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Winter wheat conditions improve as expected... USDA rated 41% of the winter wheat crop as “good” to “excellent,” up three points from last week and equal to expectations from analysts polled by Reuters. The “poor” to “very poor” rating held at 23%, though there was a one-point increase in the bottom category.
| This week | Last week | Year-ago |
Very poor | 8 | 7 | 6 |
Poor | 15 | 16 | 11 |
Fair | 36 | 39 | 33 |
Good | 35 | 33 | 42 |
Excellent | 6 | 5 | 8 |
USDA reported winter wheat planting reached 87%, two points behind the five-year average. Planting stood at 76% in Texas (80% average), 72% in Oklahoma (88%) and 94% in Kansas (93%).
The winter wheat crop was 66% emerged, five points behind average. Emergence stood at 52% in Texas (59% average), 47% in Oklahoma (73%) and 76% in Kansas (73%).
Corn, soybean harvest paces remain well ahead of average... USDA reported corn harvest advanced 10 percentage points over the past week to 91% as of Sunday, 16 points ahead of the five-year average. Each of the top 18 production states was ahead to well ahead of its average pace.
Soybean harvest advanced just five points over the past week to 94%, though that was still nine points ahead of average. Of the top 18 production states, only North Carolina was behind its normal pace (43% vs. 44%), while Louisiana (99%) was equal to its five-year average. The remaining 16 states were running ahead to well ahead of average for harvest.
Cotton harvest nears two-thirds complete... USDA reported cotton harvest advanced 11 points to 63%, nine points ahead of average. Harvest stood at 58% in Texas (49% average) and 52% in Georgia (49%). Of the top 15 production states, only California (50% vs. 52%) and North Carolina (42% vs. 52%) were running behind the normal pace.
Canadian West Coast ports lock out foremen... As expected, Port of Vancouver foremen were locked out on Monday after failing to withdraw a strike notice at Canada’s largest port. An update from the BC Marine Employers Association said it made “the difficult decision to lockout forepersons and other Local 514 members” as of 4:30 p.m. Pacific time, continuing until further notice. The lockout comes after the International Longshore and Warehouse Union Ship & Dock Foremen Local 514, which represents about 730 workers at ports including Vancouver and Prince Rupert, gave a 72-hour advance notice on Thursday of a walkout starting at 8 a.m. Pacific time Monday.
Malanga: Strong GDP growth amid inflation, Fed rate cuts expected but fiscal concerns loom... Dr. Vince Malanga, president of LaSalle Economics, says real GDP grew at a 2.8% rate in the summer, with inflation at 1.8%, signaling strong corporate profits if sustained. Federal spending and consumption were key drivers, he notes, while trade and construction underperformed. Although business investment was stable, external events like hurricanes and strikes impacted the quarter.
The Federal Reserve is expected to cut rates, though Malanga signals future economic stability may be threatened by conflicting survey data, recent steepening of the yield curve, and a federal deficit near 7% of GDP. Long-term rates may be rising due to investor concerns over fiscal sustainability, potentially signaling discontent with growing federal red ink. Housing markets showed signs of a recovery but were negatively impacted by rising rates.
Malanga says both presidential candidates have not focused on addressing the deficit, favoring tax cuts and subsidies instead. The Fed, which has traditionally stayed clear of fiscal policies, might need to step in, he believes, with Chair Jerome Powell likely considering whether to counter deficits or monetize debt.
Malanga’s bottom line: The sustainability of the current growth and low inflation relies on fiscal responsibility and economic adjustments moving forward.
China begins crucial legislative meeting... The Standing Committee of China’s legislature began an important five-day session in Beijing, where economic stimulus measures are set to be discussed. The measures approved during this meeting are expected to signal the leadership’s approach to handling the country’s economic challenges. Key elements of the anticipated package include potential bank recapitalization, refinancing of local government debt and possible support for households. This package will be closely watched by investors looking for signs that Chinese policymakers understand the gravity of the economic situation and are prepared to allocate sufficient resources to address it.
Another significant concern for investors is how China will respond if Donald Trump wins the U.S. presidential election. Trump has threatened severe tariffs of 60% on Chinese imports, which, according to UBS, could reduce China’s GDP growth by 2.5 percentage points over the following year. If such tariffs are implemented, China might need to adopt a more aggressive economic stimulus to counteract the impact.