First Thing Today | September 13, 2022

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Good morning!

Firmer price tone this morning... Soybean futures built on Monday’s strong gains overnight, while wheat rebounded from yesterday’s losses and corn favored the upside is light, two-sided trade. As of 6:30 a.m. CT, soybeans are trading 15 to 18 cents higher, corn is around a penny higher and wheat futures are mostly 8 to 13 cents higher. Front-month crude oil futures are around $1.25 higher and the U.S. dollar index is nearly 600 points lower this morning.

Consultant lowers corn, soybean production forecasts... Crop Consultant Dr. Michael Cordonnier made no changes to his corn or soybean yield forecasts, which remained at 170 bu. and 50.5 bu. per acre, respectively. For corn, he lopped another 300,000 acres off USDA’s harvested acreage estimate, which lowered his production forecast to 13.68 billion bushels. For soybeans, Cordonnier is using USDA’s harvested acreage figure for now, which trimmed his production forecast to 4.37 billion bushels.

Corn, soybean CCI ratings continue to fall... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop inched 0.3 point lower to 340.2, while the soybean crop dropped 1.4 points to 342.2. CCI ratings have declined for nine straight weeks for corn and six consecutive weeks for soybeans. The corn CCI rating is 5.0% below its five-year average, while the soybean rating is 2.7% below average for the second week of September. Click here for more details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Sept. 11.

  • Corn: 95% dough (96% average), 77% dented (79% average), 25% mature (30% average), 5% harvested (4% average), 53% good/average (54% last week).
  • Soybeans: 97% setting pods (98% average), 22% dropping leaves (28% average), 56% good/excellent (57% last week).
  • Spring wheat: 85% harvested (89% average).
  • Winter wheat: 10% planted (7% average).
  • Cotton: 49% bolls opening (41% average), 8% harvested (8% average), 33% good/excellent (35% last week).

China maintains corn crop, soybean import forecasts... Despite recent heat and drought stress in southern China, the country’s ag ministry kept its production estimate at 272.56 MMT, as yields in northeastern areas are expected to be strong. USDA raised its 2022-23 China corn production forecast by 3 MMT to 274 MMT. China’s ag ministry kept its 2022-23 soybean import forecast at 95.2 MMT. USDA cut its 2022-23 China soybean import forecast by 1 MMT to 97 MMT.

Rail strike update... Ten of 12 railroad workers’ unions have struck new labor deals, but there are two holdouts — the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal Air, Rail, and Transportation Workers. The unions had just advanced a proposal that included an allowance that workers can take unpaid time off for a doctor’s appointment without being disciplined, according to Dennis Pierce, national president of the 57,000-member Brotherhood of Locomotive Engineers and Trainmen, a Division of the Teamsters Rail Conference. “It’s no longer about money — it’s about unpaid time off to go to the doctor without getting fired,” Pierce told the New York Times. He added that if the railroad carriers agreed to the proposal, the unions would put it to a vote, which would avert a labor stoppage for at least a few weeks as the count unfolded.

Ag sector frets over impacts from possible rail strike... A strike could impact all major railroads, including BNSF, Union Pacific and CSX Transportation. Fertilizer shippers are already preparing for the worst. “Rail networks are complicated, and carriers must make preparations ahead of a potential stoppage to keep certain types of cargo safe and secure,” Fertilizer Institute CEO Corey Rosenbusch said. “Fertilizer falls into that category and is being taken off the rails. That is bad news for farmers and food security.” Others in the U.S. ag sector also have high anxiety with the situation. The National Grain and Feed Association warned: “A shutdown would quickly cause additional problems and force producers to make difficult decisions regarding the viability of their animals. Processing and biofuels plants may have to scale back production due to an inability to both move in commodities for processing and move out finished products for consumption.” The American Cotton Shippers Association noted, “There is a lot of old crop that needs to ship via rail. The whole logistical system is still too fragile from backlogs and Covid. We do not need this hiccup right now.”

Calls for Congress to step in on rail dispute... President Joe Biden and cabinet officials were in touch with freight-rail companies and unions on Monday in an effort to avert a strike, according to a White House official. Congress would act to avert a national freight railway strike, House Majority Leader Steny Hoyer (D-Md.) said. He told Bloomberg Television, “We can pass legislation if needed.” But unions, a key constituency for Democrats, have urged lawmakers to stay out of the matter. Steve Bobb, the chief marketing officer of BNSF, encouraged customers to ask Congress to intervene. His counterpart at Norfolk Southern requested that of its customers over the weekend.

Trucks couldn’t absorb a rail strike... More than 460,000 additional trucks would be needed each day to carry the goods otherwise delivered by rail, the American Trucking Associations, another industry group, said in a letter last week asking lawmakers to be prepared to intervene. The trucking industry faces a shortage of 80,000 drivers, so a rail disruption would “create havoc in the supply chain and fuel inflationary pressures across the board,” it said.

ERP payments on the rise... Payments under the Emergency Relief Program (ERP) covering losses for 2020 and 2021 increased to $6.63 billion as of Sept. 11, up from $6.56 billion the prior week. Amounts for non-specialty crops are at $5.71 billion ($5.68 billion prior) while specialty crop payments are at $918 million ($904 million prior).

China to release more pork reserves... China will release the second batch of pork from state-owned reserves this week as Beijing seeks to ensure ample supplies ahead of the upcoming holiday season. Pork prices have surged recently as supplies have tightened.

Cattle slaughter remains strong... Packers pushed 604,000 head of cattle through slaughter lines last week, the largest figure for the week of Labor Day since 2007. While the average cash cattle price softened another 40 cents last week, the recent strength of cash market weakness is likely nearing an end as feedlots are highly current and slaughter supplies will decline.

More declines in cash hog index... The CME lean hog index is down another $1.28 to $98.29 (as of Sept. 9), the lowest level since late February. October lean hog futures posted a $1.30 loss on Monday, as traders shied away from narrowing the spread as they had done aggressively for a couple weeks. With the discount under $6.50, buyer interest in the lead contract is likely to be limited until the cash index shows signs of stabilizing.

Overnight demand news... Taiwan tendered to buy up to 65,000 MT of corn to be sourced from the U.S., Brazil, Argentina or South Africa. Japan is seeking 97,373 MT of wheat in its weekly tender. Jordan passed on a tender to buy 120,000 MT of optional origin milling wheat but issued a similar tender with a later closing date.

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

 

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