Good morning!
Solidly firmer price tone overnight... Corn and wheat futures posted solid corrective gains overnight, while soybeans built on Thursday’s modest gains. As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents higher, soybeans are 12 to 14 cents higher and wheat futures are 6 to 10 cents higher. Front-month crude oil futures are around $1.50 higher and the U.S. dollar index is nearly 900 points lower.
India restricts rice exports... India, the world’s biggest exporter of rice, restricted its international sales to safeguard domestic supply. Starting today, a 20% duty will be applied to exports of most grades of rice, though not basmati. Shipments of “broken rice,” eaten in some parts of Africa but otherwise feedstock, were banned outright. Exporters will ask the government to waive taxes on about 2 MMT of rice that have been contracted but not yet shipped
Argentina to raise financing costs for hoarding farmers... Argentine soy farmers who hold onto stocks of more than 5% of their production will face financing costs above the normal benchmark rate, the country’s central bank said on Thursday, part of a wider push to encourage sales. The central bank said soy farmers over a certain size who hoarded their stock would face a minimum financing rate “equivalent to 120% of the latest Monetary Policy rate.” Argentina’s benchmark interest rate stands at 69.5%. The minimum rate would start at 83.4% under the new policy, which aims “to make credit more expensive so that it is more convenient to sell (soybeans) than to take credit,” a source familiar with the matter told Reuters. On Sunday, Argentina boosted the soy foreign exchange rate for farmers to encourage more sales.
Putin, Erdogan to discuss Ukraine grain export deal next week... The Kremlin said on Friday President Vladimir Putin and his Turkish counterpart Tayyip Erdogan will discuss implementation of a deal on Ukrainian grain exports when they meet in Uzbekistan next week. Putin earlier this week criticized the deal and said it may need to be reworked. Russia’s Foreign Ministry said on Friday the deal is being fulfilled “badly” and its extension will depend on how it is implemented, Russia state-owned RIA news agency reported.
Sizing up Putin and his renewed threat on exports of Ukrainian grain... A Wall Street Journal editorial captures Putin’s dilemma on this topic: “Putin struck the deal to allow Ukrainian exports this summer lest Russia be blamed for famine around the world. He accused the West on Wednesday of ‘blatant deception’ in somehow taking advantage of the deal at the expense of providing food to the developing world. But Mr. Putin knows the food market is global and one of the goals of the export deal was to lower food prices by increasing supply. That helps consumers in poor countries too. If Mr. Putin does block Ukraine’s grain exports, he’ll be responsible for the suffering. The U.S. could also warn Mr. Putin that if he does block Ukraine’s grain, a coalition of the willing would consider naval escorts for Ukrainian grain ships. A similar plan worked to escort oil from the Persian Gulf in the 1980s against threats from Iran. With his military struggling with manpower and supplies, Mr. Putin can’t be eager to challenge Western ships engaged in a peaceful escort mission.”
No weekly export sales data again this week... Due to issues with USDA’s new export sales reporting system, export sales data for the week ended Sept. 1 that was originally scheduled for today will not be released. As we previously reported, USDA hopes to resume its weekly export sales data releases on Thursday, Sept. 15.
IMF report: U.S. may need 7.5% unemployment to curb inflation... Unemployment may need to reach as high as 7.5%, double its current level, to end America’s high inflation, according to a new study from the International Monetary Fund (IMF). That would entail 6 million job losses, but the research found that only under “quite optimistic assumptions” about the behavior of the job market and inflation would the Fed be able to tame surging costs with a smaller blow to employment.
Finance ministers, ECB to coordinate fight against inflation... Euro zone finance ministers will coordinate policies with the European Central Bank (ECB) to bring down inflation while making sure their actions do not add to inflationary pressures, the ministers’ chairman Paschal Donohoe said. ECB raised rates by an unprecedented 75 basis points on Thursday and policymakers say the must keep tightening monetary policy to combat surging inflation. While the ECB projected stagnating growth over the winter months, ECB chief Christine Lagarde acknowledged that many of the downside risks to this outlook have already materialized, particularly the loss of access to Russian gas, raising the risk of an outright recession.
Chinese inflation unexpectedly retreated in August... China’s consumer price index increased 2.5% from the same month a year earlier, slower than the 2.7% rise in July and the 2.8% economists expected. Cost of food rose by 6.1%, slowing from a 6.3% rise in July that was the steepest pace in 22 months. Cost of non-food increased 1.7%, moderating from a 1.9% gain the previous month. China’s producer price inflation eased to an 18-month low of 2.3% above year-ago – the 20th straight month of easing factory-gate prices.
China’s new bank loans rise less than expected... New bank lending in China rose less than expected in August, while broad credit growth slowed, as Covid flare-ups and a deepening property crisis weigh heavily on the economy despite the central bank’s efforts to stimulate demand. Banks extended 1.25 trillion yuan ($180.63 billion) in new yuan loans in August, up from July but below analysts’ expectations, data released by the People’s Bank of China. Analysts say demand for credit is still weak as business and consumer confidence remain fragile.
China will ensure ‘reasonable’ pork, hog prices... China’s state planner said the country’s supply of hogs was sufficient and would increase toward the end of the year, guaranteeing pork prices would stay in a “reasonable” range. The National Development and Reform Commission also said it would take measures to ensure that hog prices remained reasonable, after they surged in recent months.
Disappointing start for cash cattle... Light cash cattle trade started Thursday at slightly lower prices compared to last week, with initial activity around $141 in the Southern Plains and the $226 to $227 range in the northern dressed market. Live cattle futures absorbed the lower prices well, especially considering they anticipated steady/firmer trade. That could have been due to feedlots’ limited willingness to move cattle at the lower prices. Plus, traders expect cash prices will soon begin to firm and generally strengthen through next year as supplies tighten.
Cash hog index continues steady decline... The CME lean hog index is down another $1.22 to $100.26 (as of Sept. 7) and appears poised to fall below $100.00 for the first time since Mid-May. October hogs finished Thursday $8.135 below today’s cash index quote, though as we’ve pointed out, that’s still a pessimistic stance as the cash index has firmed on average over the past five years into mid-October.
Overnight demand news... Taiwan passed on an international tender to purchase 65,000 MT of corn.
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. Dairy Products — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC