First Thing Today | October 13, 2023

Good morning!

Followthrough buying in grains... Corn, soybean and wheat futures are mildly firmer and near their overnight highs this morning as tensions in the Middle East intensify. As of 6:30 a.m. CT, corn futures are trading a penny higher, soybeans are 6 to 7 cents higher and wheat futures are mostly 6 to 8 cents higher. Front-month crude oil futures are more than $3.00 higher and the U.S. dollar index is modestly weaker this morning.

Middle East conflict intensifies... The Israel Defense Forces issued an ultimatum, instructing approximately 1.1 million Palestinians to relocate from the northern to the southern region of Gaza within a 24-hour period. Israel cited the presence of “Hamas terrorists” allegedly using “human shields” as the reason behind this move. The United Nations swiftly urged Israel to withdraw this “impossible” order, while Hamas dismissed it as “fake propaganda” and advised the affected populace to ignore it. Israel has deployed tanks along Gaza’s borders, with a focus on targeting underground tunnels believed to be used for storing supplies, housing fighters and potentially holding hostages.

Weekly Export Sales Report out this morning... For the week ended Oct. 5, traders expect:

China’s soybean imports drop sharply in September... China imported 7.15 MMT of soybeans in September, down 2.21 MMT (23.6%) from the previous month and 570,000 MT (7.4%) less than last year as hefty stocks at ports slowed arrivals. Through the first nine months of this year, China imported 77.8 MMT of soybeans, up 14.4% from the same period last year.

China’s trade data a little better but not good... China’s exports in September declined 6.2% from last year, while imports also dropped 6.2%. That marked the fifth straight month of year-over-year declines in exports and the seventh consecutive month with an annual drop in imports. China’s trade surplus rose to $77.71 billion from $68.2 billion in August. The trade surplus with the U.S. widened to $33.2 billion in September from $33.06 billion in August.

China’s consumer prices unchanged, producer prices continue to fall... China’s consumer price index was unchanged in September following a 0.1% rise the previous month. Food prices dropped 3.2%, driven by a 22% decline in pork prices, while non-food inflation rose 0.7%. China’s producer price index declined 2.5%, easing from a 3.0% drop the previous month. That was the 12^th consecutive month of producer price deflation.

Another sharp increase in Russian wheat export tax... Russia’s wheat export tax for Oct. 18-24 will be 5,734.7 rubles ($58.98) per metric ton based on an indicative price of $251.20. That’s up from a rate of 5,224.0 rubles per metric ton the previous week and the highest since the week of April 19-25.

USDA modifies FY 2023 sugar allotments, sets FY 2024 levels... USDA’s Commodity Credit Corporation (CCC) published a notice in the Federal Register outlining revisions to the fiscal year (FY) 2023 state cane sugar allotments and allocations to sugarcane processors; reassigning FY 2023 cane sugar marketing allocations to raw cane sugar imports already anticipated; and announce the FY 2024 overall sugar marketing allotment quantity (OAQ), state cane sugar allotments, and sugar beet and sugarcane processor allocations. For FY 2023, USDA is transferring FY 2023 allocations from sugarcane processors with surplus allocation to those with deficit allocation. For FY 2024, USDA said it was setting the initial OAQ at 10,667,500 short tons, raw value (STRV), equal to 85% of 12,550,000 STRV, the estimated quantity of sugar for domestic human consumption for FY 2024 as forecast in the September 2023 WASDE with 54.35% of the OAQ distributed among beet processors and 45.65% is distributed among the sugarcane states and cane processors. USDA noted mainland U.S. sugarcane producing states will be allocated the 325,000 STRV that by law is for “offshore states” as those states — Puerto Rico and Hawaii —have permanently exited sugarcane production.

$7 billion coming to build hydrogen hubs... The Biden administration will announce $7 billion in grants to build hydrogen hubs. President Joe Biden and Energy Secretary Jennifer Granholm will unveil the winning projects today to be located in regions including the Gulf Coast, Appalachia and California. The funding, part of the Inflation Reduction Act, is meant to narrow America’s production gap in clean hydrogen.

Euro zone industrial output rose in August but sharply lower than last year... Euro zone industrial production rose 0.6% from the previous month in August but fell 5.1% annually. Production of durable consumer goods rose 1.2%, while non-durable goods increased 0.5%.

House GOP meets again to decide leader... Rep. Steve Scalise (R-La.) dropped out of the race for House speaker Thursday night, further throwing the chamber into chaos as Republicans openly ponder whether their fractured conference is capable of electing anyone as speaker. The Republican conference plans to restart the nomination process today. There are growing calls from centrists, particularly from the Republican Governance Group, to extend the powers of Speaker Pro Tempore Patrick McHenry (R-N.C.) so the House can begin to address critical pieces of legislation.

China’s meat imports decline in September... China imported 595,000 MT of meat during September, down 32,000 MT (5.1%) from August. Through the first nine months of this year, China imported 5.71 MMT of meat, up 5.6% from the same period last year.  

Cash cattle prices strengthen... Cash cattle trade turned active Thursday as packers raised bids, with cattle moving at mostly $1.00 higher prices, though some traded as much as $3.00 higher. The strength in the cash market allowed futures to extend Wednesday’s strong gains. Meanwhile, Choice boxed beef prices firmed 91 cents, again proving there’s solid retailer buying around the $300.00 level.

Cash hog index firms a little more... The CME lean hog index is up 2 cents to $82.42, marking consecutive daily gains for the first time since Sept. 19-20. While the cash index has temporarily stabilized, wholesale pork prices continue to fall, with the cutout down 25 cents on Thursday to the lowest level since June 15.

Overnight demand news... Egypt purchased 470,000 MT of wheat, including 300,000 MT Russia, 120,000 MT Romanian and 50,000 MT Bulgarian.

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
• 11:00 a.m. Feed Grains Database — ERS
• 2:00 p.m. Season Average Price Forecasts — ERS
• 2:00 p.m. Wheat Data — ERS
• 2:00 p.m. Peanut Prices — NASS
• 2:30 p.m. Commitments of Traders — CFTC