First Thing Today | August 14, 2023
Good morning!
Beans firmer, corn and wheat weaker this morning... Soybeans recouped Friday’s losses during overnight trade. Corn and wheat failed to sustain early buyer interest overnight and are lower this morning. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 11 to 13 cents higher, winter wheat markets are 4 to 7 cents lower and spring wheat is 2 to 3 cents lower. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is trading just above unchanged.
Favorable weather before heat builds... There will be two waves of cooler air and rains that move through the Corn Belt this week. World Weather Inc. says a ridge of high pressure is likely to develop over the Corn Belt next week, suppressing rainfall and inducing much warmer weather.
Russia fires warning shots at civilian ship headed to Ukrainian port... Russia’s defense ministry said Sunday a Russian warship fired warning shots on a Palau-flagged cargo vessel headed to the Ukrainian port of Izmail. The ministry said the captain of the Sukru Okan had ignored demands from the ship to stop. Russian military descended from a helicopter onto the cargo ship and after they inspected the Sukru Okan, the vessel was allowed to proceed to Izmail. Ukraine “strongly condemned the provocative actions” of Russia, saying its navy “grossly violated the UN Charter, the UN Convention on the Law of the Sea and other norms of international law.”
Ukraine grain shipments running ahead of year-ago... Since July 1, Ukraine has shipped 3.12 MMT of grains, 470,000 MT (17.7%) ahead of the same period last year. The grain exports included 1.48 MMT of corn, 1.25 MMT of wheat and 385,000 MT of barley.
Russia plans no grain purchases for state reserves this year... Russia’s agriculture ministry said it is not planning to buy grain for its intervention fund in 2023, state news agency RIA reported.
Limited demand for China rice sales, cotton sales continue... China sold 97,249 MT of state-owned rice stocks, or 16.2% of the total offered for sale, at an average price of 2,582 yuan ($356) per metric ton. China sold another 12,001 MT of cotton from state-own reserves as a string of daily sales has been ongoing since late July.
More dour news out of China... Country Garden Holdings, China’s largest privately held property developer, is in financial trouble. The firm is reportedly seeking to delay payment on a private onshore bond for the first time. Meanwhile, two Chinese listed companies said over the weekend they had not received payment on maturing investment products from Zhongrong International Trust Co., one of China’s leading integrated financial service providers. Chinese asset management firm Zhongzhi Enterprise Group Co., a financial giant in China, has an ownership stake in Zhongrong. Concerns are building with the health of China’s economy, real estate sector and financial markets.
The week ahead in Washington... Congress remains on its summer recess into September, but staff and some lawmaker work on a new farm bill continues. House Ag Chairman Glenn “GT” Thompson (R-Pa.) has indicated a farm bill draft could come in early September followed by a panel markup later in the month and floor consideration depending on a busy congressional calendar. That timeline appears optimistic to many observers. On Friday, President Joe Biden hosts a trilateral leaders’ summit with Japan’s prime minister and South Korea’s president at Camp David. The Global Times newspaper, an outlet of China’s Communist Party, criticized the scheduled Camp David summit, saying the U.S. wanted to create a North Atlantic Treaty Organization-style alliance in the region that would be dangerous for Japan and South Korea. On the economic front, James Bullard will step down as head of the Federal Reserve Bank of St Louis. Bullard was a hawkish member of the Fed’s rate-setting committee (FOMC) and has frequently advocated for interest rate increases.
Bigger cattle showlist expected this week... Cash cattle trade developed late Friday at steady/firmer prices, though trading volume was expected to be relatively light. If that was the case, this week’s showlist would be bigger. Typically, that would favor packers in cash negotiations. But given tight market-ready supplies, some packers may be short-bought on near-term needs. It appears another lengthy week of cash cattle negotiations is likely, especially with USDA’s Cattle on Feed Report scheduled for Friday afternoon.
Cash hog fundamentals weaken... The CME lean hog index is down 85 cents to $103.06 (as of Aug. 9), extending the recent string of price weakness. August hog futures, which expire today and are cash settled on Wednesday, finished Friday 96 cents below today’s cash quote. October hogs, which will assume lead-month status, finished Friday $21.735 below today’s cash quote. The pork cutout value is also declining seasonally, falling $2.93 on Friday, due mostly to a $22.47 plunge in primal belly prices.
Weekend demand news... Iran tendered to buy up to 180,000 MT of corn that can be sourced from Brazil, Europe, Russia, Ukraine or other Black Sea countries and 120,000 MT of soymeal that can be sourced from Brazil, Argentina or India.
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
- 10:00 a.m. Export Inspections — AMS
- 11:00 a.m. Feed Grains Database — ERS
- 2:00 p.m. Dairy Monthly Tables and Dairy Quarterly Data — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS
- 2:00 p.m. Turkey Hatchery — NASS
- 3:00 p.m. Crop Progress — NASS
