First Thing Today | November 14, 2023

Good morning!

Grains pull back overnight... Soybeans and soymeal led a pullback from Monday’s gains during the overnight session, while corn and wheat saw lighter price pressure. As of 6:30 a.m. CT, corn futures are trading mostly 3 cents lower, soybeans are 9 to 11 cents lower, winter wheat markets are 2 to 4 cents lower and spring wheat is fractionally to a penny lower in most contracts. Front-month crude oil futures and the U.S. dollar index are both modestly weaker this morning.

Cordonnier cuts Brazilian crop estimates... Hot and dry conditions across much of central Brazil are delaying soybean planting, slowing crop development and resulting in acres that need to be replanted. Even if the weather cooperated for the remainder of the growing season, the late-planted soybeans run the risk of lower yields. As a result, South American crop consultant Dr. Michael Cordonnier cut his Brazilian soybean crop by 2 MMT to 158 MMT. Cordonnier also cut his Brazilian corn crop estimate 2 MMT to 121 MMT, noting “universal agreement in Brazil that farmers will either reduce their safrinha corn acreage or plant their corn with the minimal inputs possible.” He maintains a lower bias toward both crops. Cordonnier kept his Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn given improvements in weather the past couple weeks.

HRW CCI declines, SRW rating improves... 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 declined 2.1 points to 318.9, while the SRW crop improved 4.4 points to 375.8. Both crops are rated well above year-ago levels, with HRW up 48.3 points and SRW up 25.4 points. Click here for details.

Crop progress report highlights… Following are highlights from USDA’s crop progress and condition update as of Nov. 12.

• Corn: 88% harvested (86% average).
• Soybeans: 95% harvested (91% average).
• Cotton: 67% harvested (63% average).
• Winter wheat: 93% planted (93% average); 81% emerged (80% average); 47% good/excellent (50% last week).

Ukrainian grain shipments flowing via humanitarian corridor but export pace lags year-ago... Ukraine’s grain exports through the Black Sea humanitarian corridor have reached nearly 4 MMT since it began operating in August, said Ukrainian President Volodymyr Zelenskyy. He noted the grain corridor is functioning well, and they are making positive progress. Ukraine’s grain exports as of Nov. 6 reached 9.8 MMT, according to the country’s ag ministry, down 31.5% from the same period last year.

France trims wheat crop estimate... France’s ag ministry trimmed its 2023 wheat production forecast by 50,000 MT to 35.10 MMT, which would still be 4.2% higher than last year and 2.1% above the five-year average. The ministry raised its corn crop estimate by 420,000 MT to 12.20 MMT, which would be up 13.3% from last year though still 6.3% below the five-year average.

Thailand announces rice, sugar support... Thailand approved 56 billion baht ($1.55 billion) of handouts to rice farmers and increased the price of domestic sugar by 10%. The measures for rice farmers include a 1,000-baht handout for farmers for each rai (0.16 hectares) of land, but not exceeding 20 rais. The support program is in addition to 55 billion baht worth of loans approved last week to help farmers hurt by low prices.

Johnson considers two-step CR under suspension of the rules... Support for House Speaker Mike Johnson’s (R-La.) “two-step CR” (continuing resolution) was weak among House Republicans, leading to the decision to consider the bill under suspension of rules. This process requires a two-thirds majority for passage, or 290 yes votes. Some 50 House Republicans are expected to vote against the CR, but the exact scale of opposition will become clearer after the GOP conference meeting today. House Minority Leader Hakeem Jeffries (D-N.Y.) and other senior Democrats are also cautious and want to consult with their party members before committing to this maneuver. While Democrats don’t love the plan, they want to avoid a government shutdown. One challenge for Johnson is the possibility that more Democrats may vote in favor of the bill than Republicans. This situation could have political repercussions for him. Senate Majority Leader Chuck Schumer (D-N.Y.) is “pleased” with Johnson’s plan to avoid a government shutdown. Schumer said Johnson’s “laddered” stopgap spending bill — which funds four bills through Jan. 19 and the remaining eight through Feb. 2 — is “far from perfect,” but indicated the “clean” measure provides a path to funding the government for the next two months.

Euro zone economy slows in Q3... Euro zone GDP shrank 0.1% on a quarterly basis and posted a meager 0.1% annual growth rate during the third quarter. That marked the first quarterly contraction in economic activity since 2020 and the weakest annual performance since 2021.  

China to halt cotton reserve sales... China will stop auctioning cotton from state reserves from Nov. 15, according to an announcement posted by the China Cotton Reserves Management Company. China started selling state-owned cotton reserves in late July, with strong demand into early fall, though buyer interest has faded recently.

ERP payments show slight increase... Payments made under the Emergency Relief Program (ERP) reached $8.24 billion as of Nov. 12, up from the previous week’s total of $8.23 billion. Payments under ERP Phase 2 rose to $788.02 million, distributed to 10,046 recipients, compared to $783.89 million distributed to 10,024 recipients the previous week. There are no reported payments issued under the newly launched ERP 2022 program at this time.

Cattle futures firm but traders still cautious... Cattle futures posted corrective gains on Monday, though buyer interest was limited by the nearly $5.00 plunge in the average cash cattle price last week and trepidation ahead of Friday’s Cattle on Feed Report. The bearish placements figure in the October Cattle on Feed Report was the catalyst for the heavy liquidation pressure over the past month. Traders will likely wait on signs of a low in the cash market and until after Friday afternoon’s report before actively buying futures.

Traders actively narrow hog futures discount... December hog futures firmed $1.45 on Monday. The CME lean hog index is down 23 cents today to $76.05 as of Nov. 10. That narrowed the discount in the lead month contract to $2.70. For December hogs to actively extend higher, the cash index is going to need to show signs of an early seasonal low.

Overnight demand news... Japan is seeking 104,677 MT of milling wheat in its weekly tender. The Philippines tendered to buy 30,000 MT of feed wheat from unspecified origins. Jordan made no purchases in its tender to buy up to 120,000 MT of 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

• 11:00 a.m. Meat Price Spreads — ERS
• 11:00 a.m. Oil Crops Outlook: November 2023 — ERS
• 2:00 p.m. Dairy Monthly Tables and Dairy Quarterly Data — ERS
• 2:00 p.m. Feed Outlook: November 2023 — ERS
• 2:00 p.m. Rice Outlook: November 2023 — ERS
• 2:00 p.m. Wheat Outlook: November 2023 — ERS