Good morning!
Pressure overnight… Corn futures are 3 to 5 cents lower amid active harvest progress and some light profit-taking, but the market’s short-term uptrend remains intact. Soybean futures are down a penny or two, with futures dropping to a new six-month low overnight. Winter wheat futures have fallen 10 to 16 cents, with the HRW wheat market leading the decline. Spring wheat futures are 6 to 8 cents lower. The greenback is firmer today, and crude oil futures have shot to another seven-year high.
Crop Progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Oct. 3. Find more details.
- Corn: 88% mature, 29% harvested, 59% “good” to “excellent” (G/E)
- Soybeans: 86% dropping leaves, 34% harvested, 58% G/E
- Cotton: 70% bolls open, 13% harvested, 62% G/E
- Winter wheat: 47% planted, 19% emerged
Soybean CCI ratings improves a little… When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop ticked down 0.2 points to 357.0 points, while the soybean crop improved 1.9 points to 351.0 points. The CCI rating is 9.7 points below the five-year average for corn and 8.6 points below for soybeans.
Cordonnier maintains U.S. crop estimates and notes ‘surprisingly good’ bean yields… Crop Consultant Dr. Michael Cordonnier maintained his U.S. corn yield estimate of 175.0 bu. per acre and his bias is neutral to slightly lower going forward. “U.S. corn yields are quite variable which is the result of dry weather, increased disease pressures, and rapid maturity of the corn. There also appears to be lighter test weights, which could also be caused by the above-mentioned factors,” he reports. He also made no change to his U.S. soybean yield estimate of 50.3 bu. per acre and his bias is neutral going forward. He comments, “There are some surprising good soybean yields being reported, which illustrates once again that soybeans can respond to improved conditions late in the growing season.”
Rain and snow forecast for the Northern Plains next week… World Weather Inc. reports a “significant round of precipitation is likely” for the Northern Plains Oct. 10-12, which is expected to boost soil moisture. The weather watcher reports rain and snow are expected, with most of the snow expected for Montana and possibly the western Dakotas. Evening weather models decreased rain chances from central Kansas and northeastern Oklahoma into the central Corn Belt October 9-11. Temperatures remain elevated on the central and northern High Plains.
StoneX boosts U.S. corn and soybean production estimates… The commodity brokerage StoneX now estimates the U.S. corn crop will yield an average of 176.6 bu. per acre, down 0.9 bu. from its September estimate, but its production estimate climbed 24 million bu. to 15.022 billion bu. on an increase in acreage. The brokerage also raised its soybean yield projection by 0.5 bu. to 51.3 bu. per acre, bumping its production estimate up to 4.436 billion bu. from 4.409 billion bushels.
Russian wheat prices still climbing… Russian wheat prices climbed for the 12th week in a row, according to the consultancy IKAR. It estimates wheat with 12.5% protein loading from Black Sea ports for supply the first half of November at $307 per MT, free on board, as of late last week. That’s up $3 from the week prior. The consultancy SovEcon estimates prices climbed $1.50 per MT last week to $306 per metric ton. Taxes on wheat exports have also been climbing steadily since June. Rising prices, a smaller crop and uncertainty about export tariffs have resulted in Russian wheat exports lagging year-ago by 14%.
Another Chinese developer has fallen into crisis… Fantasia Holdings Group failed to repay a maturing bond, adding to the strains of the nation’s heavily leveraged property firms following industry giant China Evergrande’s debt woes. Fantasia, a developer of luxury apartments in China, said it didn’t make a $206 million U.S. dollar bond payment that was due Oct. 4, adding to the malaise surrounding the country’s highly indebted property companies. Fantasia is not as big as the troubled Evergrande property firm, but there are growing concerns about a contagion effect in the financial markets.
Chinese end-around on cotton contributing to cotton price rally… Cotton futures are trading at their highest price in about a decade, with growing Chinese demand being met in part by rising U.S. exports to China. Last year, then President Donald Trump banned U.S. imports of clothing and other products made of cotton from the Xinjiang region, China’s largest cotton-producing area. The administration said at the time that there was evidence that the products were made with forced labor by the Uyghur ethnic group. U.S. companies still can import cotton products made in China if the cotton itself is from somewhere else. So, China is importing cotton — much of it from the U. S. — to make goods and ship them back.
Global trade flows will continue their rapid rebound from the pandemic this year and next… Asia will likely see the strongest gains in exports, the World Trade Organization (WTO) said. The Geneva-based body’s new forecasts underline the unequal nature of Covid-19’s economic impact, with poorer countries set to suffer the weakest trade recovery, partly because they lack access to vaccines.
Biden warns U.S. could default on debt, blames McConnell… President Joe Biden warned that the U.S. government is at risk of breaching the legal limit on its debt in two weeks, blaming Senate Republican Leader Mitch McConnell (R-Ky.) for what he described as a “meteor” headed for the economy. Biden demanded that Republicans stop blocking Democratic efforts to suspend the debt ceiling, while Republicans urged Democrats to use the reconciliation legislative procedure to boost the limit without any Republican votes. Biden revealed he had just received a letter from McConnell in which the Senate minority leader prodded him to pressure his party to raise the limit with only Democrats. Biden said he planned “on talking to Mitch about it.” Senate Majority Leader Chuck Schumer (D-N.Y.) said he wants to pass a debt ceiling bill by the end of the week, without providing details on how that will unfold.
Growth Energy calls for Supreme Court review of lower court E15 ruling… Growth Energy is requesting the U.S. Supreme Court to review a decision by the DC Circuit Court of Appeals that vacated EPA’s approval of selling E15 fuel year-round, arguing that the decision is at odds with the statutory interpretation of the law that has been established by the court and the action will stymie expansion of higher-ethanol fuel blends in the future. EPA’s decision to approve the Reid vapor pressure (RVP) waiver for E15 fuel that previously was applied only to E10, was changed in 2019 as the agency acknowledged its interpretation of the RVP waiver “made no sense and undermined Congress’s objectives.” Growth Energy argued that E15 was not available when the initial EPA decision was made to apply the RVP only to E10 fuel. It also stated the statute “at most” is “ambiguous” and that EPA’s interpretation of the law is “reasonable.” The DC Circuit Court of Appeals denied a rehearing request on the matter in September.
Total CFAP 2 payments edge up... Coronavirus Food Assistance Program 2 (CFAP 2) payments now total $18.66 billion as of Oct. 3, up slightly from the prior week, with the original CFAP 2 payments at $13.86 billion and the top-up payments for acreage-based commodities that started to be made April 2 totaling $4.81 billion. Of the total payments, $11.09 billion have been made for acreage-based commodities, $3.46 billion for livestock, $2.83 billion for sales commodities, $1.22 billion for dairy and $65.94 million for eggs/broilers. CFAP 1 payments stood at $10.6 billion as of Oct. 3, little changed from the prior week.
Choice beef remains under pressure… Cattle futures posted strong gains to kick off the week, with the October live cattle contract getting a boost from its discount to the cash market. The contract ended Monday nearly in line with last week’s average cash cattle price of $122.56, which was down $1.08 from the week prior. Packers forward bought a lot of animals on the last price break, limiting their need for purchases near-term. Until the product market improves, the upside for cash prices is likely limited. Choice beef dropped another $3.13 on Monday, but Select was able to muster a 32-cent gain. Movement was light at 103 loads.
Lackluster starts to the week for pork and cash hog markets… The pork cutout value fell 99 cents to start the week, with losses for loins, butts and picnics more than offsetting gains for other cuts. Movement was also light at 292.27 loads. Cash hog bids continue to slide, with USDA reporting bids slid a national average of 91 cents to start the week. But while the cash and product market got off to lackluster starts, Monday’s futures pullback was likely corrective in a nature and a test of the summer highs is still very much a possibility.
Overnight demand news… Japan’s ag ministry is seeking a total of 130,963 MT of food-quality wheat from the U.S., Canada and Australia in a regular tender.
Today’s reports
- No reports