Good morning!
Early pressure on grain and soy futures gives way to some buying… Corn and soybean futures faced pressure overnight, with corn dropping to its lowest levels since early July. But both markets are now paring losses and trading narrowly mixed. SRW and HRW wheat futures have also strengthened after a softer start to trade 1 to 2 cent higher in most contracts. Spring wheat futures are down 1 to 4 cents. The U.S. dollar index is slightly lower; crude oil futures are posting modest gains.
Storm damage, power outages keeping all southern Louisiana terminals closed… Cargill Inc. confirmed damage to its Westwego, Louisiana terminal due to Hurricane Ida, soon after confirming more extensive damage at its only other grain export facility in the state. Cargill is still unsure how quickly grain loading and shipping operations may resume. Power outages have kept other terminals closed across southern Louisiana. Power may not be restored for several weeks. Some of the Mississippi River north of river mile 167.5 near Donaldsonville reopened to vessel traffic yesterday afternoon, but a 75-mile stretch of the river to the south of that remains closed to all vessel traffic due to downed power lines and sunken vessels and grounded barges and ships. There have been reports China has started shifting October orders for soybeans to Brazil. President Joe Biden will survey the destruction Friday.
Expectations for today’s Weekly Export Sales Report… The report is for the week ending Aug. 26. The reporting period will proceed Hurricane Ida-related disruptions at the Gulf.
| 2020-21 (MT) | 2021-22 (MT) |
Corn | -100,000-100,000 | 850,000-1,600,000 |
Soybeans | -100,000-125,000 | 725,000-1,400,000 |
Wheat | NA | 200,000-450,000 |
Soymeal | 25,000-200,000 | 75,000-200,000 |
Soyoil | 0-10,000 | 0-10,000 |
Argentine producers consider grain and cattle trade strike to protest restrictions on beef exports… Argentine farm associations are considering a grains trade strike and a halt to cattle trading in response to the government’s decision earlier this week to extend limits on beef exports another two months through the end of October. “Our intention is to seek that the protest is extended to all agricultural production, which will clearly require stronger organization,” Jorge Chemes, the head of the major Argentine Rural Confederations (CRA), told Reuters. The head of the Argentine Agrarian Federation, Carlos Achetoni, also confirmed the sector was debating strike action. Rural leaders say members will gather in the days ahead to define the scope and date of any protest measures. But both Chemes and Achetoni say action likely wouldn’t take place until after the Sept. 12 primary.
Early cold snap for Russia… Some frosts and freezes have already occurred this week in Russia’s northern New Lands and in northwestern areas of the country, with more possible this weekend and early next week. “Most of the spring and summer crops were either maturing, mature or being harvested in the frosted areas, leaving little impact from the cold already noted,” World Weather Inc. says. But it warns that if the frost and freezes stretch into Russia’s Volga River Basin or northern Ukraine early next week, it could impact immature summer crops.
Global food prices on the rise again…Global food prices climbed 3.1% from July, according to the Food and Agriculture Organization of the United Nations’ food price index, which came in at 127.4 points in August—up a dramatic 32.9% from year-ago. The rebound followed two consecutive months of decline. Strong gains in sugar, vegetable oils and cereal sub-indices led the rise.
FAO slices its global wheat crop estimate, citing drought in key producing areas… FAO cut its 2021 global cereal production forecast by 29.3 MMT to 2.788 billion metric tons. That would still be a 0.7% increase from 2020. Wheat drove that decline, with FAO cutting its production estimate by 15.2 MMT from July to 769.5 MMT, which is a 0.7% dip from 2020. “The reduction predominantly reflects the negative impact of prolonged drought conditions on yield prospects in the United States of America, Canada and, to a lesser extent, Kazakhstan, as well as adverse weather in the Russia Federation that increased winter crop losses and lowered yields compared to earlier expectations,” FAO says. That more than offset improvement in crop prospects for Brazil, the EU and Ukraine.
OPEC alliance stuck with gradual production increases, despite a U.S. request… OPEC and a group of Russia-led producers are resisting, for the time being, recent U.S. pressure to open the alliance’s spigots wider. On Wednesday, the group chose to continue with that plan, boosting output in monthly installments of 400,000 barrels a day through the end of 2022. The move came despite the White House saying last month the planned increases were insufficient, urging OPEC to boost production faster.
Vilsack to join virtual town hall, discussing most pressing issues in agriculture... USDA Secretary Tom Vilsack will join Farm Journal’s Clinton Griffiths for a live town-hall virtually today at 2 p.m. CDT. The event will give farmers and ranchers the opportunity to directly ask Vilsack about the issues and opportunities facing agriculture not only today, but tomorrow. The discussion will happen in a virtual town-hall-style conversation during Farm Journal’s Farm Country Update. Register for the free webinar.
Surging Covid-19 cases are hammering Asian factories…Continuing struggles in the region’s manufacturing sector could lead to higher prices for consumer goods such as shoes and electronics. Gauges of manufacturing activity plummeted across major Asian economies, in large part because virus lockdowns, port congestion and higher input costs hampered production. There were also signs that global demand for some Asian goods has been leveling off, as consumers rein in spending in the West. Factories in Vietnam have been forced to shut or reduce their workforces during the country’s deadliest Covid-19 wave. In Malaysia, most manufacturers have been told to reduce capacity unless they have vaccinated at least 80% of factory workers. China partly shut down the world’s third-busiest port last month, though it has since reopened. The struggles could signal more problems ahead for buyers of Asian products that remain in high demand, such as toys and semiconductors.
China using climate talks with Kerry to push for broad improvement in relationship… China is using talks with climate envoy John Kerry to push the U.S. to commit to an improvement in their broader relationship, with one report saying he will meet Beijing’s top diplomat during his visit to the port city of Tianjin. Kerry will speak with Yang Jiechi, a member of the ruling Communist Party’s Politburo, on a video call tonight, the South China Morning Post reported. Chinese Foreign Minister Wang Yi told Kerry in a video call yesterday that Washington must take the first step to improve ties that frayed during the Trump administration, when a trade war erupted and the nations started bickering over issues from the technology industry to visas for journalists and students.
Brazil investigating suspected BSE case… Brazil’s ag ministry on Wednesday announced it was investigating a suspected case of bovine spongiform encephalopathy (BSE) in the country. An industry source told Reuters the suspected case was in the state of Minas Gerais. The country last reported a case of “atypical” BSE in May 2019, in a 17-year-old cow. An industry source cited by Reuters signals the current case was also likely atypical as it appeared to have been detected in an older cow. The World Animal Health Organization considers Brazil to be a “negligible risk” country for BSE. Brazil was the world’s largest exporter of beef in 2020, with China as its top customer.
Cash cattle trade gets underway at steady prices… Live cattle futures dropped to their lowest level in nearly three weeks yesterday, but the market was able to muster a mid- to high-range close, with futures posting gains for the day. December live cattle also settled back above the 40-day moving average after dropping below that level of support early in the session. Meanwhile, Choice boxed beef values dropped $3.66 at midweek and Select fell $4.46, with movement topping the 100-load mark for the first time in at least a week. Some light cash cattle trade started from $126 to $127 in Iowa and Nebraska, with Kansas and Texas seeing action from $123 to $124. That’s generally in line with last week’s action that ranged from $122 to $128.
Weights in key hog producing region on the rise… Lean hog futures strengthened at midweek, though futures settled well off their highs. The pork cutout value dropped $2.47 on Wednesday and movement slowed to 240.68 loads. Bellies were able to stabilize after recent heavy pressure, but ribs took another dive and hams extended their slide. USDA estimates hog weights in the Iowa/southern Minnesota/South Dakota market rose 1.3 lbs. the week ending Aug. 28, with weights back above year-ago levels by nearly 2 pounds. Cash hog bids fell an average of $3.42 across the nation on Wednesday.
Overnight demand news… Turkey has started provisionally purchasing wheat in its international tender for 300,000 MT of the grain. Algeria reportedly purchased roughly 460,000 MT to 490,000 MT of milling wheat from optional origins in an international tender that closed Tuesday. Jordan’s state grain buyer made no purchase in its international tender to buy 120,000 MT of milling wheat. The country has also tendered to buy 120,000 MT of animal feed barley.
Today’s reports
- 7:30 a.m. Weekly Export Sales — FAS
- 10:00 a.m. Highlights From the September 2021 Farm Income Forecast — ERS