First Thing Today | September 14, 2023

Good morning!

Quiet overnight trade in grains... Corn, soybeans and wheat held in tight trading ranges during a quiet overnight session. As of 6:30 a.m. CT, corn futures are trading mostly a penny lower, soybeans are 1 to 3 cents higher, winter wheat futures are 3 to 5 cents lower and spring wheat is mostly 2 to 3 cents lower. Front-month crude oil futures are more than $1.00 higher and the U.S. dollar index is trading just below unchanged.

Weekly Export Sales Report out this morning... For the week ended Sept. 7, traders expect:

India to release more wheat stocks to tame prices... India will release more wheat stocks into the open market to curb prices during the coming festive season, food secretary Sanjeev Chopra said. He said India has no immediate plans to abolish its wheat import tax or to import wheat from Russia. Chopra also assured the country possesses sufficient sugar supplies to meet festival-related demand, addressing concerns about domestic prices that have reached their highest levels in six years.

Strategie Grains raises EU wheat crop estimate, cuts export forecast... Strategie Grains increased its 2023 EU wheat production estimate by 300,000 MT to 125 MMT, though that would still be slightly below last year’s 125.3 MMT crop. The firm cut it 2023-24 EU wheat export forecast by 700,000 MT to 30.1 MMT, citing a sluggish start to the season because wheat from EU origins is proving uncompetitive against Russian wheat. EU wheat exports are now projected to fall 2.2 MMT from last year.

Exchange lowers Argentine wheat crop forecast... The Rosario Grain Exchange cut its 2023-24 Argentine wheat crop forecast by 600,000 MT to 15 MMT, as some areas of the country continue to struggle with dry conditions. Still, that would be up 3.5 MMT (30.4%) from last year’s drought-ravaged crop. The exchange said western and northern Argentina are experiencing drought conditions, while rains have improved soil moisture in central and eastern parts of the country.

Cargill’s purchases of Brazilian soy crush plants approved... Brazil’s antitrust watchdog CADE approved Cargill’s acquisition of Brazilian soy crusher Granol’s three soy crushing plants on Wednesday. The approval allows Cargill’s acquisition of biodiesel plants at Granol’s industrial complexes located in the cities of Anapolis, Porto Nacional and Cachoeira do Sul. With the approval, Cargill will have nine Brazilian soy crushing plants, equaling Bunge, according to data from oilseed lobby Abiove.

Cargill agrees to sell stake in Russian grain terminal... Cargill said on Thursday it had agreed to sell its stake in a Russian grain terminal to Russia’s Delo Group, a day after it denied such reports from Russian media. The sale is contingent on Russian government approval. A representative for Delo, a transport and logistics group, said the Russian government’s foreign investment commission was reviewing the deal, and this was expected to take no more than a month.

China cuts RRR for banks... The People’s Bank of China (PBOC) said it would cut the amount of cash that banks must hold as reserves for the second time this year to help keep liquidity ample and support the struggling economy. Effective Sept. 15, PBOC will cut the reserve requirement ratio (RRR) for all banks, except those that have implemented a 5% reserve ratio, by 25 basis points.

China asks big banks to take additional measures to support yuan... PBOC asked some of the country's biggest lenders to refrain from immediately squaring their foreign exchange positions in the market and to run open positions for a while in order to alleviate pressure on the yuan, two sources with knowledge the matter told Reuters. As part of this informal “window guidance,” banks have been asked not to square their positions in the inter-bank foreign exchange markets after any U.S. dollar sales to clients, until their spot foreign exchange position hits a certain level, the sources said. Most banks are allowed to run a net short or long foreign currency position in spot dollar-yuan markets, within defined limits. The move would effectively mean some of the heavy dollar purchases by companies would be absorbed by banks and sit on their books for a while, thus partially reducing downward pressure on the yuan.

Moody’s downgrades China’s property sector outlook... Moody’s cut it outlook for China’s property sector to negative from stable, citing economic growth challenges the ratings agency said would dampen sales despite government support. Moody’s said it expected contracted sales to fall by about 5% over the next six to 12 months in China and impacts of government measures to boost property purchases was likely to be short-lived and uneven. The outlook downgrade comes amid a string of debt defaults by cash-squeezed developers.

Trucking rebound threatens to tighten diesel market amid low stockpiles... The anticipated rise in domestic freight demand, driven by reduced retail inventory levels and increased construction projects under President Joe Biden’s stimulus programs, is expected to boost the consumption of diesel-powered truck fleets. This surge in demand comes at a time when domestic fuel stockpiles are at their second-lowest seasonal levels since 2000. The consequences of this situation extend beyond the trucking industry. Diesel’s influence on manufacturing and transportation costs means that a rise in diesel prices could lead to broader inflationary pressures across various sectors. At the retail level, diesel prices are 30% above the five-year average. The tightness in the U.S. diesel supply market compounds a global shortage exacerbated by factors such as OPEC’s extended output limits, reduced fuel yields from different crude usage and Russia’s curtailment of diesel exports.

House to vote on gas cars bill... The House will vote today on a bill to prohibit EPA from allowing states to limit gas-powered cars. The House Rules Committee met last night to outline debate on the bill, separating it from an earlier rule that issued it alongside the stalled Defense appropriations measure. Even if it clears the House, it would not be approved in the Democrat-controlled Senate.

California Senate approves groundbreaking climate disclosure rules amid growing ESG focus... The California State Senate passed pioneering climate disclosure regulations, marking the first-of-its-kind legislation in the country. Under these rules, thousands of companies conducting business in California would be obligated to disclose information regarding climate-related financial risks. This move, championed by Democratic proponents, is seen as a direct response to Republican initiatives nationwide aimed at undermining Environmental, Social, and Governance (ESG) policies within business operations.

Slow developing cash cattle market... As expected, this week’s cash cattle negotiations have been slow to develop, creating uncertainty about cash trade. While showlist numbers are down from last week, packers are having to cut Choice prices to attract retailer demand. Choice boxed beef fell another 48 cents on Wednesday, though Select firmed $3.41 and movement improved to 142 loads on the day.

Cash hog index firms... The CME lean hog index is up 35 cents, marking the third daily increase in the past five. While the index has only risen a net 47 cents during that span, there are increasing signs of stabilization. After Thursday’s losses, October hogs stood $2.505 below today’s cash quote.

Overnight demand news... Japan purchased 118,490 MT of milling wheat in its weekly tender, including 20465 MT U.S., 69,322 MT Canadian and 28,703 MT Australian.

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

• 7:30 a.m. Weekly Export Sales — FAS
• 11:00 a.m. Cotton and Wool Outlook: September 2023 — ERS
• 11:00 a.m. Oil Crops Outlook: September 2023 — ERS
• 2:00 p.m. Feed Outlook: September 2023 — ERS
• 2:00 p.m. Rice Outlook: September 2023 — ERS
• 2:00 p.m. Wheat Outlook: September 2023 — ERS