First Thing Today | November 7, 2023

Good morning!

Grains weaker overnight... Soybeans pulled back from recent strong gains amid corrective selling overnight, while corn and wheat also traded lower. As of 6:30 a.m. CT, corn futures are trading mostly 4 cents lower, soybeans are 3 to 4 cents lower, winter wheat futures are 4 to 8 cents lower and spring wheat is 2 to 4 cents lower. Front-month crude oil futures are more than $1.25 lower and the U.S. dollar index is nearly 400 points higher.

Cordonnier keeps South American crop estimates unchanged but has lower bias... Weather improved over the past week across Brazil but remains irregular with too-dry conditions in central and northeastern areas and too much rainfall in southern locations. While some fields will need to be replanted, crop consultant Dr. Michael Cordonnier kept his Brazilian soybean crop estimate at 160 MMT with a neutral to lower bias. He also kept his Brazilian corn crop estimate at 123 MMT with a lower bias, noting “worrisome signs on the horizon for safrinha corn.” Those include soybean planting delays and the need to replant some soybeans, which could push safrinha corn plantings past the ideal window. Cordonnnier left his Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn.

Winter wheat CCI ratings post modest improvements... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 2.3 points to 321.0, while the SRW crop rose 1.6 points to 371.5. Both crops are rated well above year-ago levels at this time, with HRW up 55.0 points and SRW up 21.0 points. Click here for details.

Crop progress report highlights… Following are highlights from USDA’s crop progress and condition update as of Nov. 5.

• Corn: 81% harvested (77% average).
• Soybeans: 91% harvested (86% average).
• Cotton: 95% bolls opening (97% average); 57% harvested (55% average).
• Winter wheat: 90% planted (89% average); 75% emerged (73% average); 50% good/excellent (47% last week).

Chinese soybean imports slow dramatically in October... China imported 5.16 MMT of soybeans in October, down 27.8% from September and lower than the 6.5 MMT to 7 MMT traders expected as some cargoes were delayed. However, that was up 24.6% from last year. Through the first 10 months of this year, China imported 82.42 MMT of soybeans, up 14.6% from the same period last year.

China’s imports rise, but exports fall... China’s imports unexpectedly rose 3.0% annually to $218.3 billion in October, beating expectations of a 4.8% drop and rising from a 6.2% decline in September. This was the first growth in imports since February. China’s exports dropped 6.4% from year-ago to $274.83 billion, down from a 6.2% decline the previous month and worse than forecasts for a 3.0% slide. This marked the sixth consecutive month of declining exports, reflecting persistent weak demand from abroad. That left China with a $56.53 trade surplus, down sharply from $77.71 billion in September and the smallest level since February. The trade surplus with the U.S. narrowed to $30.82 billion in October from $33.119 billion in September.

China issues sovereign bonds to boost economy... China approved a 1 trillion yuan ($137 billion) sovereign bond issue and passed a bill to allow local governments to frontload part of their 2024 bond quotas, Xinhua news reported, in a move to support the economy. Funds raised from the new sovereign bonds will support the rebuilding of disaster-hit areas in the country and improve urban drainage prevention infrastructure to boost China’s ability to withstand natural disasters. That will widen the country’s 2023 budget deficit to around 3.8% of GDP from a previously set 3%, Xinhua said.

IMF raises China’s 2023, 2024 GDP forecasts... China’s economy is set to grow 5.4% this year, having made a “strong” recovery from the pandemic, the International Monetary Fund (IMF) said, making an upward revision to its earlier forecast of 5% growth. IMF said continued weakness in the property sector and subdued external demand could restrict GDP growth to 4.6% in 2024, which was still better than the 4.2% growth it forecast last month.

Australia unexpectedly raises interest rates... Australia’s central bank raised its main interest rate by 25 basis points to 4.35%, saying inflation is still too high. The central bank had gone four monetary policy meetings in a row with a pause. Barrons reported the Reserve Bank of Australia’s surprise rate hike to crack down on inflation may be a precursor to what the U.S. central bank may have to do in the coming months. The Wall Street Journal reported Minneapolis Fed official Neel Kashkari said he is not convinced U.S. interest rate hikes are done and said he would rather err on side of overtightening.

Euro zone producer prices post record annual decline... Factory gate prices in the euro zone fell 12.4% in September, following an 11.5% decline the previous month. This marked the steepest decline in producer prices on record, driven by tumbling costs for both energy (-31.3% vs. -30.6% in August). Excluding energy, producer price inflation decelerated to 0.5% annually in September, down from 1.0% in August.

China’s meat imports decline in October... China imported 552,000 MT of meat during October, down 43,000 MT (7.2%) from September. Its meat imports during the first 10 months of this year totaled 6.26 MMT, up 3.8% from the same period last year.  

Cash cattle firmed, futures plunged... Cattle futures faced heavy followthrough selling from long liquidation on Monday, despite an 87-cent rise in the average cash cattle price to $184.89 last week. Cash sources came into the week expecting steady/firmer prices, but a sharp extension of yesterday’s losses in futures would likely derail those expectations.

Hog futures continue to rise despite falling cash prices... The CME lean hog index dropped another 22 cents to $76.23 (as of Nov. 3). December lean hog futures firmed 65 cents on Monday to $72.40. That narrowed the spread between the cash market and futures to $3.83.  

Overnight demand news... Japan is seeking 108,890 MT of milling wheat in its weekly tender.

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

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