First Thing Today | August 29, 2023

First Thing Today
First Thing Today
(Pro Farmer)

Good morning!

Grains weaker overnight... Corn, soybeans and winter wheat markets traded lower overnight, while spring wheat was mixed. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents lower, soybeans are 8 to 9 cents lower, SRW wheat is 2 to 3 cents lower, HRW wheat is 6 to 7 cents lower and HRS wheat is fractionally lower to 2 cents higher. Front-month crude oil futures are 65 cents higher and the U.S. dollar index is more than 100 points higher.

Cordonnier cuts corn, soybean yield forecasts... Crop consultant Dr. Michael Cordonnier cut his corn and soybean yields, noting impacts from last week’s extreme heat and a “problematic” forecast. Cordonnier lowered his corn yield by 2 bu. per acre to 173 bu. per acre, but raised harvested acreage by 500,000 acres, resulting in a crop forecast of 15.01 billion bushels. Cordonnier reduced his soybean yield by 1 bu. to 50 bu. per acre and left harvested acres unchanged, resulting in a crop estimate of 4.13 billion bushels. He has a neutral to lower bias toward both crops.

Extreme heat didn't hurt corn, soybean crop conditions as much as expected... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 5.4 points to 350.1, which was still 2.6 points (0.8%) above last year at this time. The soybean crop fell 4.9 points to 344.0, which was 1.8 points (0.5%) below last year at the end of August. Iowa and Nebraska led the CCI declines for both corn and soybeans, while crops in Illinois improved. Click here for details.

Crop progress report highlights… Following are highlights from USDA’s crop progress and condition update as of Aug 27.

  • Corn: 88% dough (86% average); 51% dented (49% average); 9% mature (8% average); 56% good/excellent (58% last week).
  • Soybeans: 91% setting pods (90% average); 5% dropping leaves (6% average) 58% good/excellent (59% last week).
  • Cotton: 90% setting bolls (90% average); 25% bolls opening (25% average); 33% good/excellent (33% last week).
  • Spring wheat: 54% harvested (63% average); 37% good/excellent (38% last week).

Canadian production estimates out this morning... Statistics Canada will release its first Canadian production estimates, using a model-based approach, at 7:30 a.m. CT. Analysts expect StatsCan to estimate all-wheat production at 30.4 MMT, which would be down from 33.8 MMT last year. The canola crop is expected to come in at 17.4 MMT, down from 18.2 MMT in 2022.

Philippines trying to curb rice inflation... Philippine President Ferdinand Marcos ordered authorities to double efforts to hunt down rice hoarders and take steps to curb soaring prices, while warning of a possibility that price control measures could be imposed. Marcos, who also serves as the country’s ag minister, also sought support mechanisms for farmers and traders “should legal measures be invoked by the government in controlling the price of rice,” his office said.

China’s big banks could further cut deposit rate to boost growth... China’s biggest state-owned banks are considering lowering deposit rates for at least the third time in a year, Bloomberg reported, citing people familiar with the matter, as they ramp up efforts to boost the economy and protect margins. Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and other lenders may cut rates on local currency deposits across key tenors by between 5 and 20 basis points. Regulators have signed off on the plan and the cut may come as soon as Friday, the sources said.

China's economic prospects remain bleak with no indications of improvement... According to a survey by Bloomberg, economists have revised down their GDP growth forecast for this year to 5.1%, from a previous estimate of 5.2%. The economic analysis firm Continuum is even more pessimistic, predicting a smaller expansion of 4.9%. Furthermore, Morgan Stanley has expressed skepticism about the lasting effectiveness of Beijing’s efforts to bolster the stock market, suggesting that these attempts will have limited long-term impacts on the overall economic situation.

Raimondo: U.S. wants to work with China... The U.S. wants to work with China to solve problems such as climate change and artificial intelligence, Commerce Secretary Gina Raimondo told China’s Premier Li Qiang at a meeting in Beijing on Tuesday. Raimondo also told China’s economy chief He Lifeng the U.S. does not seek to disengage from its rival. “While we will never compromise in protecting our national security, I want to be clear that we will never seek to decouple or hold China’s economy back,” she said. He expressed Beijing’s concerns on topics including “Section 301” U.S. tariffs, export controls and two-way investment restrictions. Li said sound economic relations and trade cooperation would be beneficial not only to their countries but also to the whole world.

Cash cattle ready to rally again?... Cash cattle averaged $182.75 last week, down $2.29 and the third straight weekly decline. With packer margins back in the black and feedlots not likely to be willing sellers at lower prices for another week, this week’s cash cattle negotiations are again likely to extend deep into the week. Packers may limit their purchases to keep from having to actively bid for cattle, but that time seems to be not far off.

Hog futures/cash spreads narrow... Lean hog futures posted moderate to strong gains on Monday, led by the October contract. Meanwhile, the CME lean hog index continues to fall, dropping another $1.29 to $93.89. As of Monday’s close, the discount in October lean hog futures had narrowed to $12.04 to today’s cash quote. December hogs held nearly a $20.50 discount.  

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

 

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