First Thing Today | July 14, 2023

Good morning!

Grains firmer this morning... Corn, soybean and wheat futures traded on both sides of unchanged during the overnight session but have firmed and are near their highs this morning amid uncertainty with the Black Sea grain deal and forecasts calling for reduced rainfall chances in some areas of the Corn Belt over the next two weeks. As of 6:30 a.m. CT, corn futures are trading 10 to 11 cents higher, soybeans are 8 to 10 cents higher and wheat futures are 12 to 15 cents higher. Crude oil futures and the U.S. dollar index are both trading near unchanged.

Russia raises wheat export tax... Russia’s wheat export tax for July 19-25 will be 3,022.6 rubles ($33.53) per metric ton based on an indicative price of $233.30. That’s up from a rate of 2,989.6 rubles per metric ton the previous week.

India considers rice export ban... Top rice shipper India is considering banning exports of most varieties as the disruptive El Niño weather pattern returns. Such a move could further push up prices that are already at a two-year high. Many importers would likely turn to Thailand and Vietnam, with the former already set to harvest only one crop this season instead of the usual two.

Canadian port deal reached... The International Longshore and Warehouse Union and the B.C. Maritime Employers Association have reached a deal to halt a 13-day strike that stopped billions in trade at dozens of West Coast Canadian ports.

China signals economic stimulus coming... China’s central bank will step up “countercyclical adjustments” and use policy tools, such as the reserve requirement ratio and medium-term lending facility, to weather economic challenges, People’s Bank of China (PBOC) officials said. The central bank also will keep credit growth appropriate and guide banks to increase lending to small firms and private firms. PBOC will try to keep the yuan stable and prevent sharp fluctuations and has the “confidence, conditions and ability to cope with various shocks and maintain the smooth operation of the foreign exchange market.”

China will try to shore up investor confidence in sputtering economy... China’s financial regulators have invited some of the world’s biggest investors to a rare symposium next week, three sources told Reuters, seeking to encourage foreigners to keep investing in the world’s second-largest economy despite its recent weakness and rising geopolitical tensions. The meeting in Beijing next Friday will focus on the current conditions of U.S. dollar-denominated investment firms in China and the main problems and challenges facing them, according to the sources. Such a meeting, with a clear agenda to discuss challenges facing global fund managers investing in China is rare and reflects Beijing’s keenness to shore up confidence among foreign investors.

WOTUS rule confusion... The recent Supreme Court decision in the Sackett v. EPA case has sowed confusion among landowners in three states: Michigan, New Jersey and Florida. These states, which handle federal permitting on their soil, are reportedly struggling to understand the breadth of wetlands regulations following the high court’s ruling. State officials and people closely observing the situation have noted these states serve as early examples of the challenges other places may face in response to the Sackett ruling. Many states are in a holding pattern, waiting for EPA to amend its definition of “waters of the U.S.” (WOTUS) to take into account the court’s ruling. Meanwhile, EPA announced it will only seek public input after it has adjusted its rule about federal waters. This move has been criticized by House Republicans who, during a recent hearing, accused EPA of potentially circumventing the ruling. They argue the agency may try to maintain federal jurisdiction over as many wetlands as possible and could be keeping the public uninformed during the decision-making process.

Sugar industry ruling... The U.S. Third Circuit Court of Appeals rejected an appeal by the Department of Justice (DOJ) aimed at blocking U.S. Sugar’s acquisition of Imperial Sugar Co., thereby upholding a lower court’s ruling from September 2022 that allowed the merger to proceed. DOJ argued the merger would infringe upon antitrust law and result in increased sugar prices for customers and businesses. However, a three-judge panel from the Third Circuit Court dismissed DOJ’s argument that distributors, who only sell sugar and do not produce it, should not be regarded as market competitors under antitrust law. Despite this, the panel did concur with DOJ that the lower court had erred in contending USDA could potentially counteract any anticompetitive effects caused by the acquisition, such as by expanding the amount of low- or no-duty sugar imported into the U.S. under the current tariff-rate quota (TRQ).

New clean energy lending initiative... The Biden administration is set to announce a $20 billion investment to support the establishment of a national clean energy lending network. It aims to enhance private-sector development of environmental projects and eco-friendly technologies across the United States. Vice President Kamala Harris and EPA Administrator Michael Regan are scheduled to officially announce the initiative in Baltimore, Maryland. The allocated funds will be competitively awarded to two or three national clean financing institutions. These organizations will collaborate with the private sector to back climate-friendly initiatives spearheaded by individuals, groups and local authorities. The distribution of the $20 billion will feature $14 billion going to the National Clean Investment Fund competition and $6 billion to the Clean Communities Investment Accelerator competition.

Bullard resigns from St. Louis Fed... James Bullard, President of the Federal Reserve Bank of St. Louis, has resigned to become the inaugural dean of the Mitchell E. Daniels, Jr. School of Business at Purdue University. Bullard’s resignation is effective as of last Thursday, and he will fully leave his role on Aug. 14. Although Bullard doesn't vote on rate decisions, his opinions have often presaged policy changes. The St. Louis Fed’s No. 2 official, Kathleen O’Neill Paese, will step in as the interim president. Of note: The St. Louis Fed is commonly more “hawkish,” favoring tighter control over monetary policy.

Still waiting for active cash cattle trade... Packers tried to use the price break in live cattle futures Wednesday and Thursday morning to get cattle bought at lower prices, but feedlots resisted. The close well off session lows in live cattle futures on Thursday may be enough to swing momentum back in feedlots’ favor in this week’s extended cash cattle negotiations. Cash trade so far this week has been at mostly steady prices, though volume was light and the range of prices was wide.

Cash hog index tops $100... The CME lean hog index is up another 93 cents, pushing it above $100.00 for the first time since early last September. While the cash index has rallied more than $29.00 from the April low, it is still $13.00 below last year at this time and nearly $22.00 below the August 2022 peak.

Overnight demand news... Thailand purchased 60,000 MT of feed wheat expected to be sourced from the European Union.

See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.

Today’s reports

• 11:00 a.m. Cotton and Wool Outlook: July 2023 — ERS
• 11:00 a.m. Oil Crops Outlook: July 2023 — ERS
• 2:00 p.m. Feed Outlook: July 2023 — ERS
• 2:00 p.m. Rice Outlook: July 2023 — ERS
• 2:00 p.m. Wheat Outlook: July 2023 — ERS
• 2:00 p.m. Mink — NASS
• 2:00 p.m. Peanut Prices — NASS
• 2:00 p.m. Turkey Hatchery — NASS
• 2:30 p.m. Commitments of Traders   CFTC