U.S. Coast Guard told Reuters. The Coast Guard said in an email it has received reports and responded to several groundings over the last week along the Greenville-Vicksburg sections of the lower Mississippi River. American Commercial Barge Line warned that customers should expect one- to two-day delays for river shipments “due to reduced navigable space in certain areas,” the company said. The water level at Memphis is lower than it was last year: It is forecast to drop to -7.5 feet by Sept. 18, NOAA data shows. Rates for barges coming from the St. Louis, Missouri, area were 65% higher in late August than the three-year average, according to Mike Steenhoek, executive director of the Soy Transportation Coalition, and USDA data.
Farm group estimates 26% plunge in French wheat production... Farmer group AGPB estimates this year’s French wheat production at 25.98 MMT, down 9.1 MMT (25.9%) from last year. That’s in line with the estimate from France’s ag ministry and other private forecasts. The group estimates the yield at 6.2 MT per hectare, down 17% from last year.
Record U.S. ag trade deficit in July... The U.S. exported $13.00 billion of agricultural goods in July against imports of $17.54 billion, resulting in a record deficit of $4.54 billion. During the first 10 months of fiscal year (FY) 2024, U.S. ag exports stood at $148.29 billion, while imports totaled $171.63 billion for a deficit of $23.34 billion. USDA forecasts ag exports at $173.5 billion and imports at $204 billion for FY 2024, which would imply a record deficit of $30.5 billion. For FY 2025, the ag trade deficit is projected to swell to a record $42.5 billion.
U.S. trade deficit reaches two-year high, driven by imports of Chinese goods... The U.S. trade deficit increased 7.9% from the previous month, reaching $78.8 billion in July. This was the largest trade gap since June 2022. The goods trade deficit increased 6.9% to $97.6 billion after adjusting for inflation. The U.S. merchandise trade deficit with China widened to $27.2 billion in July, the largest gap since September 2022, driven by an 11.3% surge in imports from China. The increase in imports, reaching the highest level since October 2022, is attributed to businesses frontloading goods ahead of potential tariff hikes and strong U.S. consumer demand. This $4.9 billion rise from the previous month reflects ongoing trade tensions and economic uncertainty ahead of the November 2024 elections.
Weekly export sales delayed... Due to Monday’s holiday, export sales data for the week ended Aug. 29 will be pushed back to Friday morning.
China to deepen ties with Africa, including agriculture... Chinese President Xi Jinping told African leaders China was willing to deepen industrial, agricultural, trade and investment cooperation with the resource-rich continent during a speech on Thursday. China and Africa would undertake 30 infrastructure connectivity projects, Xi said during the opening ceremony of the Forum on China-Africa Cooperation in Beijing. For agriculture, China will help African countries accelerate production and trade of soybeans, beef, nuts, coffee, cocoa, red wine and aquatic/fishery products. China will also seek to create shared environmental goals with African countries, he added.
China’s bond frenzy continues amid monetary policy easing expectations... China’s long-dated yield fell to a record low as investors accelerated bets of further monetary easing despite the central bank’s repeated warnings and recent actions to cool frenzied treasury buying. China’s 30-year treasury yield hit a record low of 2.29% on recent media reports the country is considering lowering rates on outstanding mortgage loans to aid its struggling property market. Easing expectations were further elevated as a Chinese central bank official said there is still some room to lower the amount of cash banks must hold as reserves. Meanwhile, Bloomberg reports some Chinese government bonds the central bank bought last week are now being sold in the secondary market, a possible sign that authorities are once again intervening to curb the debt rally. The 10-year special sovereign notes, which the People’s Bank of China purchased from primary dealers last week, were offered by financial institutions in batches including 50 million yuan ($7 million) and 100 million yuan, according to traders.
Chile approves trade agreement expanding U.S. meat and cheese market access... The Chilean government approved a trade agreement ensuring market access for U.S. meat and cheese products, protecting terms like cheddar, gouda, prosciutto, and salami. This follows the exchange of letters between U.S. Trade Representative Katherine Tai and Chile’s Undersecretary of International Economic Relations Claudia Sanhueza on June 21, 2024, which initially established the mutual understanding.
Beef movement surges... Choice beef prices firmed 93 cents on Wednesday, while Select dropped 72 cents. Movement totaled 169 loads, including 98.6 loads of Choice. Continued strong retailer buying of beef suggests demand may not wane much after the unofficial end of the summer grilling season.
Cash hog index firms... The CME lean hog index is up 12 cents to $86.27 as of Sept. 3, halting an extended string of seasonal price pressure. October lean hog futures finished Wednesday $4.695 below today’s cash quote, suggesting traders sense any uptick in the cash market will be brief before seasonal pressure resumes.
Overnight demand news... Japan purchased 87,660 MT of milling wheat via its weekly tender, including 63,730 MT U.S. and 23,930 MT Canadian. Thailand purchased 146,000 MT of feed wheat likely to be sourced from Ukraine, EU, Serbia, U.S. and/or Australia. Indonesia bought 165,900 MT of rice expected to be sourced from Vietnam, Myanmar and Pakistan, with more purchases possible from the tender for up to 350,000 MT. Egypt tendered to buy 30,000 MT of soyoil, 10,000 MT of sunflower oil and at least 50,000 MT of raw sugar – all optional origin.
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
· 11:00 a.m. Highlights From the September 2024 Farm Income Forecast — ERS
· 11:00 a.m. Livestock and Meat International Trade Data — ERS