First Thing Today | November 8, 2023

Good morning!

Soybeans lead overnight price gains... Soybean futures posted strong gains overnight on talk of big Chinese purchases, while corn and wheat followed to the upside. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 8 to 17 cents higher and wheat futures are 5 to 8 cents higher. Front-month crude oil futures are down around $1.00 and the U.S. dollar index is about 200 points higher this morning.

Reuters: China makes large U.S. soybean purchases... Chinese importers bought around 10 cargoes of U.S. soybeans (about 600,000 MT) for shipment from Gulf and Pacific Northwest export terminals between December and March, trade sources told Reuters. If confirmed, Tuesday’s sales would be the largest single-day soybean purchases by China since late July. Cash premiums for U.S. soybeans at Gulf Coast terminals jumped as much as 10 cents a bushel on Tuesday as exporters scrambled to source supplies, traders said.

Russia to maintain elevated seasonal grain export quota... Russia’s ag ministry is expected to set the quota for grain exports at 24 MMT from Feb. 15 to June 30, TASS news agency reported. While the specific allocation for wheat was not mentioned, experts suggest this generous quota is unlikely to restrict exports. The ministry said the country’s 2023-24 total grain exports would reach 65 MMT.

U.S. ag trade runs another deficit in September, record gap in FY 2023... The U.S. exported $12.73 billion of ag goods in September, while ag imports totaled $15.34 billion. This resulted in a monthly trade deficit of $2.61 billion, falling from $3.62 billion in August but the fifth consecutive month of red ink. The U.S. ag sector concluded fiscal year (FY) 2023 with a record trade deficit, as exports reached $178.75 billion, while imports soared to a record $195.37 billion, resulting in a trade gap of $16.62 billion. Still, it was a better outcome than initially anticipated by USDA, as exports exceeded its forecast of $177.5 billion, while imports fell short of the projected $196.5 billion level that would have resulted in a $19 billion deficit.

U.S. trade deficit widens in September... The U.S. trade deficit widened to $61.5 billion in September from an upwardly revised $58.7 billion gap in August. Still, it is the third lowest trade deficit since 2021. Imports were up 2.7% to $322.7 billion, the highest level in seven months. Exports rose at a slower 2.2% to $261.1 billion, the highest level since August 2022.

U.S. finds no major trade partners manipulated currencies... The U.S. Treasury Department on Tuesday said no major trading partners appeared to be manipulating their currencies, but it put Vietnam back onto a foreign exchange “monitoring list,” while removing Switzerland and South Korea from that category. Treasury’s semi-annual currency report for the four quarters ended June 2023 showed China, Vietnam, Germany, Malaysia, Singapore and Taiwan were included on its monitoring list. These countries exceeded two of three thresholds: a trade surplus with the U.S. above $15 billion, a high global current account surplus above 3% of gross domestic product and persistent net foreign currency purchases exceeding 2% of GDP over a year.

Democrats scored several notable victories in Tuesday's elections...

• Incumbent Democratic Governor Andy Beshear secured his re-election in Kentucky. He defeated Republican Daniel Cameron, who is known to be closely aligned with Senate Minority Leader Mitch McConnell (R-Ky.). Beshear will now be seen as a rising star among Democrats.
• Ohio voters took a significant step by incorporating the right to an abortion into the state’s constitution, which implies a strong commitment to protecting reproductive rights.
• Democrats successfully gained control of the state legislature in Virginia, marking a significant political shift in that state, and deflating rising GOP star Glenn Youngkin.
• Gabe Amo, a former aide to President Joe Biden, emerged victorious in a special election held in Rhode Island, further bolstering Democratic representation in that region. For a few weeks, that gives House Speaker Mike Johnson (R-La.) even less room to maneuver, as it cuts the GOP majority to 221-213 with a Utah special election pending on Nov. 21 to fill the seat opened by the retirement of former Rep. Chris Stewart (R).
• The most notable GOP victory was in Mississippi, where voters reelected Gov. Tate Reeves over Democratic challenger Brandon Presley.

Reuters: China asks insurance group to aid embattled property developer... Chinese authorities have asked Ping An Insurance Group to take a controlling stake in embattled Country Garden, the country’s biggest private property developer, four people familiar with the plan told Reuters. A spokesperson for Ping An said the company had not been approached by the government and denied the information reported by Reuters.

ERP payments top $8.2 billion... As of Nov. 5, the total Emergency Relief Program (ERP) reached $8.23 billion, a slight uptick from the previous week. Phase 2 ERP payments increased to $783.89 million from $767.99 million in the prior week. These Phase 2 payments have been disbursed to a total of 10,024 recipients, signifying ongoing efforts to provide essential relief and support in various sectors.

Vilsack to unveil new final rule on poultry contacting... Ag Secretary Tom Vilsack today will emphasize USDA’s commitment to enhancing agricultural markets, establishing new revenue avenues and boosting competition within the industry. This development follows the Office of Management and Budget’s recent completion of its review of USDA's final rule titled “Transparency in Poultry Grower Contracting and Tournaments.”

Macros, technicals hammer cattle... Live cattle and feeders faced heavy pressure from macroeconomic concerns and technical-based selling on Tuesday. That sets the market up for followthrough selling, though a lack of early seller interest could see fresh buying surface as both are short-term oversold.

Cash hog index firms, pork cutout falls... The CME lean hog index firmed 4 cents to $76.27 (as of Nov. 6). That’s the first uptick in the cash index since Oct. 11. After Tuesday’s gains in December hog futures, the discount in the lead contract is down to $3.37. Wholesale pork prices were unable to sustain Monday’s strong gains, falling $3.84 amid a $14.64 plunge in bellies along with smaller declines in all other cuts except ribs.

Overnight demand news... South Korea purchased 65,000 MT of corn expected to be sourced from South America or South Africa. Algeria purchased at least 550,000 MT of milling wheat expected to be sourced from the Black Sea region and France. Japan tendered to buy 60,000 MT of feed wheat and 20,000 MT of feed barley.

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

• 9:30 a.m. Weekly Ethanol Production — EIA
• 10:00 a.m. Livestock and Meat International Trade Data — ERS
• 2:00 p.m. Broiler Hatchery — NASS