First Thing Today | September 11, 2023
Good morning!
Quiet start to the week overnight... Corn and soybean futures mildly favored the upside in light trade overnight, while wheat posted modest losses. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 2 to 4 cents higher, SRW wheat is 2 to 4 cents lower, HRW wheat is 6 to 8 cents lower and HRS wheat is mostly 4 to 6 cents lower. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is nearly 400 points lower.
Russia reiterates stance on returning to Black Sea grain deal... Russia will return to the Black Sea grain deal “the same day” as Moscow’s conditions for export of its grain and fertilizers are met, Foreign Minister Sergei Lavrov said. “When all the necessary actions for removing obstacles for our grain and fertilizer exports are implemented, the same day we will return to the collective implementation of the Ukrainian part of the Black Sea initiative,” Lavrov said. In a letter seen by Reuters, the UN told Russia a unit of Russian Agricultural Bank in Luxembourg could immediately apply to SWIFT to “effectively enable access” for the bank to the SWIFT international payments system within 30 days, but Lavrov disputed that, saying “no one, including (U.N. Secretary-General Antonio) Guterres,” made that promise.
G20 update... Leaders from the Group of 20 nations achieved consensus on a joint declaration, sidestepping direct condemnation of Russian aggression against Ukraine. While the declaration acknowledges the ongoing conflict in Ukraine, it employs softer language compared to the previous G20 summit in Bali. The statement emphasizes the importance of adhering to the United Nations Charter, refraining from threats or use of force for territorial acquisition, and prohibiting the use or threat of nuclear weapons. The declaration highlights the adverse impact of the war in Ukraine on global food and energy security, supply chains, financial stability, inflation and growth. It calls for unimpeded delivery of grains, foodstuffs and fertilizer from Russia and Ukraine to meet the demand in developing countries, particularly in Africa. The declaration also welcomes the African Union as a permanent G20 member and underscores the commitment to address the global economic repercussions of the conflict and promote comprehensive and lasting peace in Ukraine. Of note: China challenged the planned U.S. presidency of the Group of 20 in 2026, according to officials briefed on the discussions, in a move that underscores the deep sense of mistrust between Beijing and Washington.
U.S., India advance infrastructure deal amid counter-China efforts... President Joe Biden, along with the leaders of India, Saudi Arabia and the United Arab Emirates, announced a joint infrastructure agreement that would link India with the Middle East and Europe and advance trade between several economies. The infrastructure deal is seen as a response to China’s influence in the region and aims to connect Gulf and Arab nations through a network of railways, as well as establish shipping lanes to India via regional ports. This move underscores the shifting alliances in the region, with Saudi Arabia and the UAE seeking closer ties with China. The project, dubbed the India – Middle East – Europe Economic Corridor (IMEC), will consist of two corridors — one connecting India to the Arabian Gulf and one connecting the gulf to Europe, according to a statement from the White House. Officials say the project will: reduce trade costs, generate jobs, lower greenhouse gas emissions and increase trade efficiency.
The week ahead in Washington... House lawmakers finally return to join their Senate counterparts in a dash to get a budget deal by the deadline to prevent a government shutdown, with talk of the need for a likely short-term deal (duration is murky) if a comprehensive agreement isn’t reached. Additionally, several federal programs are up for reauthorization, including the farm bill. Separately, discussions are underway to add supplemental funding to the stopgap spending measure, which could include aid for Ukraine, FEMA funding for disasters and additional support for the WIC food assistance program, as the number of beneficiaries grows. The economic focus will be Wednesday’s consumer inflation data. Key for agriculture will be Tuesday’s September crop reports, which will feature USDA’s first objective yield (field) samples for corn and soybeans.
Fed shift on monetary policy... A Wall Street Journal headline reads, “An important shift in Fed officials’ stance is under way.” Reporter Nick Timiraos, who is said to have close ties with the Fed, writes that Fed officials, including Chair Jay Powell, now have a more balanced approach on monetary policy. That’s a dovish shift from the more hawkish approach the Fed had in recent months, which was one of erring on the side of raising interest rates too high, to make certain inflation is choked off. Now, the Fed reportedly is more worried about further interest rate increases causing an unnecessary U.S. recession.
China’s CPI inches up, PPI continues to contract... China’s consumer price index (CPI) posted an annual rise of 0.1% in August, which followed the first drop in consumer prices in over two years with a 0.3% decline in July. The uptick in consumer prices was primarily driven by non-food prices, which saw growth, while the cost of food continued to decrease. China’s producer price index (PPI) declined 3.0% in August, marking the 11th consecutive month of producer deflation but the smallest drop since March.
China’s new loans jump... China’s banks extended 1.36 trillion yuan in new loans in August, marking a sharp increase from July’s 350 billion, as the central bank aimed to bolster economic growth in the face of subdued demand both domestically and internationally. Additionally, corporate loans surged to 948.8 billion yuan from 237.8 billion in July. Meanwhile, outstanding yuan loans increased by 11.1% from year-ago in August, matching the July level.
BOJ signals possible end to easy money stance, jolting markets... Japan surprised global markets by indicating a potential early exit from its long-standing accommodative monetary policy just as other G7 central banks contemplate tightening their policies. Bank of Japan (BOJ) Governor Kazuo Ueda suggested in a recent interview with Reuters the central bank might consider ending its negative interest rate policy and bond-buying yield cap strategy once it believes it is close to achieving its 2% inflation target. Ueda stated, “If we judge that Japan can achieve its inflation target even after ending negative rates, we’ll do so.”
U.S., India reach deal on poultry trade... The U.S. and India have agreed to resolve an outstanding dispute over poultry at the World Trade Organization, the Office of the U.S. Trade Representative said. India agreed to reduce tariffs on certain U.S. products, such as frozen turkey, frozen duck, blueberries and cranberries. USDA Secretary Tom Vilsack welcomed the announcement, saying the move is an opportunity for American producers and exporters to access the Indian market, the world’s most populous nation. Vilsack highlighted recent efforts to rebuild trust and strengthen relationships with global trading partners, emphasizing the importance of ensuring these partners meet their trade obligations.
Bullish cash cattle hopes... Traders will have to wait until later today to get the official average cash cattle price from last week, but all indications suggest prices firmed, ending a month-long string of declines. Traders expect the cash market to strengthen again this week, though active trade won’t likely be seen until late in the week.
Cash hog index inches higher... The CME lean hog index is up 8 cents, marking the second straight daily gain after a string of declines since late July. The 26-cent gain the past two days suggests the cash market has stabilized and may tick up into October, which is rather typical before a stronger seasonal downturn through winter.
Weekend demand news... Iran tendered to buy up to 180,000 MT of corn that can be sourced from Brazil, Europe and the Black Sea region, including Russia and Ukraine.
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
- 3:00 p.m. Crop Progress — NASS
