Good morning!
A break from the selling overnight… Corn futures are 2 cents higher, with nearbys still trading below the 200-day moving average after closing below that level of support turned resistance on Wednesday for the first time since September 2020. Soybean futures are 4 cents higher amid corrective buying after an uptick in selling the past two days. The market has sustained technical damage in recent weeks. Winter and spring wheat futures are around a nickel higher. Crude oil futures are again on the rise, and the U.S. dollar index is under pressure.
Export sales delayed to Friday… Due to Monday’s government holiday, the weekly export sales report will be released Friday at 7:30 a.m. CT.
China raises minimum purchasing price for wheat for first time since 2014… China has raised the minimum purchasing price for wheat in 2022 to 2,300 yuan ($357) per metric ton, a 1.8% increase from 2021’s minimum of 2,260 yuan ($351) per metric ton. The minimum price refers to the price the government pays farmers to buy their wheat when the market price drops below that level. The policy is aimed at ensuring food production and comes amid a renewed Chinese focus on food security. This was the first increase to the minimum purchasing price since 2014.
Attaché reins in forecast for Argentine soybean plantings given strong corn prices… An attaché in Argentina lowered its projection for 2021-22 soybean plantings by 500,000 hectares (1.2 million acres) to 17.0 million hectares (42.0 million acres), resulting in a 49.7 MMT crop estimate, which is 1.3 MMT under USDA’s official estimate. “The reduction in area is driven primarily by better anticipated margins for other crops, especially corn,” the post explains. The attaché continues to estimate the 2020-21 soybean crop at 44.5 MMT, which is 1.7 MMT under USDA’s latest forecast. But the post raised its export projection to match USDA’s 5.2 MMT forecast.
Another bumper canola crop for Australia… Australian producers are expected to bring in a record canola crop topping 5 MMT, according to government data, and canola prices are near record levels. That comes as a relief to farmers who faced a near ban on barley exports to their biggest customer, China, due to its 80% tariffs on imports of the grain from Australia. The result was a shift in acreage toward crops like canola, with some speculating high prices for canola could lead to an even larger boost in acres next year. Australia is expected to export more than 4 MMT of the oilseed in 2021-22, up from 3.1 MMT last season and accounting for nearly 30% of global canola trade that’s estimated at 14.21 MMT.
Inflation: transitory or structural?... That’s the latest guessing game in financial circles. Recent U.S. inflation data did little to help those arguing the spike in prices will be brief, while there is growing evidence that the energy shortage is feeding into a wider range of factory inputs. Oil is trading close to $81.50 a barrel this morning after an International Energy Agency (IEA) report said the shortage of natural gas in Europe and Asia is deepening the already sizeable supply deficit in crude markets. U.S. inflation data came in higher than expected as consumer prices rose 0.4% in September and 5.4% on an annual basis. That’s the fifth straight month that the consumer price index recorded an annual gain of at least 5%. Transitory? Meanwhile, the VIX volatility index, which measures expected volatility for the S&P 500 over the next 30 days, dropped sharply to its lowest level in three weeks, Many will keep an eye on the VIX for signs of stability ahead.
China’s producer price index surged 10.7% year-over-year in September… That was the fastest pace in almost 26 years, led by coal prices and other commodity costs. That is adding to global inflation fears, though it didn’t spill over into the country’s consumer prices, which rose at a slower rate compared with August.
UAW has called a strike against Deere & Co…. The decision impacts more than 10,000 workers at 14 facilities across the U.S. and comes as the United Auto Workers union and Deere attempt to reach a new contract agreement. The strike started overnight at midnight. Deere does not currently have an estimate of when striking employees with resume activities or when contract negotiations will be completed. Depending upon how long the work stoppage lasts, this could add to shortages of tractors, farm equipment and parts. This is the largest private-sector strike in the U.S. in two years.
Port of Los Angeles will begin operating 24-7… President Joe Biden sought to address some logistical issues, announcing Wednesday that the Port of Los Angeles would begin operating 24 hours a day, seven days a week. Administration officials promised a “90-day sprint” to clear a path for cargo. Several companies participating in the White House event, including Walmart, made specific volume commitments about containers they will remove from California docks. Leaders of the International Longshore and Warehouse Union have agreed to work longer hours, “provided individual terminal operators pay up.” Biden said, “If federal support is needed, I’ll direct all appropriate action, and if the private sector doesn’t step up, we’re going to call them out and ask them to act.” The Los Angeles Times says the plan “addresses only one link in a global supply chain largely outside of Biden’s control, meaning he faces potential blowback from unhappy shoppers while also lacking the power to fix the mess.”
FDA panel to consider Moderna’s Covid-19 boosters today... The Food and Drug Administration’s vaccine advisory panel meets today to consider whether to authorize booster shots of Moderna’s Covid-19 vaccine and meets Friday about Johnson & Johnson boosters. It will also hear data about mixing and matching boosters with doses of a different company’s vaccine. The National Institutes of Health released findings that said mixing and matching is safe, adding that recipients of J&J’s one-dose vaccine had a better response with a booster of Pfizer or Moderna’s shot than a booster of J&J. Pfizer’s vaccine with BioNTech is the only booster currently approved for those 65 and older, the immunocompromised, and workers in at-risk settings such as hospitals or schools.
WHO launches another probe regarding origins of Covid-19… The World Health Organization assembled a new team of 26 scientists to investigate the origins of the coronavirus that causes Covid-19, saying time is running out to study blood samples and other clues. China says investigators should examine the U.S. and other countries, in case it came from a lab accident.
EPA, Army announce regional roundtables on WOTUS… EPA pledged to hold a series of regional roundtables this fall and winter as part of their plant to put a new definition of waters of the U.S. (WOTUS) in place. Yesterday, EPA and the U.S. Department of Army called on communities to propose roundtables to provide input on the regional implications of WOTUS. The agencies want stakeholders to organize a targeted set of interested parties and regional representatives to participate. It says those participants “must” include those representing “agriculture, conservation groups, developers, drinking water/wastewater management, environmental organizations, environmental justice communities, industry, and other key interests in that region.” Organizers should submit self-nomination letters via email by Nov. 3, 2021.
U.K. importing butchers to deal with pig crisis… Brexit paired with Covid-19 have resulted in an exodus of east European workers at U.K. hog and pork facilities, leaving the country with few options for marketing hogs and sparking fears about mass cullings. In response, Britain is allowing trained butchers to come work on temporary visas and has dropped its requirement for fluent English, according to Sky news.
Cash cattle action picks up near upper end of last week’s trade… Choice and Select boxed beef values continue to slide, with Select dropping $2.65 on Wednesday and Choice falling $1.05. Movement held strong at 171 loads. Retail demand is thought to be soft. Sliding prices paired with steady cash cattle action thus far gives traders little reason to be buyers, with futures already at a modest premium to the cash market. Cash cattle trade picked up at $124 across the Midwest and Plains at midweek, steady with the upper end of last week’s trade.
Pork cutout value stabilizes… The pork cutout value climbed $2.47 at midweek and movement held strong at 418.48 loads. Hams and picnics led gains. But the cutout value is still down more than $7 for the week. Cash hog bids resumed their decline yesterday, dropping 93 cents nationally. December lean hogs are trading at nearly a $13 discount to the CME lean hog index.
Overnight demand news… Turkey has provisionally purchased 275,000 MT of animal feed corn in a tender in which it was seeking around 325,000 MT of the grain. Turkey also tendered to buy around 300,000 MT of red milling wheat. Japan bought 58,319 MT of food-quality wheat from the U.S., as well as 32,475 MT of the grain from Canada and 28,718 MT from Australia.
Today’s reports
- 11:00 a.m. Cotton and Wool Outlook: October 2021 — ERS
- 11:00 a.m. Oil Crops Outlook: October 2021 — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Feed Outlook: October 2021 — ERS
- 2:00 p.m. Rice Outlook: October 2021 — ERS
- 2:00 p.m. Wheat Outlook: October 2021 — ERS