First Thing Today | September 13, 2023

Good morning!

Corn and wheat firmer, soybeans weaker... Grain futures posted two-sided trade overnight, with corn and wheat favoring the upside and soybeans mildly weaker early this morning. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 1 to 2 cents lower, winter wheat markets are 7 to 8 cents higher and spring wheat is mostly a nickel higher. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is trading just above unchanged.

Ukraine grain exports fall sharply during the first half of September... Ukraine exported 783,000 MT of grain in the Sept. 1-13 period, according to the country’s ag ministry, down sharply from around 1.5 MMT of shipments during the same period last year. Traders and exporters have said Ukrainian Black Sea ports being blocked and recent Russian attacks on Ukrainian ports on the Danube River are the main reasons for the reduced exports.

EU neighbors will ban Ukrainian grains if export ban isn’t extended... Hungary has agreed with Poland, Romania, Slovakia and Bulgaria that the five countries would impose national bans on Ukrainian grain imports to protect their markets if the EU does not extend a ban that expires on Sept. 15. Hungary’s ag minister said any new national ban would apply to a wider range of Ukrainian products than the current measures. The countries would allow Ukrainian grains to be shipped through their borders to other countries, but not be stored within their boundaries.

France cuts wheat export outlook... France’s ag ministry lowered its forecast for 2023-24 French wheat exports outside the EU trade bloc by 100,000 MT to 9.5 MMT, which would be down 6.4% from the previous marketing year. The outlook for wheat exports within the EU was reduced 250,000 MT to 7.54 MMT, though that would still be 18.1% higher than 2022-23.

Vilsack: Ethanol industry faces ‘make-or-break’ moment... Tuesday at an event hosted by the ethanol lobby group Growth Energy, USDA Secretary Tom Vilsack urged ethanol producers to focus on reducing greenhouse gas emissions and seizing opportunities in the growing market for low-polluting jet fuel. “This is a critical moment — a make-or-break moment,” Vilsack said, according to Bloomberg. The industry’s future is closely tied to sustainable aviation fuel (SAF), with a potential 36-billion-gallon industry on the horizon. Ethanol producers are working to improve their environmental credentials to become a sought-after ingredient for SAF production. The U.S. Treasury Department is working on guidance that will influence the industry and determine which fuels qualify for expanded tax incentives. Vilsack supports using an Energy Department model (GREET) to estimate greenhouse gas emissions from SAF production, a model favored by the industry. Michael Berube, a deputy assistant secretary at the Energy Department, highlighted the potential for significant greenhouse gas reductions within current ethanol production if the right measures are taken.

U.S. gov’t shutdown odds continue to rise... More than 30 Democrats, led by Rep. Robert Garcia (D-Calif.), sent a letter to House Speaker Kevin McCarthy (R-Calif.) asking him to figure out a bipartisan solution to prevent a shutdown when government funding runs out Sept. 30. But McCarthy faces pushback from some of his conservative hardliners on the issue. Conservatives have pushed two big demands on McCarthy: opening an impeachment inquiry into President Joe Biden and major cuts to government spending. Freedom Caucus members want any continuing resolution (CR) to include items like increased funding for border security. But even then, they haven’t committed to supporting such a temporary funding fix. Rep. Matt Gaetz (R-Fla.) said he is considering a motion to oust the speaker. “If Kevin McCarthy puts a continuing resolution on the floor, it’s going to be shot/chaser. Continuing resolution — motion to vacate,” Gaetz said. He did not opine on whether that statement covered a CR that included demands from conservatives, such as border security funding and disaster funding.

New rule proposed to enhance protections for temporary farm workers... The U.S. Department of Labor proposed a rule aimed at bolstering protections for farm workers within the H-2A program. The rule intends to combat labor abuses and ensure fair treatment for agricultural workers. Key aspects:

• It enhances protections for workers advocating for better conditions and allows workers to invite guests, including labor organizations, to employer-provided housing. Employers must provide a worker list to labor organizations upon request and permit worker representation in meetings that might lead to discipline. Employers are also required to certify their commitment to labor neutrality agreements or provide an explanation if they won't.
• The rule clarifies the criteria for "for cause" terminations, preserving workers' rights and access to work hours and transportation.
• Employers must share all agreements with agents or recruiters with the Department of Labor and disclose the identities of individuals soliciting H-2A workers on their behalf.
• Wage rates would be immediately applicable upon publication in the Federal Register, ensuring workers receive up-to-date wages promptly. Employers failing to provide adequate notice of delayed start dates must compensate workers accordingly.
• A seat belt requirement is introduced to enhance transportation safety for workers traveling long distances to and from worksites.
• The rule expedites debarment proceedings for businesses violating H-2A program rules, streamlines enforcement actions, and restricts employers from withholding workers' identification documents.

The proposed rule will undergo a 60-day public comment period upon publication in the Federal Register, with the Department of Labor considering all feedback before finalizing the rule. 

Wholesale beef prices continue to slide... Choice boxed beef prices fell $2.08 on Tuesday, while Select dropped $1.66. Though movement has picked up recently, packers are having to lower wholesale prices to attract retailer demand. Packer margins remain in the black but have tightened with the downturn in wholesale beef prices.

Pork cutout back above $100... The pork cutout value firmed $1.75 on Tuesday to $101.20 as all prices except ribs posted gains. Movement improved to 343 loads of the day, despite the stronger prices. It appears retailers are buying pork for features in October for National Pork Month.

Overnight demand news... Algeria tendered to buy up to 80,000 MT of Argentine corn and 30,000 MT of optional origin feed barley. South Korea made no purchases in a tender to buy up to 138,000 MT of corn. Japan purchased 201 MT of feed wheat from a tender for up to 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
• 11:00 a.m. Feed Grains Database — ERS
• 11:00 a.m. Meat Price Spreads — ERS
• 2:00 p.m. Dairy Monthly Tables — ERS
• 2:00 p.m. Season Average Price Forecasts — ERS
• 2:00 p.m. Wheat Data — ERS
• 2:00 p.m. Broiler Hatchery — NASS
• 2:00 p.m. Turkey Hatchery — NASS