First Thing Today | September 18, 2023
Good morning!
Grains weaker in quiet overnight trade... Winter wheat futures led losses in the grain and soy markets during overnight trade. As of 6:30 a.m. CT, corn futures are trading steady to fractionally lower, soybeans are 3 to 4 cents lower, SRW wheat futures are 6 to 8 cents lower, HRW wheat is 10 to 11 cents lower and spring wheat is mostly unchanged. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is modestly lower.
First ships arrive at Ukraine port to load grain... Two cargo vessels arrived in Ukraine on Saturday, the first ships to use a temporary corridor to sail into Black Sea ports and load grain for African and Asian markets. The Ukrainian Sea Ports Authority said bulk carriers “Resilient Africa” and “Aroyat” had arrived in the port of Chernomorsk. They were due to load almost 20,000 MT of wheat for Africa and Asia.
Ukraine to file WTO complaint over grain ban... Ukraine will file a complaint to the World Trade Organization over an import ban of its grain into Poland, Hungary and Slovakia “in several hours,” according to Deputy Economy Minister Taras Kachka. Kyiv also plans to retaliate with its own bans on imports of several products if the neighboring countries don’t scrap similar restrictions and may target goods such as onions and apples from Poland and cars from Hungary, Kachka said. Meanwhile, Spain’s ag minister said a unilateral ban by any European Union member state on Ukrainian grain imports seemed illegal but it was up to the European Commission to judge.
Romania will ask to extend trade ban on Ukraine grain if import requests rise... Romania will look to extend a trade ban on Ukrainian grain if import requests rise, Prime Minister Marcel Ciolacu said. He said Romania had not yet seen requests rise to import grain from Ukraine since the European Commission decided on Friday not to extend the import ban.
Firm raises Ukrainian corn export forecast... Analyst APK-Inform increased Ukraine’s 2023-24 corn export forecast by 1 MMT to 19 MMT. But that would be down 6.3 MMT (23.1%) from shipments of 27.3 MMT in 2022-23.
The week ahead in Washington... Work will continue on trying to get a fiscal year 2024 spending measure or a continuing resolution (CR) to temporarily fund the government from Oct. 1. A group of six House Republicans on Sunday unveiled a proposal to temporarily fund the government in a bid to prevent a shutdown at the end of the month. The plan calls for funding until Oct. 31, with a 1% cut to current fiscal levels, excluding the Defense Department and Veterans Affairs, while the rest of the government would see an immediate 8% cut until the end of October. It is uncertain whether it will gain enough support to pass in the House and survive an anticipated rejection in the Senate. Many lawmakers are anticipating at least a brief government shutdown. President Joe Biden on Tuesday will deliver a speech to world leaders, including Ukrainian President Volodymyr Zelenskyy, at the 78th session of the United Nations General Assembly in New York City. Zelenskyy is also scheduled to address the assembly and then travel to Washington DC. Work will continue on a new farm bill, though the spending measure must be cleared first. The economic focus this week will be the two-day monetary policy meeting on Tuesday and Wednesday after which the Fed is expected to hold interest rates unchanged. But traders will pay close attention to updated economic forecasts from Fed officials and Chair Jerome Powell’s post-meeting press conference for indications of future monetary policy moves. The key agricultural data this week will be Friday’s Cattle on Feed Report.
Autoworkers strike continues... The United Auto Workers (UAW) strike, impacting General Motors, Ford, and Stellantis, has now reached its fourth day, marking a historic moment as it is the first simultaneous strike against all three major U.S. automakers. While negotiations continued over the weekend, the UAW issued a warning, indicating the possibility of further strikes in the upcoming week if their demands remain unaddressed. UAW President Shawn Fain emphasized the union’s determination, citing the substantial profits of the automakers, which have amassed a quarter of a trillion dollars in the last decade, including $21 billion in the last six months alone. Fain stressed the need to improve worker wages and conditions. This strike aligns with a broader trend of labor activism across various sectors in the U.S., highlighting growing unrest among American workers.
Soft landing for U.S. economy?... The easing of inflation and a slowdown in the labor market have generated optimism about the possibility of achieving a “soft landing” for the economy – a scenario where the economy slows down gradually without entering a recession or experiencing a sharp downturn. However, achieving a soft landing is a challenging task and a rare occurrence in economic history, a Wall Street Journal article notes. It suggests that while the conditions for a soft landing may seem favorable, the process is inherently difficult to manage and execute successfully.
China resumes cotton reserve sales... China sold 14,579 MMT of cotton from state reserves. Those are the first sales of state-owned cotton stocks in three weeks after making daily sales from late July through Aug. 24.
China’s pork exports slowed in August... China imported 110,000 MT of pork during August, down 10,000 MT (8.3%) from July and 21% less than last year. Through the first eight months of 2023, China imported 1.17 MMT of pork, up 9.6% from the same period last year.
Bullish cash cattle hopes... Live cattle futures surged to an all-time high on the continuation chart Friday, fueled by the strengthening cash market. While last week’s average cash cattle price will fall shy of the all-time high posted during summer, there are bullish cash hopes again this week as it appears packers are short-bought on near-term slaughter needs.
Hog traders likely to remain cautious... The cash hog market showed signs of a short-term low last week, though that failed to trigger sustained buyer interest in futures, despite the October contract trading below the cash index. October lean hog futures finished Friday at a $3.805 discount to today’s cash quote, which should limit seller interest in the lead-month contract but may not trigger buying.
Weekend demand news... Algeria tendered to buy unspecified amounts of optional origin milling wheat and 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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: September 2023 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: September 2023 — ERS
- 2:00 p.m. Hop Stocks — NASS
- 2:00 p.m. Milk Production — NASS
- 3:00 p.m. Crop Progress — NASS
