First Thing Today | September 19, 2022
Good morning!
Wheat and corn lower, soybeans mixed overnight... Heavy pressure on the wheat market pulled corn lower overnight, while soybeans posted two-sided trade. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are narrowly mixed, winter wheat is 15 to 17 cents lower and spring wheat is mostly 7 to 11 cents lower. Front-month crude oil futures are more than $2 lower and the U.S. dollar index is around 225 points higher this morning.
Dollar’s rise spells trouble for global economies... The U.S. dollar is experiencing a once-in-a-generation rally, a surge that threatens to exacerbate a slowdown in growth and amplify inflation headaches for global central banks. The dollar’s role as the primary currency used in global trade and finance means its fluctuations have widespread impacts. In a worrying sign, attempts from policy makers in China, Japan and Europe to defend their currencies are largely failing in the face of the dollar’s unrelenting rise, the Wall Street Journal reports.
U.S. crop areas mostly dry, South America will get needed rains... Hot, dry weather will be seen across the central U.S. through the middle of this week. Cooler air and some showers are expected late this week. U.S. rainfall will be limited over the next 10 days, which should facilitate rapid early harvest progress. In South America, needed rains fell on areas of Brazil and Argentina over the weekend. Argentina will receive some additional rains early this week before drier conditions return, while three waves of rains are expected across Brazil over the next 10 days.
Ukrainian grain shipments continuing... Through Saturday, a total of 165 ships with 3.7 MMT of agricultural products on board had left Ukrainian ports since Aug. 1 under the grain export deal, the country’s infrastructure ministry said. Another 10 ships carrying 169,300 MT of grain departed Ukrainian ports on Sunday.
Ukraine keeps its grain crop estimate unchanged... Ukraine expects a 2022 grain crop of 50 MMT to 52 MMT, unchanged from its previous estimate and down from 86 MMT last year, the country’s ag ministry said on Monday. The ministry expects grain exports to total between 5.4 MMT and 5.5 MMT this month, up from 4.5 MMT in August.
Firm raises Russian wheat crop forecast... Russian ag consultancy IKAR raised its forecast for Russia’s 2022 wheat crop by 2 MMT to 99 MMT. IKAR says Russia will have 47.5 MMT of wheat available for export in 2022-23.
The week ahead in Washington... Lawmakers will continue to work on a stopgap spending measure that’s needed to keep the government running past Oct. 1, the start of fiscal year (FY) 2023. Ag disaster aid for eligible 2022 crop and livestock producers is widely expected to be part of a post-election, lame-duck session of Congress that will be part of an omnibus spending measure for the remainder of FY 2023. The economic highlight this week will be the Fed’s decision on how much to hike interest rates at the conclusion of the two-day monetary policy meeting on Wednesday. Another 75-basis-point increase is most likely, though some believe a 100-point hike is needed. Key ag reports this week include Thursday’s Cold Storage Report and Friday’s Cattle on Feed Report. USDA will also update its food price outlook on Friday.
Biden says U.S. would defend Taiwan from China attack... President Joe Biden told 60 Minutes the U.S. would defend Taiwan if it were attacked by China. As expected, later the White House “clarified” that its official policy on Taiwan remains one of “strategic ambiguity.” China’s foreign ministry said it “deplores and firmly opposes” the comments.
World leaders gather in New York... World leaders are gathering in New York this week for the 77th session of the United Nations General Assembly, where high-level discussions and meetings are expected to focus on Russia’s invasion of Ukraine, as well as climate change and the ongoing energy and food crises. All attending leaders are required to speak in-person, with one special case: Ukrainian President Volodymyr Zelenskyy, who was granted an exception.
China’s central bank steps up cash injections... China’s central bank lowered the borrowing cost of 14-day reverse repos on Monday and increased cash injections to counteract higher demand towards the quarter-end. The People’s Bank of China (PBOC) injected 2 billion yuan ($286.54 million) through 7-day reverse repos and another 10 billion yuan ($1.43 billion) through the 14-day tenor, it said in a statement. PBOC also resumed 14-day operations for the first time since late January, while lowering the interest rate on liquidity tool by 10 basis points to 2.15% from 2.25%. The reduction was a catch-up move to the central bank’s decision in August by cutting some key interest rates, including the 7-day reverse repo rate, to revive credit demand and prop up the sputtering economy.
China pork imports rose in August... China imported 140,000 MT of pork in August, up 20,000 MT from July but still 50% less than last year. For the first eight months of the year, China imported 1.07 MMT of pork, down 63.6% from the same period last year.
Higher cash cattle prices expected... Cash cattle prices firmed last week, breaking a three-week string of losses, though traders will have to wait until later today to get the final average price. Traders expect further strength in the cash market this week but buyer interest in futures may be limited until active trade gets underway, which won’t likely happen until midweek or later.
Cash hog index firmer again... The CME lean hog index is 20 cents higher to $97.97 (as of Sept. 15), the second straight daily gain after a five-week string of losses. October lean hog futures finished Friday around $1 below today’s cash index quote, which should limit seller interest and may encourage followthrough buying in the lead contract after a strong technical performance that resulted in a weekly high close on Friday.
Weekend demand news... Saudi Arabia purchased 556,000 MT of wheat from unspecified origins. Pakistan tendered to buy 300,000 MT of wheat from unspecified origins. Bangladesh cancelled a tender to buy 50,000 MT of wheat.
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
- 8:00 a.m. Food Expenditure Series — ERS
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Milk Production — NASS
- 3:00 p.m. Crop Progress — NASS
