First Thing Today | September 15, 2023
Good morning!
Another quiet overnight session for grains... Corn, soybeans and wheat held in relatively 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 3 to 4 cents lower, SRW wheat is fractionally higher, HRW wheat is 2 to 3 cents lower and HRS wheat is steady to a penny lower. Front-month crude oil futures are 50 cents higher and the U.S. dollar index is about 100 points lower.
NOPA August soy crush expected to slow seasonally... Traders expect the National Oilseed Processors Association (NOPA) to report processors crushed 167.8 million bu. of soybeans during August, which would be down 3.2% from July but up 1.4% from last year and the second highest figure on record for the month. Soyoil supplies held by NOPA members at the end of August are expected to total 1.483 billion pounds.
Japan to cut wheat import price for first time in three years... Japan will slash the price at which it sells imported wheat to domestic flour mills from October by an average 11.1% to reflect lower import prices. It marks the first drop in three years and reflects softer international wheat prices. Japan buys five types of milling wheat from the U.S., Canada and Australia through import tenders and sells to domestic millers at prices set twice a year. For the six months starting Oct. 1, the ministry’s wheat selling price to local millers will average 68,240 yen ($465) per metric ton, down from 76,750 yen the previous six months.
Senate farm bill writers at odds over reference prices... In the ongoing process of drafting a new farm bill, Senate Ag Chair Debbie Stabenow (D-Mich.) is considering changes to the federal crop insurance program that would benefit a wide spectrum of farmers. However, other committee members are advocating for a focus on producers of major commodity crops, sparking a contentious debate over subsidies within this legislation. The primary point of contention centers around subsidies in the face of budget constraints for farm and conservation programs. While the deadline for some provisions in the current farm policy law is Sept. 30, Stabenow has suggested a new goal of Dec. 31 for passing the legislation. Some commodity groups argue that reference prices for major crops in the Price Loss Coverage program need updating, as they are based on 2012 commodity prices and are considered too low. Stabenow believes that modifying the federally subsidized crop insurance program could have a broader impact. Senate Agriculture ranking member John Boozman (R-Ark.) said increasing reference prices is a priority. Bottom line: The debate over reference prices remains unsettled, with different committee members offering varying perspectives on how to address this issue in the farm bill. Some argue that raising reference prices is essential to support farmers, while others contend that it could lead to regional conflicts and benefit certain crop producers over others.
Senate faces gridlock as conservatives block amendment debate on FY 2024 spending bills... In a surprising turn of events, the Senate, after voting 91-7 in favor of advancing a bipartisan package of fiscal year (FY) 2024 spending bills, has hit an impasse. This sudden halt is due to objections raised by hardline conservatives who oppose any amendments to the legislation. Senate Appropriations Committee Chair Patty Murray (D-Wash.) and Vice Chair Susan Collins (R-Maine) attempted to gain unanimous consent to initiate the voting process for ten amendments — equally divided between Republicans and Democrats — pertaining to the MilConVa-Agriculture-Transportation/HUD minibus. However, Senator Ron Johnson (R-Wis.) objected to this proposal, effectively blocking the Senate from proceeding with the crucial amendment debate. This move by Johnson poses a significant challenge to the Republican Party’s push for a robust amendment process.
House Budget Committee budget resolution coming next week... The House Budget Committee is gearing up to mark up a FY 2024 budget resolution on Wednesday, Sept. 20, according to a statement from a Republican Budget Committee aide. Budget Chair Jodey Arrington (R-Texas) provided additional details, explaining that the resolution aims to achieve a balanced budget and reduce deficits by an ambitious $16 trillion over the span of a decade. One notable aspect of the resolution is its call for the establishment of a bipartisan commission. This commission’s primary role would be to craft legislation addressing the solvency concerns surrounding Social Security and Medicare. Instead of advocating for specific policy changes, the resolution seeks a collaborative approach through the commission, fostering bipartisan cooperation in addressing these critical social safety net programs.
China’s factory output, retail sales top expectations... China’s factory output and retail sales grew at a faster pace in August. Industrial output rose 4.5% from year-ago in August, the strongest growth since April. Retail sales increased 4.6%, the strongest growth since May. The upbeat data suggests recent measures to shore up the economy are starting to show impacts. But the real estate sector remains a concern. China’s new home prices fell at the fastest pace in 10 months in August, while property investment dropped for an 18th consecutive month and home sales slumped for a 26th straight month.
China continues directives to support yuan... China’s central bank told some brokerage companies this week to scale back their proprietary foreign exchange trading, two sources with direct knowledge of the matter told Reuters. The directive follows a series of recent steps by authorities to stem rapid declines in the Chinese yuan.
China takes more steps to boost liquidity... The People’s Bank of China (PBOC) said it was keeping the rate on 591 billion yuan ($81.2 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50%. The decision was intended to keep “banking system liquidity reasonably ample” and quarter-end cash conditions stable, PBOC said. With 400 billion yuan worth of MLF loans set to expire this month, the operation resulted in a net 191 billion yuan of fresh fund injections into the banking system. This followed the move by PBOC on Thursday to cut the amount of cash banks must hold in reserve.
Historic triple strike: UAW walkout hits GM, Ford and Stellantis over contract dispute... In an unprecedented move, the United Auto Workers (UAW) union initiated a strike against automotive giants GM, Ford and Stellantis, commencing at midnight when negotiators failed to secure a last-minute agreement on a new contract. This historic labor action represents the first-ever simultaneous strike against the Big 3 automakers in Detroit, signifying a significant development in the automotive industry. If the strike were to encompass all U.S. plants of these automakers, it could potentially cost over $5 billion over a span of 10 days, as projected by the Anderson Economic Group.
New high in cattle... October live cattle futures reached $185.775 on Thursday, marking an all-time high for a front-month contract on the continuation chart. Cash cattle traded higher in the northern market, while activity in the Southern Plains remained limited. While it appears a fall rally in the cash cattle market could be underway, premiums futures hold to cash prices may limit followthrough buying ahead of the weekend.
Stronger signs of short-term low for cash hogs... The CME lean hog index is up 46 cents, marking the fourth gain in the last six days, signaling a short-term low is in place. Seasonally, the cash market tends to firm into early October before facing heavier seasonal pressure as market-ready supplies build. As of Thursday’s close, October lean hog futures held a $3.59 discount to today’s cash quote.
Overnight demand news... Exporters reported no tenders or sales.
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
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
- 2:00 p.m. Livestock Historical Track Records — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC
