First Thing Today | September 25, 2023
Good morning!
Grains mostly weaker this morning... Corn, soybean and wheat futures held in tight trading ranges in light, two-sided trade overnight. As of 6:30 a.m. CT, corn futures are trading mostly a penny lower, soybeans are 1 to 2 cents lower, SRW wheat is 1 to 2 cents higher, while HRW and HRS wheat are steady to a penny lower. Front-month crude oil futures and the U.S. dollar index are both modestly firmer.
Russia strikes Ukrainian grain infrastructure... An overnight Russian air strike on the southern Ukrainian region of Odesa caused “significant damage” to port infrastructure and destroyed some grain storage facilities, Ukrainian officials said. The Russian attack on Odesa was the latest in a series of missile and drone strikes which Kyiv says are intended to prevent Ukraine from shipping its agricultural products to the world. Ukraine’s ag ministry said its grain exports during the first three weeks of September fell 51% from the same period last year to 1.57 MMT.
India could sell more wheat to tame prices... The Indian government could sell more wheat on the open market to control prices that have reached their highest in nearly eight months, the country’s food secretary said. The government could sell more wheat to bulk consumers, such as flour millers and biscuit makers, to stabilize prices, he said. India earlier this month reduced the limit on the amount of wheat stocks that wholesalers and large retailers are allowed to hold to 2,000 MT from 3,000 MT previously.
Morocco to extend subsidy program for wheat imports... Morocco will offer subsidies to import up to 2 MMT of soft wheat between Oct. 1 and Dec. 31, state grains agency ONICL said. Subsidy details will be announced separately. The subsidies for imports during the second quarter of 2023-24 follow an initial program in the first quarter of this current marketing year.
The week ahead in Washington... Lawmakers return on Tuesday with the tough task of passing a continuing resolution (CR) to keep the government funded past Sept. 30. The Senate will vote on a CR on Tuesday. One way some House Republicans are trying to avert a shutdown is by a discharge petition, which allows an already-introduced bill to be used as a shell for other legislative text. Thus, a deal struck by Republicans and Democrats could be tacked on to the eventual Senate proposal. A wild card is an 11th hour bipartisan spending agreement that could trigger an effort to remove Kevin McCarthy (R-Calif.) as House Speaker. The key economic data is the personal consumption expenditures (PCE) price index for August, which will be released Friday. The third and final estimate of second quarter GDP will be issued on Thursday. Key agricultural data will be Thursday’s Hogs & Pigs Report and Friday’s Grain Stocks Report and Small Grains Summary.
Chinese real estate, financial sector woes worsen... China’s Evergrande Group announced its inability to issue new debt, citing an ongoing investigation into one of its subsidiaries. This development deals a significant blow to the beleaguered developer’s restructuring efforts. Investors are also closely monitoring Country Garden’s upcoming dollar bond coupon payment scheduled for Wednesday. Adding to the unease among foreign investors was the uncertainty regarding the fate of Nomura’s head of China investment banking, Charles Wang Zhonghe. Chinese authorities overseeing the firm’s banking operations have reportedly instructed him not to leave the mainland, further contributing to the apprehension surrounding the Chinese financial landscape.
Final payments for rice farmers under RPP will be issued soon... USDA’s Farm Service Agency announced final payments are coming soon for rice farmers under the Rice Production Program (RPP), which is a $250 million assistance program aimed at supporting U.S. rice farmers who faced stagnant rice market prices and exceptionally high input costs in 2022. Rice farmers who were previously approved and received a first-round payment will not need to submit new applications. The final payment rate will be set at 0.28 cents per pound, based on previously reported data, resulting in a total assistance of 1.28 cents per pound for the 2022 crop year. USDA intends to disburse these payments ahead of the fiscal year-end, which is Sept. 30.
China sells 58% of rice put up for auction... China sold 349,781 MT of the state-owned rice reserves put up for auction last week – 58% of the total offered. The average sales price was 2,664 yuan ($364.37) per metric ton.
China to auction beef, mutton stocks... China will auction 6,700 MT of frozen beef and mutton on Sept. 26, the Huashang Reserve Commodity Management Center said.
Feedlot inventories continue to shrink... USDA estimated in the Cattle on Feed Report there were 11.094 million head of cattle in large feedlots (1,000-plus head) as of Sept. 1, down 248,000 head (2.2%) from year-ago but 71,000 head more than the average pre-report estimate implied. Placements fell 5.1%, while marketings dropped 6.0% from year-ago levels during August. All three of the categories came in a little on the negative side of the average pre-report estimates. But the report data is far from bearish as it showed a decline in feedlot inventories for a 12th consecutive month – a trend that will continue given shrinking U.S. calf supplies.
Cash hogs consolidate, pork cutout pulling back... The CME lean hog index is down 9 cents to $87.08 (as of Sept. 21) as the cash market continues to consolidate in the $87.00 range. The pork cutout value fell $1.49 on Friday, extending is pullback after briefly pushing above $100.00 earlier last week.
Weekend demand news... Iran tendered to buy 180,000 MT of corn (sourced from Brazil, Europe, Russia, Ukraine or elsewhere in the Black Sea region) and 120,000 MT of soymeal (sourced from Brazil, Argentina or India). Tunisia tendered to buy 100,000 MT of soft milling wheat and 50,000 MT of feed barley – both optional origin. Bangladesh tendered to buy 50,000 MT of optional origin 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
- 8:00 a.m. Food Price Outlook — ERS
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. Poultry Slaughter — NASS
- 3:00 p.m. Crop Progress — NASS
