Evening Report | September 9, 2024

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Corn conditions decline as expected... USDA rated 64% of the corn crop as “good” to “excellent” as of Sunday, down one percentage point as analysts expected. The “poor” to “very poor” rating held at 12%.

USDA reported 95% of the crop was in dough stage (94% average), 74% was dented (73%), 29% was mature (24%) and harvest reached 5% (3%).

Soybean conditions unexpectedly unchanged... USDA rated 65% of the soybean crop as “good” to “excellent,” unchanged from the previous week, whereas analysts expected a two-point decline. The “poor” to “very poor” rating held at 10%.

USDA reported 97% of the crop was setting pods (96% average) and 25% was dropping leaves (21%).

Cotton conditions decline... USDA rated 40% of the cotton crop as “good” to “excellent,” down four points from the previous week. The “poor” to “very poor” rating increased four points to 28%. The Texas crop was rated 29% in the top two categories and 39% in the bottom two.

USDA reported 45% of the crop had bolls open (40% average) and harvest stood at 8% (6%).

Spring wheat harvest into the home stretch... USDA reported spring wheat harvest reached 85% done, two points ahead of the five-year average. Harvest was equal to or ahead of average in each of the six states. Top producer North Dakota’s harvest stood at 79% (78% average).

Winter wheat planting on average pace... USDA reported 6% of the winter wheat crop was planted as of Sunday, equal to the five-year average. Planting stood at 7% in Texas (5% average), 0% in Oklahoma (4%) and 4% in Kansas (2%).

Canadian wheat stocks down, canola stocks up from year-ago... Canadian wheat stocks fell 18.5% from year-ago to 4.6 MMT as of July 31, according to Statistics Canada. The decline was partially due to lower total national supply (down 1% to 38.7 MMT). Commercial stocks rose 39.7% to 3.8 MMT, while on-farm stocks fell 72.7% to 796 000 MMT. Wheat excluding durum fell 20.7% to 4.0 MMT, while durum wheat inventories edged up 0.3% to 576,000 MT. Exports of wheat in 2023-24 fell 1.2% to 25.2 MMT but remained above the five-year average.

Canadian canola stocks increased 66.9% to 3.1 MMT. Commercial stocks rose 129.0% to 2.3 MMT, while on-farm stocks fell 7.7% to 775,000 MT. Total domestic disappearance of canola (mostly for crushing) increased 8.1% to a record 11.5 MMT, in response to increased demand for renewable energy. Higher domestic disappearance was more than offset by lower exports of canola (down 15.9% to 6.7 MMT). Canola exports declined due to lower global demand caused by competition from soybean and palm oils, combined with higher domestic demand for industrial uses.

It is important to note that Canada made revisions to data over the past three years. Canada revised last year’s wheat stocks up from 3.51 MMT to 5.625 MMT. Canada revised higher past production. Last year’s production of 32.946 MMT was 1 MMT more than previously estimated. The 2022 crop increased nearly 500,000 MT. USDA will adopt the Canadian numbers for its world wheat balance sheet, so these will be bearish monthly revisions in Thursday’s reports.

European wheat shipment headed to eastern U.S.... The vessel Patagonia set sail for the U.S. in late August, carrying almost 27,000 MT of French wheat, Bloomberg reported, citing data from the port of Rouen. The supplies are expected to unload at Albany, New York, where Ardent Mills has a facility along the Hudson River. The shipment adds to at least 53,000 MT of European wheat already sent to the U.S. since the 2024-25 marketing year began in July, according to preliminary data from the European Commission.

While France is harvesting its smallest crop since the 1980s, the cargo was likely booked months ago when French wheat was trading at a discount to U.S. supplies.

Stabenow: Will do ‘everything in my power to pass a farm bill’... With Congress resuming work after its summer recess, Senate Ag Committee Chair Debbie Stabenow (D-Mich.) says she is determined to pass farm bill this year, despite ongoing challenges and deadlocks. Stabenow, however, has not yet released official text of her farm bill proposals.

Main points of disagreement among lawmakers include:

· SNAP funding: There are conflicting views on the Supplemental Nutrition Assistance Program (SNAP) budget. The House version proposes cuts to SNAP, while Stabenow’s Senate framework prioritizes investments in nutrition programs.

· Crop subsidy spending: The House bill aims to increase the Commodity Title by 70%, which has been a point of contention.

· Climate mitigation: Stabenow’s proposal includes bringing major investment in climate-smart conservation practices into the farm bill, which may face opposition from some lawmakers.

If an agreement cannot be reached, another extension of the 2018 Farm Bill is likely by year’s end.

Focus now on slowing growth, not inflation... The economy is showing spreading signs of weakness, potentially indicating past monetary policy actions are beginning to take effect, says Dr. Vince Malanga, president of LaSalle Economics. He notes that recent data reveals:

· Stronger productivity growth in the spring quarter

· Lower unit labor costs

As for the Federal Reserve’s next steps, Malanga says the Federal Open Market Committee (FOMC) is currently considering rate reductions:

· A 25-basis point cut is expected at the upcoming meeting

· A 50-basis point cut is anticipated shortly after the election

· Further reductions totaling 75 basis points could be implemented by next spring, he adds.

Malanga says these actions aim to ensure a positively sloped yield curve as long-term rates lag behind short-term rate reductions.

While a significant recession is not anticipated, Malanga believes the U.S. economy is expected to experience a period of slow growth:

· Annual growth rate below 2%

· Unemployment rate potentially reaching 4.5%

· Inflation expected to meet the 2% target

The slower economic growth, he concludes, is likely to result in:

· Reduced growth in tax receipts

· Increased government spending

· A worsening overall fiscal condition

WTO warns protectionism will widen global wealth gap, undermine decades of progress... The World Trade Organization (WTO) in a report warned that rising protectionism threatens to reverse 30 years of progress in reducing income disparities between rich and poor countries. Since 1995, per capita income in low- and middle-income nations has nearly tripled, while global income has risen by 65%. WTO Director-General Ngozi Okonjo-Iweala countered claims that trade harms poorer nations, while acknowledging globalization has left some workers in wealthier countries feeling left behind. Protectionism, she argued, raises production costs and risks retaliation, worsening economic inequalities.

While defending trade’s overall benefits, WTO acknowledged some negative impacts:

· Some workers in wealthier countries have felt left behind by globalization.

· The benefits of trade have not been evenly distributed, contributing to political backlash in some nations.

WTO urged governments to:

· Resist implementing tariffs and other barriers to international commerce.

· Pursue policies that harness trade’s benefits while addressing its downsides through targeted support for affected workers and communities.

Bottom line: WTO’s report presents a strong defense of open trade policies while recognizing the need for complementary measures to ensure more inclusive economic growth. It warns that a turn toward protectionism could reverse decades of progress in reducing global economic inequality.

Schumer pushes for bipartisan funding extension to avoid gov’t shutdown... Senate Majority Leader Chuck Schumer (D-N.Y.) urged bipartisan cooperation to pass a short-term funding measure and avoid a government shutdown on Sept. 30. In a letter to Democratic colleagues, Schumer emphasized the need to prevent “Republican extremism” from risking funding for critical programs. He also highlighted potential bipartisan efforts on defense, rail safety, and drug cost reductions. Despite disagreements, including on voter eligibility measures proposed by House Republicans, the likelihood of a shutdown remains low, with leaders expected to agree on a continuing resolution into December.

Under a House bill, government funding would be extended until March 28, nearly six months into fiscal 2025, under an as-yet-unnumbered bill. The measure also includes the “SAVE Act,” which would require proof of citizenship to vote. House Republican leaders released the measure on Sept. 6.