First Thing Today | August 11, 2023

Good morning!

Quiet trade overnight... Corn, soybeans and wheat traded in relatively tight ranges during the overnight session as traders awaited USDA’s August crop reports later this morning. As of 6:30 a.m. CT, corn futures are trading fractionally lower, soybeans are 5 to 6 cents higher, SRW wheat is 3 to 4 cents lower, HRW and HRS wheat are steady to fractionally higher. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is trading just below unchanged.

First corn, soybean crop estimates will be highlight of USDA’s reports... USDA’s initial survey-based corn and soybean crop estimates in USDA’s Crop Production Report at 11 a.m. CT will be based mostly on farmer surveys and satellite imagery. The first cotton crop estimate will include objective yield data from southern Texas. Any changes to the U.S. wheat crop estimates this month are typically minor. USDA will also update its U.S. and global balance sheets. Click here to view the pre-report estimates.

Assessing damage to China’s corn, rice crops from storm impacts... Floods have damaged corn and rice crops in China’s key northern grain belt, with more rains expected from Khanun, though World Weather Inc. doesn’t expect serious damage from the latest storm. Initial estimates show 4 MMT to 5 MMT of corn, or about 2% of the country’s output, have been affected by the floods, two trade sources told Reuters. An analyst at Beijing Orient Agribusiness Consultant told Reuters damage from the storms may reduce rice production by 3% to 5%. China’s ag ministry left its corn and soybean production estimates at 282.34 MMT and 21.46 MMT, respectively. Any reductions due to recent flooding and adverse weather will likely show up in next month’s report.

U.S. halts cargo of Polish wheat... A vessel carrying about 30,000 MT of Polish wheat is being prevented from unloading at the port of Houston due to contamination with corn, people familiar with the situation told Bloomberg News. The sources said the move may spark tensions with the European Union.

Russia sharply raises wheat export tax... Russia’s wheat export tax for Aug. 16-22 will be 3,712.8 rubles ($37.74) per metric ton based on an indicative price of $233.00. That’s up from a rate of 2,918.1 rubles per metric ton the previous week and the highest level since the week of May 31-June 6.

Vietnam’s rice exports likely to increase this year... Vietnam will have 7 MMT to 8 MMT of rice to export this year, according to Vietnam News Agency, citing the country’s ag minister. Last year, Vietnam exported 7.1 MMT of rice. During the first seven months of this year, the country’s rice exports totaled 4.89 MMT, up 21% from the same period last year.

More downbeat economic data out of China... China’s banks extended 345.9 billion yuan ($47.80 billion) in new loans in July, the least since November 2009. New loans tumbled 89% from June and nearly 50% from July 2022. Household loans, mostly mortgages, contracted 200.7 billion yuan in July compared with 963.9 billion yuan in June, as a debt crisis in the property sector deepened, while corporate loans slid to 237.8 billion yuan last month from 2.28 trillion yuan in June. Outstanding yuan loans expanded 11.1% in July from the year before, the lowest so far this year.

Biden’s ‘ticking time bomb’ comments likely to anger China... President Joe Biden called China a “ticking time bomb” and criticized the leaders of the Communist Party, referring to them as “bad folks.” Biden said, “They have got some problems. That’s not good because when bad folks have problems, they do bad things.” China’s official Xinhua news agency rebuked Biden’s statements. The commentary labeled his comments as employing an “old trick” of targeting China when there are domestic issues.

NOAA expects more active hurricane season... The National Oceanic and Atmospheric Administration (NOAA) raised its projection for the 2023 Atlantic hurricane season, indicating an expectation of more hurricane activity than previously anticipated. The revised outlook predicts the formation of 14 to 21 named storms. Among these storms, six to 11 are expected to intensify into hurricanes, and two to five might develop into major hurricanes. NOAA says sea surface temperatures in the Atlantic Ocean are unusually warm, which counteracts the usual atmospheric conditions that would typically limit hurricane development.

U.S. budget deficit more than double last year at this time... The U.S. budget deficit expanded to $1.6 trillion through the first 10 months of fiscal year (FY) 2023, more than double the amount from the same period last year. In July, a budget deficit of $220.8 billion was recorded, with government receipts rising by 2.5% to $276 billion and spending increasing by 3.4% to $497 billion. Notably, interest payments on the federal debt amounted to $67 billion in July, and these payments have totaled $725 billion so far in FY 2023. This is in comparison to $589.5 billion during the same period in FY 2022. The Congressional Budget Office’s estimate for the total FY 2023 deficit is $1.7 trillion.

Japan lifts ban on Brazil’s Espirito Santo chicken products... The Japanese government lifted restrictions on chicken products from the Brazilian state of Espirito Santo, which it imposed after bird flu cases in local backyard flocks in late June, Brazilian agriculture ministry said. Japan was Brazil’s second largest destination for chicken exports in the first half of this year.

Quiet cash cattle market... Limited cash cattle trade was reported through Thursday as packers remained committed to not raising cash cattle bids above last week’s levels and feedlots held out for higher prices. Unless either side budges in cash negotiations, this is setting up to be a light week of trade.

Cash hog pullback extends... The CME lean hog index is down another 43 cents. While the index has only dropped $2.09 since the July 28 peak, this marks the eighth decline in the last 10 days. August hog futures, which expire on Monday and will be cash settled on Wednesday, finished Thursday at a $2.185 discount to today’s cash quote, signaling traders expect the pullback to continue. October hogs held over a $23.50 discount, while December hogs were more than $30.00 below the cash index.

Overnight demand news... Algeria purchased an unknown volume of corn expected to be sourced from Argentina from a tender for up to 80,000 MT.

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. Crop Production — NASS
• 11:00 a.m. WASDE — WAOB
• 11:00 a.m. Cotton Ginnings — NASS
• 11:15 a.m. Cotton: World Markets and Trade — FAS
• 11:15 a.m. Grains: World Markets and Trade — FAS
• 11:15 a.m. Oilseeds: World Markets and Trade — FAS
• 11:15 a.m. World Agricultural Production — FAS
• 2:00 p.m. Peanut Prices — NASS
• 2:30 p.m. Commitments of Traders — CFTC