First Thing Today | September 8, 2023

Good morning!

Quiet grain trade overnight... Corn, soybean and wheat futures held in tight trading ranges during a quiet overnight session. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents higher, soybeans are fractionally to a penny higher and wheat futures are steady to 3 cents lower. Front-month crude oil futures are around 60 cents higher and the U.S. dollar index is trading just below unchanged.

Weekly Export Sales Report out this morning... For the week ended Aug. 31, traders expect:

Romania upgrades port infrastructure to facilitate more Ukrainian shipments... Romania approved a plant to upgrade road infrastructure around the Black Sea port of Constanta, part of wider investments in the port that could help bring in more Ukrainian grain for shipment. The transport ministry will use European Union funds to repair or reinforce existing infrastructure, build new roads, access ramps and roundabouts, as well as launch a digitized traffic management system, the draft project showed. Romanian officials have said they aimed to double the monthly transit capacity of Ukrainian grain to Constanta to 4 MMT in the coming months. The government has upgraded dozens of railroad lines connecting it to Ukraine, and works are under way on the Danube to enable more barges to pass, including hiring more pilots and making navigation possible at night.

Argentine crop production expected to rebound sharply amid El Niño... Argentina’s crop production for 2023-24 is expected to be sharply higher than the previous season as El Niño is expected to bring rain to the key growing regions after last year’s drought, the Buenos Aires Grain Exchange said. It forecasts soybean production will rebound from just 21 MMT this year to 50 MMT. It expects the corn crop to jump to 55 MMT from 34 MMT in 2022-23. Wheat production is forecast to rise from 12.2 MMT to 16.5 MMT.

FAO global food price index drops to more than two-year low... The UN Food and Agriculture Organization global food price index dropped 2.1% in August to the lowest level since March 2021, reflecting declines in prices for dairy, vegoils, meat and cereal grains, which more than offset a rise in sugar. Rice prices, which are part of the cereal grain index, surged to a 15-year high. Compared to year-ago, prices declined 5.4% for meat, 22.4% for dairy, 14.1% for cereal grains and 23.0% for vegoils, while sugar prices jumped 34.1%.

Weather impacts trigger surge in sugar prices... Thailand, the world’s second-largest sugar exporter, faces a significant setback in sugar production, with an anticipated 18% drop due to a severe drought, Bloomberg reports. The drought-induced water shortages in key production regions are expected to lead to a substantial reduction in sugar cane production, plummeting from 93.9 MMT in 2022-23 to 82 MMT in 2023-24. Rangsit Hiangrat, director of Thai Sugar Millers Corp, predicts a drop in Thailand’s sugar exports from 8 MMT this year to 6 MMT next year. While overseas sales in the first seven months of 2023 have increased 2.4% compared to the previous year, the overall outlook remains uncertain. Simultaneously, extreme heat in India contributes to the global sugar crunch, underscoring the disruptive impact of climate change on food markets. Brazilian production may also drop briefly with heavy rains hitting major producing areas.

Stabenow, Boozman discuss farm bill funding amid shutdown concerns... Senate Ag Committee Chair Debbie Stabenow (D-Mich.) highlighted the potential $11 billion cost of a government shutdown and its impact on farm bill funding. She expressed the need to secure funding by attaching expiring farm bill programs to a continuing resolution (CR) for government funding beyond Sept. 30 and stressed the importance of using these funds for investments in farmers and rural America. Stabenow cited the Congressional Budget Office's estimate that a previous government shutdown cost the economy $11 billion. Politico reported “a couple” of programs set to expire with the 2018 Farm Bill would be included in the CR for government funding, as confirmed by Stabenow. Meanwhile, Sen. John Boozman (R-Ark.), ranking member on the Senate Ag Committee, mentioned they are financially secure until January but emphasized the importance of addressing “orphan programs” before the farm bill’s expiration at the end of this month.

Biden to G20... President Joe Biden has embarked on a journey to the G20 summit in India with the aim of strengthening alliances on the global stage, particularly in light of the absence of Chinese and Russian leaders. Biden’s goal is to demonstrate that, on significant transnational issues, the U.S. is a more reliable partner than Beijing or Moscow, reaffirming the importance of the G20 as a pivotal international forum. However, challenges related to Russia’s war in Ukraine and differences in approaches to addressing climate change in emerging nations are expected to impede the attainment of consensus during the meeting in New Delhi.

USDA finalizes rule for Milk Loss Program (MLP)... USDA has formally established the Milk Loss Program (MLP), designed to provide compensation to dairy producers who suffered losses due to the dumping or removal of milk without compensation resulting from disaster events. These events include droughts, wildfires, hurricanes, floods, derechos, excessive heat, winter storms, freeze (including a polar vortex), and smoke exposure that occurred during the years 2020, 2021 and 2022. Recent legislation has added tornadoes in 2022 as an eligible disaster event. The rule, set to be published in the Federal Register on Sept. 11, also marks the beginning of the signup period, which is scheduled to conclude on Oct. 16. Under MLP, the base period is defined as the first full month of milk production before the milk’s dumping or removal due to a qualifying event. Dairy producers can file claims for each month in which milk was lost due to the disaster event. Producers affected in multiple months must submit separate applications for each period of loss. For the years 2020, 2021, and 2022, producers have a 30-day window each year to file claims for losses. Payments will be calculated at 90% of the fair market value of normal marketings for underserved farmers and ranchers and at 75% for all other affected producers, minus any amounts previously received for milk marketed during the application's prior coverage period and any non-refundable payments received from a milk handler. Total expected payouts under MLP have not been disclosed by USDA at this time.

Cash cattle prices firm... Cash cattle activity picked up Thursday with trade reported within a wide range from $179 to $187. That should pull up the cash price from last week’s average of $182.50. Given the availability of fresh contract supplies, it appears packers were short-bought on slaughter needs after weeks of limited purchases. October live cattle finished Thursday at a premium to last week’s average cash price, signaling a seasonal rally is underway.

Cash hog index firms... The CME lean hog index is up 18 cents, snapping the string of daily declines since late July. Seasonally, the cash market tends to strengthen over the next two to six weeks before facing heavier seasonal pressure into winter. October lean hog futures finished Thursday $3.365 below today’s cash quote (as of Sept. 6).

Overnight demand news... South Korea rejected all offers on a tender to buy 45,000 MT of Canadian milling wheat.

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

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
• 2:00 p.m. Peanut Prices — NASS
• 2:30 p.m. Commitments of Traders — CFTC