First Thing Today | August 18, 2023
Good morning!
Grains higher overnight... A combination of weather concerns and increased geopolitical uncertainty in the Black Sea region supported corn, soybeans and wheat overnight. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 12 to 15 cents higher, SRW wheat is 11 to 12 cents higher, HRW wheat is 8 to 9 cents higher and HRS wheat is mostly 7 cents higher. Front-month crude oil futures and the U.S. dollar index are both modestly weaker.
Ukrainian drone attacks Moscow... A Ukrainian drone smashed into a building in central Moscow on Friday after Russian air defenses shot it down, Russian officials said. The attack on Russia’s capital raised fears of further escalation in Russia/Ukraine war. Meanwhile, a fire broke out in a cargo area of Russia’s Black Sea port city of Novorossiysk, state media reported.
First vessel from Ukrainian port reaches Bosphorus since grain deal ended... A container ship, Joseph Schulte, which set sail from Ukraine’s Odesa port earlier this week, has reached the Istanbul Strait. This is the first vessel to leave Odesa since Russia withdrew from the Black Sea grain deal.
Evergrande files for bankruptcy in U.S. court amid debt restructuring... Embattled developer China Evergrande Group has filed for bankruptcy protection in a U.S. court as part of one of the world’s biggest debt restructuring exercises, as anxiety grows over China’s worsening property crisis and a weakening economy. The developer has sought protection under Chapter 15 of the U.S. bankruptcy code, which shields non-U.S. companies that are undergoing restructurings from creditors that hope to sue them or tie up assets in the United States. The filing is procedural in nature, but the world’s most indebted property developer with more than $300 billion in liabilities has to do it as part of a restructuring process under U.S. law, two people familiar with the matter told Reuters.
India facing record-low August rains... India is heading for its driest August in more than a century, with scant rainfall likely to persist across large areas, partly because of the El Niño weather pattern. August rainfall is expected to be the lowest since records began in 1901, threatening crops. “The monsoon is not reviving as we had expected,” said a senior official of the India Meteorological Department told Reuters. “We are going to end the month with a significant deficit in the southern, western, and central parts.” India received just 90.7 mm (3.6 inches) of rain in the first 17 days of August, nearly 40% lower than normal. The month’s normal average is 254.9 mm (10 inches). The lowest August rainfall on record was 191.2 mm (7.5 inches) in 2005.
India’s rice export ban a short-term boon for U.S. producers... India’s recent ban on exports of white rice is expected to bring short-term benefits to U.S. rice producers and exporters due to increased global demand for their product, according to a research brief from CoBank’s Knowledge Exchange. The ban has led to higher global rice prices, benefiting U.S. rice producers and positioning them to meet the heightened export demand, particularly from regions like Iraq and the Caribbean, as well as Central and South America. However, the favorable situation is anticipated to be short-lived. Once India lifts the export ban, a surplus of rice from the country is expected to flood the export market, causing a sudden oversupply. This excess supply is projected to result in a sharp price correction and potentially depress rice prices globally, including in the United States.
Euro zone inflation eases in July... Euro zone consumer inflation increased 5.3% annually in July, down from a 5.5% rise the previous month. Core inflation, minus food and energy costs, was unchanged at 5.5%. The final inflation stats confirmed preliminary data that signaled slower inflationary growth, indicating price pressures have likely peaked.
Cattle on Feed Report out this afternoon... Traders expect USDA’s Cattle on Feed Report to show the feedlot inventory as of Aug. 1 down 1.6% from year-ago at 11.044 million head, which would be the 11th consecutive month of year-over-year declines. Placements are expected to have declined 5.5%, though that category has topped expectations the past couple of months, making it key. July marketings are expected to have dropped 5.2%.
Wide range for cash cattle trade... Cash cattle traded around $1 lower in the Southern Plains and near steady in the northern market this week, with a range in prices from $179 to $188. With a big difference in the availability of market-ready supplies, the cash market is likely to remain relatively choppy with the weekly tone dictated by where the bulk of the trade occurs. The last two weeks, more cattle have trade in the Southern Plains, resulting in the weaker tone.
Hog futures correct... Thursday’s corrective gains in lean hog futures alleviated the short-term oversold condition. With the cash hog index continuing to weaken seasonally, that limits further gains, despite the still-wide discount structure. October hogs finished Thursday $21.17 below today’s cash index quote of $100.32 (as of Aug. 16).
Overnight demand news... Exporters reported no tenders or sales.
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
- 8:00 a.m. Food Expenditure Series — ERS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC
