First Thing Today | October 25, 2023

Good morning!

Quiet, two-sided overnight grain trade... Corn, soybeans and wheat posted two-sided price action while holding in relatively tight trading ranges overnight. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny lower, soybeans are 1 to 2 cents higher, SRW wheat futures are mostly a penny higher, HRW futures are steady to fractionally lower and HRS wheat is 5 to 7 cents higher. Front-month crude oil futures are holding near unchanged, while the U.S. dollar index is around 150 points higher.

Another day of House GOP leadership voting... House Majority Whip Tom Emmer dropped out of the race for speaker Tuesday and Rep. Mike Johnson (R-La.) is the latest nominee for the position. House Republicans will hold another roll call vote to test Johnson’s support at 9 a.m. ET before heading to the floor for a full House at noon ET, if that action occurs. The initial outlook is that despite several failed attempts, Johnson could actually garner the needed votes to become speaker.

Clock ticking on gov’t shutdown... The current stopgap spending measure expires Nov. 17. The ongoing House speaker issue has implications for government funding. Hard-line Republicans, especially within the House Freedom Caucus, oppose short-term funding measures and prefer full-year appropriations bills. But the House has only passed four appropriations bills, all at lower spending levels than previously agreed upon. With insufficient time to pass the remaining eight bills and reconcile them with the Senate, passing another short-term funding bill with Democratic support appears to be the only way to avert a government shutdown. “The clock is ticking every day, and they don’t have near enough time. And it doesn’t even matter who wins the speakership because the caucus is just ungovernable right now,” said Doug Holtz-Eakin, president of the American Action Forum, a conservative-leaning group. “There’s very good reason to be nervous about a shutdown. The odds are increasing.”

China initiates bolder economic policy changes... China intensified its economic stimulus efforts by issuing additional sovereign bonds and raising its budget-deficit target outside of the regular legislative session, marking the first such move in over a decade. The country’s top legislative body recently approved a plan to raise 1 trillion yuan, roughly equivalent to $137 billion, in additional sovereign debt. This latest stimulus initiative comes in the wake of several smaller measures, including interest-rate cuts and reduced mortgage costs for homebuyers. It underscores Beijing’s ongoing concerns about the strength of the economic recovery, which it had anticipated would be robust after lifting all pandemic-related restrictions.

Country Garden defaults on dollar bond for first time... Chinese developer Country Garden Holdings has been deemed in default on a U.S. dollar bond for the first time, Bloomberg News reported. Country Garden’s failure to pay interest on the note within a grace period that ended last week “constitutes an event of default,” Bloomberg reported citing the notice to holders from a trustee.

IMF’s Georgieva: High interest rates will throw ‘cold water’ on economic growth... International Monetary Fund (IMF) Managing Director Kristalina Georgieva said global growth is already slow at 3% and high interest rates will act as a further drag on economic activity. “Inflation is still high and that requires interest rates to remain high, throwing more cold water on growth,” Georgieva said. International cooperation in a fragmented world is key for growth, she said, adding that it is “truly a matter of the highest priority.”

Weak euro zone lending adds to recession fears... Bank lending across the euro zone came to a near standstill last month, European Central Bank data showed, triggering further worries of a recession for the bloc. Lending to businesses expanded by just 0.2% in September, the lowest figure since late 2015 and down from 0.7% a month earlier. Lending to households meanwhile rose 0.8% after a 1.0% increase in August.

India to provide fertilizer subsidy... India will provide potash at lower prices during the upcoming winter crop season and will try to keep prices of other fertilizers unchanged. India will spend 223 billion rupees ($2.68 billion) in total toward fertilizer subsidies, a government official said.

GM shifts EV strategy amid buyer hesitation... General Motors made an unexpected decision to abandon its previously set goal of manufacturing 400,000 electric vehicles (EVs) by mid-2024, the Wall Street Journal reports. This move underscores the growing concerns among automakers regarding the market’s sustainability for battery-powered cars. GM’s shift in focus on EVs comes as a surprise, given the company’s prior commitment to the technology, banking on its potential to eventually replace gasoline-powered vehicles in the coming decade. This decision aligns with concerns expressed by rivals such as Tesla and Ford Motor, who have also voiced doubts about consumer demand for EVs and their willingness to pay a premium for them compared to traditional models.

UAW calls strike on one of GM’s largest and most-profitable factories... The United Auto Workers (UAW) expanded its strike against Detroit’s automakers with a walkout at one of General Motors’ largest and most profitable factories, marking the second straight day of escalation by the union. The unannounced strike came one day after about 6,800 UAW workers walked out of a suburban Detroit factory where Chrysler-parent Stellantis makes Ram pickup-trucks, among the company’s most profitable and highest-selling models. The back-to-back walkouts together mark the sharpest escalation of the union’s strike since it began in mid-September.

Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of September. The five-year average is an 11.1-million-lb. increase in beef stocks and a 3.0-million-lb. rise in pork stocks during the month.

Weaker cash cattle trade... Monday’s sharp plunge in cattle futures triggered a flurry of cash cattle sales in Iowa yesterday at lower prices. While feedlots didn’t actively move cattle in other areas of the northern market or the Southern Plains, it’s widely expected this week’s average cash price will be solidly lower than last week.

Seasonal pressure continues on cash hog fundamentals... The CME lean hog index is down another 40 cents to $78.67 (as of Oct. 23), falling to the lowest level since May 17 and now more than $16.00 below last year at this time. The pork cutout value fell $1.96 to $86.59, now more than $15.00 below last year. Until cash fundamentals stabilize, buyer interest in futures will remain limited.

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

• 8:00 a.m. Food Price Outlook — ERS
• 8:00 a.m. Food Security in the U.S. — ERS
• 8:00 a.m. Household Food Security in the United States in 2022 — ERS
• 8:00 a.m. Statistical Supplement to Household Food Security in the United States in 2022 — ERS
• 9:30 a.m. Weekly Ethanol Production — EIA
• 11:00 a.m. Rice Stocks — NASS
• 2:00 p.m. Broiler Hatchery — NASS
• 2:00 p.m. Cold Storage — NASS
• 2:00 p.m. Poultry Slaughter — NASS