Good morning!
Light pressure as weekend approaches… Corn and soybean futures are a penny or two lower as a week of relatively subdued trade winds down. Wheat futures are paring early losses, with SRW wheat mixed, HRW wheat down 2 to 3 cents and spring wheat 1 to 2 cents lower. The U.S. dollar index is slightly lower, as are crude oil futures.
Rains have Argentine corn planting off to a quick start, but more needed… Argentine farmers started planting their 2021-22 corn crop early this month after welcome rains, with the Buenos Aires Grains Exchange reporting 8.5% of the expected crop had been planted. It noted that farmers took advantage “of the good soil humidity that farm lots still have,” but the exchange added, “new rains are needed to make sure that all expected early season corn gets sown.” The exchange reports nearly 76% of its 2021-22 wheat crop is in good to excellent condition thanks to recent rainfall. The exchange is calling for a 19.2 MMT crop.
Russian tariff on wheat exports hits a new high… Russia has set its wheat export tax at $53.50 per MT for the week of Sept. 29-Oct. 5. That’s a $2.60 jump from the week prior and the highest the formula-based tariff has been since it took effect at the start of June.
Ukraine’s grain exports off a solid start… Nearly three months into the 2021-22 marketing year, Ukraine has exported 12.8 MMT of grain, a 1.5-MMT rise from last season at this point. That tally includes 7.7 MMT of wheat, 3.4 MMT of barley and 1.4 MMT of corn. This year’s grain crop is expected to total a record-breaking 80.6 MMT, which would be a 24% surge from the year prior. The government expects exports to jump 16 MMT from last season to 60.7 MMT, including 23.8 MMT of wheat, 30.9 MMT of corn and 5.2 MMT of barley.
China the lead buyer of Australian wheat, despite tensions… Political tensions have upended Australian exports of some products like wine, barley, coal and beef to China, but Beijing has remained a strong buyer of Australian wheat, speaking to its need for the grain and focus on food security. China has been Australia’s top buyer of wheat in 2021-22, accounting for 2 MMT of the country’s 5 MMT in sales, according to trade sources and an analyst cited by Reuters. One of them detailed that China cancelled some cargoes of French wheat due to quality issues and scooped up some Australian wheat instead.
Cotton AWP falls a second straight week… The Adjusted World Price (AWP) for cotton declined to 77.59 cents per pound, effective today, the second consecutive weekly decline after it moved over 80 cents per pound the week of Sept. 10. Meanwhile, USDA announced Special Import Quota #23 will be established Sept. 30 for 53,532 bales of Upland cotton, applying to supplies purchased not later than Dec. 28 and entered into the U.S. not later than March 28.
Curbs on emissions have disrupted Chinese industrial operations; state planner stepping in to help… China’s state planner working to China’s National Development and Reform Commission said today it will work to resolve power shortages that have disrupted production since the end of June, when new measures to curb emissions kicked in. The state planner focused on the country’s fertilizer sector, in particular, as a segment that has been particularly impacted. It urged the country’s main energy producers to fulfill their supply contracts to fertilizer makers. The power crunch has resulted in soaring prices for a number of raw materials and caused at least three soybean processing plants in Tianjin to close recently.
U.S. posts energy product trade surplus for first time since 1970s... In 2020, the U.S. saw a trade surplus in energy products for the first time since at least 1974, the Energy Information Administration (EIA) detailed in a Sept. 22 post. Overall, the 2020 U.S. energy trade surplus stood at $27 billion, EIA said, citing Census Bureau trade data. That compared with a record $938 billion trade deficit for non-energy goods. During the first six months of 2020, the U.S. accumulated a $9-billion trade surplus in energy goods while seeing a trade deficit of $505 billion in non-energy products. Overall, EIA noted that petroleum accounts for 92% of U.S. energy import values and 74% of energy export values.
Chinese regulators tell Evergrande to avoid a near-term default on dollar bonds… They also said to focus on completing unfinished projects and repaying individual investors. The developer had an $83.5-million coupon due Thursday (with a face value of $2.03 billion) and a 30-day grace period to make the payment. A missed payment would set the stage for what could be the largest-ever dollar bond default by a company in Asia. Chinese authorities are asking local governments to prepare for the potential downfall of Evergrande, according to officials familiar with the discussions, signaling a reluctance to bail out the debt-saddled property developer while bracing for any economic and social fallout from the company’s travails.
Likely outcomes for key congressional issues… In our opinion, this is how they will most likely play out.
- A stopgap spending bill without a debt limit suspension, but one including billions of aid for 2020 and 2021 ag disasters.
- Dems will include a debt limit suspension in a reworked and much-scaled back human infrastructure bill via reconciliation. Or, Dems could just do a separate reconciliation bill just to raise the debt ceiling. That would be faster than adding to a bigger recon bill.
- A House delay from a promised Monday vote on traditional infrastructure — unless Pelosi works another deal with her moderates.
Find many more updates on where these major issues stand in “Policy Updates.”
U.S. farm & biofuel leaders to White House: Pull EPA back from the brink… Advanced Biofuels Business Council, American Farm Bureau Federation, American Soybean Association, Growth Energy, National Biodiesel Board, National Corn Growers Association, National Farmers Union, and Renewable Fuels Association issued a joint statement regarding reports about the administrations’ plans to lower blending mandates under the Renewable Fuel Standard that said in part: “While a formal proposal has not been released, the expected standards would destroy a decade of progress on low-carbon biofuels and brazenly violate the promises that President Biden made to farmers, green voters, and his own allies in Congress. We are deeply concerned that this administration is favoring the oil industry over the environment, rural communities, and hardworking farmers by providing handouts that eclipse those obtained by fossil fuel advocates under the previous administration.”
Some USDA nominations on hold… Nominations of Robert Bonnie to be USDA’s undersecretary for farm production and conservation and Xochitl Torres Small to be undersecretary for rural development are stalled because of holds put on by other senators.
Senator Chuck Grassley (R-Iowa) is running for re-election… On Twitter he announced he will seek re-election in 2022, saying “lot more to do, for Iowa.” Grassley was first elected to the Senate in 1980.
German urging Poland to help it create a wild boar-free zone to help battle ASF… Germany is planning to establish a wild boar-free zone along its border with Poland in an attempt to contain its African swine fever outbreak. Within the zone, the wild boar population would be intensely hunted, with hopes of eradicating the population. While Germany has been pretty successful keeping the virus out of its commercial barns, the virus continues to spread among the country’s wild boar population. Germany has erected 100s of miles of anti-wild boar fencing along the border, but Poland has not done the same, despite German offers of personnel and financial and organizational support.
Cattle on Feed Report again expected reflect herd contraction… Another USDA update on the number of cattle on feed arrives today. Analysts surveyed by Reuters on average expect the report to show there were around 11.155 million head of cattle on feed as of Sept. 1, which would be a 2.1% year-over-year decline. Placements are expected to slide 1.0% from year-ago and marketings are expected to hold basically steady with last year’s levels. Meanwhile, boxed beef values extended their month-long and nearly uninterrupted slide.
Markets ready for H&P Report… The pork cutout value slumped $2.63 on Thursday after a $4-plus surge at midweek gave the market hope prices may be working on an overdue seasonal move to the upside. Movement also slowed to just 280.20 loads on Thursday, as price gains yesterday morning slowed business. Today, traders will put their finishing touches on positions leading up to USDA’s quarterly Hogs & Pigs Report. It’s expected to show a 1.7% year-over-year decline in the U.S. hog herd as of Sept. 1. All categories except the number of pigs per litter are expected to contract compared with year-ago levels.
Overnight demand news… Pakistan bought around 575,000 MT of wheat in an international tender for 500,000 MT of the grain. Jordan issued a new international tender to buy 120,000 MT of milling wheat from optional origins. South Korea’s Korea Feed Association bought around 60,000 MT of feed corn in a private deal after earlier making no purchase in an international tender to 138,000 MT. Japan purchased 55,481 MT of food-quality wheat from the U.S. as well as 57,586 MT from Canada.
Today’s reports
- 8:00 a.m. Food Price Outlook — ERS
- 1:00 p.m. Weekly Red Meat Production Report — AMS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments — of Traders Report — CFTC
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Hogs and Pigs — NASS
- 2:00 p.m. Poultry Slaughter — NASS
- 2:00 p.m. Turkeys Raised — NASS