Evening Report | September 27, 2024

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Corn producers: Make 2024-crop sales... December corn futures firmed to their highest level since late July on Thursday before pulling back. While the contract didn’t quite get to our sales target, we want to reward the rally ahead of next Monday’s reports in case there’s a bearish reaction. We advise corn hedgers and cash-only marketers to sell an initial 20% of 2024-crop production in the cash market. Our next sales target would be the $4.25 to $4.50 level for December corn futures.

Your Pro Farmer newsletter is now available... Soybean led gains in the grain markets amid heat and dryness concerns in central Brazil as the country’s 2024-25 planting season gets underway and worries about a poor finish to the U.S. growing season. November soybeans rebounded more than $1.00 from the August low and firmed to their highest level since late July. December corn futures also reached its highest level since late July, while wheat futures were unable to clear their mid-September highs. USDA’s Hogs & Pigs Report showed the Sept. 1 hog inventory was modestly bigger than year-ago, but about in line with expectations, aside from near-term market hog inventories that greatly topped expectations. The Cold Storage Report indicated meat demand continues to keep pace with supplies for both beef and pork. The big economic news was China’s broad stimulus efforts and indications more supportive measures will be coming as it tries to break out of the deflationary funk and spur demand. Our News page 4 feature this week takes a look at what’s taking so long on getting 45Z clean fuel credit guidance, which will go into effect on Jan. 1, 2025. We cover all of these items and much more in this week’s newsletter, which you can access here.

Biden administration officials meeting with USMX to urge good faith negotiations... Top Biden administration officials are meeting with the United States Maritime Alliance (USMX) to urge good faith negotiations in the ongoing labor dispute with the International Longshoremen’s Association (ILA).

The meeting included:

· Transportation Secretary Pete Buttigieg

· Acting Labor Secretary Julie Su

· White House senior economic advisor Lael Brainard

The officials are conveying directly to USMX “that they need to be at the table and negotiating in good faith fairly and quickly.” This message was previously delivered to ILA earlier in the week.

A potential strike looms at East Coast and Gulf of Mexico ports starting Oct. 1 if no deal is reached. ILA represents 45,000 dockworkers at 36 ports along the U.S. East Coast and Gulf of Mexico. Negotiations have stalled over wage issues and concerns about automation. The current contract expires on Sept. 30.

The White House is pressing both sides to engage in sincere negotiations promptly.

Ag groups urge Biden to address ‘trifecta of transportation trouble’... U.S. ag and farm groups sent a letter to President Joe Biden today, urging his administration to address a “trifecta of transportation trouble” affecting U.S. agriculture: port labor issues, Mexican rail embargoes and low water levels on the Mississippi River. The letter, spearheaded by the National Grain and Feed Association (NGFA) requests intervention to lift Mexican-imposed rail embargoes on U.S. agricultural exports, which amount to over $30 billion annually, and asks the U.S. Army Corps of Engineers to deepen Mississippi River navigation channels to 12 feet amid historically low water levels. The groups also want action to avert a potential strike at U.S. East and Gulf Coast ports that could begin Oct. 1, noting broad consequences that would have on the ag sector and economy. Senior Biden officials and key Congressional committees are also involved in the effort.

Key grain stocks data out next Monday... USDA’s Quarterly Grain Stocks Report on Monday will set final 2023-24 ending stocks for corn and soybeans. The report has a history of surprises, especially for corn, with analysts routinely missing those estimates by a wide margin. USDA will also issue its final estimates for 2024 wheat production, though only modest changes are expected. The following pre-report estimates are from a Reuters survey.

EU cuts wheat crop estimate to 12-year low... The European Commission on Friday reduced its forecast for wheat production in the EU by 1.5 MMT to 114.6 MMT, a 12-year low. Wheat production is now expected to fall 9% from year-ago. The new production estimate is more in line with private crop forecasters. The EU’s top two wheat producers, France and Germany, both suffered severe crop losses this year due to excessive rainfall during the growing season.

Russia hikes corn export duty tenfold... Russia hiked the export duty for corn almost tenfold, marking the first sign of export curbs amid lower corn crop forecasts due to extreme weather that hit key corn-producing regions this year. The agriculture ministry said the corn export duty will rise to 2,786.2 rubles ($29.85) per metric from Sept. 2, up from 292.7 rubles in the previous week.

“There is a fairly high probability that corn exports will be, to put it mildly, restricted,” IKAR consultancy said.

Russia exported only 7 MMT (276 million bu.) of corn in 2023-24 with Iran, Turkey and Libya as the main buyers. IKAR forecasts Russia’s corn exports will fall to 2.5 MMT in 2024-25.

Farm groups submit comments, petition to EPA on draft insecticide strategy... The coalition letter, signed by over 200 organizations, criticized EPA for denying a request to extend the public comment period, despite receiving 27 requests from over 250 organizations. The groups emphasized the critical role insecticides play in preventing crop loss, managing pest resistance and maintaining conservation practices. They warned that without access to these tools, U.S. agriculture could suffer significant economic and environmental consequences, potentially leading to higher consumer prices.

The comments also highlighted the complexity and cost of the proposed regulations, including the burdensome calculations farmers would need to make for compliance. The groups suggested that EPA could introduce more affordable and practical alternatives, such as training courses, to ease the regulatory burden. The petition, signed by 772 growers and applicators, echoed these concerns and urged EPA to reconsider the proposal, calling it complex and flawed. Both documents also requested revisions to EPA’s risk assessment process for species, arguing that it is overly conservative.

Fed’s favorite gauge shows inflation under control... The U.S. personal consumption expenditure (PCE) price index rose 0.1% from the previous month in August, down from July’s 0.2% increase. Annually, the PCE inflation rate dropped to 2.2%, its lowest since February 2021, while the core inflation rate edged up to 2.7%.

Fed funds futures suggest investors are currently split evenly between expecting a quarter-point and a half-point cut to interest rates following the Nov. 6-7 monetary policy meeting.