First Thing Today | October 3, 2023

Good morning!

Corn and beans lower, wheat mixed overnight... Corn and soybean futures failed to build on Monday’s gains and traded lower overnight, while wheat had a mixed tone. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents lower, soybeans are 10 to 13 cents lower, SRW wheat is narrowly mixed, HRW wheat is 2 to 5 cents lower and HRS wheat is mostly 1 to 2 cents higher. Front-month crude oil futures are modestly lower and the U.S. dollar index is more than 200 points higher.

StoneX raises corn, soybean crop estimates... Commodity brokerage firm StoneX estimates the U.S. corn crop at 15.202 billion bu. on an average yield of 175.5 bu. per acre. That is up from the firm’s September forecasts of 15.102 billion bu. and a yield of 175 bu. per acre. In September, USDA estimated the corn crop at 15.134 billion bu. on a yield of 173.8 bu. per acre. StoneX estimates the U.S. soybean crop at 4.175 billion bu. on a yield of 50.4 bu. per acre. That is up from its September forecasts of 4.144 billion bu. and 50.1 bu. per acre. In September, USDA estimated the soybean crop at 4.146 billion bu. on a yield of 50.1 bu. per acre. StoneX says the estimates are for USDA’s final production number and assume USDA’s harvested acreage.

Cordonnier keeps U.S. yield, production estimates unchanged... Crop consultant Dr. Michael Cordonnier made no changes to his U.S. corn and soybean crop forecasts this week. He estimates the corn crop at 14.93 billion bu. on a yield of 171.5 bu. per acre. Cordonnier estimates the soybean crop at 4.05 billion bu. on a yield of 49 bu. per acre. He has a neutral bias toward both crops moving forward.

Crop progress report highlights… Following are highlights from USDA’s crop progress and condition update as of Oct. 1.

• Corn: 82% mature (75% average); 23% harvested (21% average); 53% good/excellent (53% last week).
• Soybeans: 86% dropping leaves (77% average); 23% harvested (22% average); 52% good/excellent (50% last week).
• Cotton: 75% bolls opening (73% average); 18% harvested (17% average); 30% good/excellent (30% last week).
• Winter wheat: 40% planted (43% average); 15% emerged (16% average).

Strong dollar good for American consumers but bad news for the rest of the world... In many countries, the combination of higher rates, a stronger U.S. currency and elevated oil prices is threatening lower growth and more financial vulnerability. The U.S. dollar index has reached its highest level since November 2022. Investors have grown more convinced of the U.S. economy’s resilience — and that the Federal Reserve is likely to keep borrowing costs higher for longer than it would do in a typical business cycle, the Wall Street Journal notes.

Argentina extends ‘agro dollar’ program... Argentina’s government extended through Oct. 25 a program to boost grain/soy exports to shore up the country’s foreign reserves. Under the program, Argentine exporters can swap 25% of the foreign currency they make on alternative exchange markets that offer better rates than the official rate, which in August was frozen at 350 pesos per dollar. The remaining 75% must be exchanged at the official rate. The Buenos Aires Grain Exchange said the so-called “agro dollar/soy dollar” program boosted Argentine soy exports to 5.1 MMT in September.

Ukraine grain exports drop 10% in September... Ukrainian grain exports fell 10% to 2.1 MMT in September versus August due to difficulties with export logistics and Russian shelling of key export facilities, the UCAB agricultural business association said. UCAB expects a “gradual increase” in grain export this month as more shipments leave via the temporary humanitarian corridor.

Malaysia proposes cut to palm oil tax, action against rice hoarders... Malaysia’s finance ministry has proposed a cut in windfall levy for palm oil producers in the states of Sabah and Sarawak to 1.5% from 3%, state news agency Bernama reported. Malaysia imposes a windfall levy of 3% on palm oil prices above 3,000 ringgit ($635.39) per metric in Peninsular Malaysia and above 3,500 ringgit per ton in Sabah and Sarawak. Meanwhile, the country’s prime minister threatened legal action against anyone found hoarding rice, as concern over rising prices and supply shortages have led to consumers stockpiling.

Malaysia considers expansion of B10 biodiesel for industrial sector... Malaysia is considering expansion of its B10 biodiesel program, which requires the mandatory use of 10% palm oil, to the industrial sector, the country’s ag ministry said. Malaysia currently implements the B10 program only for the transportation sector.

Malaysian exchange to launch soyoil futures... Bursa Malaysia Derivatives Exchange (BMD), known for offering the most liquid palm oil futures in the world, is planning to launch soyoil futures in the first quarter of the next year, a senior exchange official said. The exchange has been working on finalizing the contract specifications before the contract’s launch in early 2024. BMD will first create a benchmark soyoil contract for Asian buyers and later could launch contracts for other edible oils such as sunflower oil, said the director of derivatives markets at BMD.

Sharp increase in ERP payments...  There was a notable surge in payments made under Phase 2 of the Emergency Relief Program (ERP), as USDA intensified efforts to distribute funds in anticipation of a possible government shutdown that did not occur. The weekly data reveals an increase in overall ERP payments, which now stand at $8.16 billion, up from the previous week’s figure of $7.46 billion. Phase 2 ERP payments jumped to $714.95 million distributed to 9,955 recipients, compared to the previous week’s $11.75 million distributed to 6,887 recipients. However, there were no significant changes reported in Coronavirus Food Assistance Program (CFAP) payouts in the latest week.

Wholesale beef prices strengthen... Boxed beef prices firmed $2.30 for Choice and 94 cents for Select on Monday, while packers moved a solid 105 loads amid the price strength. While the $300.00 area appears to be a relative price floor for Choice beef, packers have struggled to find sustained retailer demand much above that level.

Cash hog fundamentals weaken... The CME lean hog index is down 74 cents to $84.84 (as of Sept. 29), marking the biggest daily decline on the pullback from the recent highs and the lowest level since June 9 when prices were climbing. The pork cutout value fell $1.19 to $96.04, the lowest level since Sept. 7.

Overnight demand news... Japan is seeking 91,234 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

• 2:00 p.m. Commodity Costs and Returns — ERS
• 2:00 p.m. Milk Cost of Production Estimates — ERS