First Thing Today | August 30, 2023
Good morning!
Grains firmer overnight... Corn, soybeans and the winter wheat markets traded higher overnight amid corrective buying, while spring wheat faced mild selling pressure. As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents higher, soybeans are 5 to 6 cents higher, SRW wheat is 4 to 6 cents higher, HRW wheat is 1 to 2 cents higher and HRS wheat is 2 to 4 cents lower. Front-month crude oil futures are 50 cents higher and the U.S. dollar index is modestly weaker.
Idalia to make landfall this morning... Hurricane Idalia was expected to reach the northern Florida Gulf Coast around dawn today and will race to the northeast reaching into southeastern Georgia by early afternoon. The storm has intensified overnight and will be producing sustained wind speeds near 130 mph when it reaches the coast. The storm’s fast movement and increased intensity has ensured the storm will stay a hurricane all the way to Savannah, Georgia this evening and possibly to near Charleston, South Carolina early tonight. The storm will then be downgraded to tropical storm status just prior to moving off the Atlantic coast of South Carolina overnight tonight and early Thursday. Overall impacts to crops are expected to be minimal.
Russia to talk grain deal with Turkey... Russian foreign ministry spokeswoman Maria Zakharova said the Black Sea grain deal would be one of the items on the agenda of Russian Foreign Minister Sergei Lavrov’s talks on Thursday and Friday with his Turkish counterpart. Turkey is trying to get Russia to rejoin the deal after Moscow pulled out in mid-July.
Green Plains: Ethanol’s use in SAF will be tied to tax policy... The fate of turning ethanol into sustainable jet fuel in the U.S. is closely tied to the formulation of tax policy, according to Green Plains CEO Todd Becker. The Biden administration’s stance on tax credits outlined in the Inflation Reduction Act (IRA/Climate Bill) will significantly impact U.S. corn farmers and biofuel producers. A critical point of contention is how emissions from sustainable aviation fuel (SAF) will be tracked, given its potential to be derived from various sources. The U.S. ethanol industry sees SAF as a means to stimulate demand in the coming years, especially as gasoline consumption declines due to the rise of electric cars. Two contrasting models are being debated: one (GREET) supported by biofuel producers and farm state lawmakers, backed by the U.S. Energy Department, which would credit carbon sequestered in soil even after crops are harvested; the other (CORSIA), favored by environmentalists, takes a stricter approach by considering changes in land use driven by biofuel production. The latter approach could disqualify certain ethanol-based sustainable aviation fuel productions from receiving the tax credit. Of note: The Treasury Department’s guidance on the lucrative aspects of the climate law is anticipated to be released in September, offering insights into how these potential provisions will take shape.
Indian allows exports of rice trapped at ports... India will allow exporters to ship their non-basmati white rice cargoes that have been trapped at ports after a sudden ban on exports of the category in late July, a government order said late on Tuesday. Shipment of those cargoes will be allowed provided traders paid the 20% export duty that was in place up to July 20, when the ban was imposed. It is expected around 150,000 MT of non-basmati white rice cargoes would be shipped out of various ports, said the president of the Indian Rice Exporters Federation.
Sri Lanka alters wheat flour import policy... Sri Lanka removed its permit system for importing wheat flour, according to Ada Derana news. The country’s import tax on wheat flour imports was increased to 27 rupees per kilogram, a 68.75% hike from the previous level.
China snaps back after Raimondo’s ‘uninvestible’ comments... China defended its business practices after U.S. Commerce Secretary Gina Raimondo said American firms had told her it had become “uninvestible,” highlighting a trend of global investors turning away from assets in the world's second-largest economy. Raimondo insisted the U.S. does not want to decouple from China but her comment on the difficulties U.S. businesses face has shone a harsh light on trade and investment flows between the two countries. In response to Raimondo’s comments, the spokesperson for the Chinese embassy in Washington said, “China is actively advancing its high-level opening-up and making efforts to provide a world-class, market-oriented business environment governed by a sound legal framework. China will only open its doors even wider to the outside world.”
Beijing orders review of shadow bank Zhongrong... China has raised concerns about the state of shadow bank Zhongrong and has directed two major financial institutions, Citic Trust and CCB Trust, to review its financial records, according to Bloomberg. This move suggests the possibility of a state-backed intervention to rescue the troubled shadow bank. The involvement of Citic Trust and CCB Trust is aimed at stabilizing Zhongrong’s operations and potentially initiating a state-led rescue effort.
Euro zone economic sentiment declines... The euro zone economic sentiment index dropped to 93.3 in August from 94.5 in July, the lowest reading since November 2020. Optimism in the industrial sector worsened to -10.3 from -9.3 in July, while in the services sector the reading fell to 3.9 from 5.4 the previous month. Consumer expectations for 12-month inflation rose to 9.0 from 4.9 in July, breaking a downward trend that began in April. Inflation expectations among manufacturers also increased for the first time since March, rising to 3.6 from 3.4 in July.
Wholesale beef prices drop again... Wholesale beef prices followed up Monday’s drop with steeper declines yesterday. Choice beef fell $2.68 and Select was $2.41 lower. Despite this week’s downturn in wholesale prices, packer margins remain in the black.
Volatile belly prices cause wild swings in pork cutout... The pork cutout value dropped $3.20 on Tuesday, pressured almost exclusively by a $26.50 plunge in primal belly prices. Since last Thursday, cash belly prices have made major daily price swings, causing big fluctuations in the cutout value. While bellies have been volatile, the other cuts are relatively quiet.
Overnight demand news... Egypt tendered for an unspecified amount of wheat. Tunisia tendered to buy 75,000 MT of durum wheat and 50,000 MT of feed barley – both optional origin.
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
- 2:00 p.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Egg Products — NASS
- 2:00 p.m. U.S. and Canadian Cattle — NASS
- 2:00 p.m. U.S. and Canadian Hogs — NASS
