First Thing Today | October 2, 2023
Good morning!
Corn and wheat firmer, beans weaker to start the week... Corn and wheat futures traded higher on corrective buying overnight, while soybeans faced followthrough selling. As of 6:30 a.m. CT, corn futures are trading 3 cents higher, soybeans are 5 to 6 cents lower and wheat futures are 4 to 8 cents higher. Front-month crude oil futures are around 80 cents higher and the U.S. dollar index is nearly 300 points higher.
Gov’t shutdown averted with 11th hour stopgap measure... In a last-minute effort to prevent a shutdown, President Joe Biden signed into a law a stopgap measure that funds the government for an additional 47 days, through Nov. 17. However, lawmakers still need to finalize a permanent budget appropriation plan to address the nation’s financial needs. Notably, the bill did not include funding for military aid to Ukraine, a matter of contention for some Democrats and Republicans. Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.) expressed their intent to reinstate funding for Ukraine in the final budget negotiations. It also doesn’t provide any funding for border protection. The continuing resolution provides $16 billion in disaster relief. The stopgap measure means USDA will be able to publish its October Crop Production and WASDE reports.
The week ahead in Washington... With a short-term stopgap spending measure in place, work and votes on fiscal year 2024 appropriations bills (and amendments) will now be a focal point, with contentious views on both sides of the political aisle and chambers. Work on a new farm bill can continue, with the same questions (timing, funding, Title 1 reform, etc.) still being unanswered. The key economic data this week will be Friday’s employment data for September.
August soy crush expected to be down sharply... Analysts expect USDA this afternoon to report August soybean crop at 171.6 million bu., which would be down 7.1% from the previous month and 2.0% below last year. Soyoil stocks are expected to total 1.840 billion pounds.
Ukraine grain exports fall sharply... Through the first three months of 2023-24, Ukraine exported 6.68 MMT of grain, down 2.31 MMT (25.7%) from the same period last year. The discontinuation of the Black Sea grain deal in mid-July forced Ukraine to keep alternative routes, which slowed down shipments. Exports included 3.3 MMT of wheat, 2.7 MMT of corn and 622,000 MT of barley.
More ships headed to Ukrainian Black Sea ports, freight rates fall... Five more cargo ships are heading towards Ukrainian Black Sea ports to pick up grain for export, Deputy Prime Minister Oleksandr Kubrakov said on Sunday. The ships are using Ukraine’s humanitarian corridor it set up following Russia’s withdrawal from the Black Sea grain deal. Ukraine’s ag minister says freight rates for ships using the new corridor are “still expensive,” but have dropped 30% to 40% in the past two to three weeks.
Malaysia announces measures to tame rice prices... Malaysia announced a subsidy and other measures to try to cool rice prices amid concern over rising costs and supply shortages. The country’s ag ministry said it would provide a subsidy of 950 ringgit ($201.78) per ton for imported white rice in the states of Sabah and Sarawak from Oct. 5. The ministry also asked the Federal Agricultural Marketing Authority to increase distribution of local white rice to rural areas. All government contracts for rice procurement would now involve purchasing imported white rice instead of local white rice.
China’s factory sector expands in September... China’s official manufacturing purchasing manufacturers index (PMI), which tracks larger and state-owned factories, rose to 50.2 in September. That was the first time the reading was above the 50.0 level, which separates expansion from contraction since March. The Caixin manufacturing PMI, which gauges smaller and privately-owned factories, declined to 50.6 in September from a 51.0 reading in August, but still marked the second straight month of sector growth.
World Bank keeps China’s 2023 GDP growth forecast unchanged, cuts outlook for 2024... The World Bank maintained its forecast for China’s 2023 economic growth at 5.1% but trimmed its projection for 2024 to 4.4% from 4.8% previously, citing the persistent weakness in the property sector. For East Asia and the Pacific, including China, the bank slightly trimmed its 2023 GDP forecast to 5.0% from its prior 5.1% estimate. For 2024, the bank lowered its regional outlook to 4.5% growth from 4.8%, dragged down by external factors, including a sluggish global economy, high interest rates and trade protectionism.
U.S. restricts French poultry over HPAI vaccine... France started vaccinating ducks against highly pathogenic avian influenza on Monday, prompting the U.S. to impose trade restrictions on French poultry imports. Vaccinated birds may not show signs of infection, meaning it is impossible to determine whether the virus is in a flock, USDA said. Japan was also still reluctant to accept French poultry after vaccination.
Weaker cash cattle expectations... Cash cattle traded steady (Southern Plains) to lower (northern market) last week, though traders will have to wait until later this morning to get the official average price. With the flip of the calendar, packers will have fresh contract supplies available, which is expected to lead to lower prices in the negotiated market again this week.
Cash hog prices weakening seasonally... The CME lean hog index is down 56 cents to $85.58 (as of Sept. 28). With the cash index signaling the start of an extended seasonal decline after a brief move up in September, traders have extended discounts futures hold to cash. October lean hog futures finished Friday $5.38 below today’s cash quote, while the December contract held a $13.805 discount.
Weekend demand news... Mauritius tendered to buy 6,000 MT of optional origin long grain white rice.
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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS
- 3:00 p.m. Crop Progress — NASS
