First Thing Today | September 20, 2022

Good morning!

Corn and wheat firmer, soybeans weaker overnight... Corn futures mildly built on Monday’s gains overnight, while wheat recouped a small portion of yesterday’s losses and soybeans pulled back. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 3 to 4 cents lower and wheat futures are mostly 2 to 5 cents higher. Front-month crude oil futures and the U.S. dollar index are both trading just above unchanged.

Consultant cuts corn, soybean crop estimates... Crop consultant Dr. Michael Cordonnier lowered his corn and soybean yield estimates given highly variable early corn yields and the hot, dry end to the growing season across areas of the Corn Belt. Cordonnier cut his corn yield by 1 bu. to 169 bu. per acre, which lowered his production estimate to 13.60 billion bushels. He cut his soybean yield by 0.5 bu. to 50.0 bu. per acre, which dropped his production estimate to 4.33 billion bushels.

Further deterioration in corn, soybean CCI ratings... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn and soybean crops each dropped 3.3 points to 336.9 and 338.9, respectively. The corn CCI rating has declined 10 straight weeks and stood 23.1 points below average. The soybeans CCI has dropped for seven consecutive weeks and was 14.2 points below average. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Sept. 18.

• Corn: 87% dented (88% average), 40% mature (45% average), 7% harvested (8% average), 52% good/excellent (53% last week).
• Soybeans: 42% dropping leaves (47% average), harvested 3% (5% average), 55% good/excellent (56% last week).
• Spring wheat: 94% harvested (94% average).
• Winter wheat: 21% planted (17% average), emerged 2% (2% average)
• Cotton: 59% bolls opening (51% average), 11% harvested (11% average), 33% good/excellent (33% last week).

Hottest August on record for North America and Europe... Last month brought severe drought, wildfires and sweltering-hot temperatures to many parts of the world, including North America and Europe — two areas that saw their hottest-ever Augusts on record, according to a new National Oceanic and Atmospheric Administration (NOAA) report (link). Overall, NOAA said, record-warm temperatures encompassed a whopping 8.2% of the world’s surface last month. Both Europe and China saw their warmest-ever summers, while North America had its second-warmest summer. Globally, this year ranked as the sixth-hottest August ever recorded since 1880, when it first began collecting such data.

Slower imports will ease port congestion... Port of Long Beach Executive Director Mario Cordero told Bloomberg News he expects the pandemic-era surge in U.S. consumer demand that snarled supply chains will start to cool, with evidence of a deceleration starting to show in weaker inbound container arrivals. The nation’s No. 2 gateway for trade moved 806,940 20-foot container units last month, down 0.1% from August 2021 — which was its busiest August on record. Imports dropped 5.6% and exports gained 1.6%. Through August, Long Beach moved 6.6 million TEUs, a 4% increase from the same eight-month period last year. Cordero also expressed confidence dockworkers and their employers at West Coast ports will keep cargo moving as they negotiate a new labor contract, avoiding a repeat of the stoppages and delays that plagued supply chains in the 2014 talks.

China leaves interest rates unchanged... China kept its benchmark lending rates unchanged, as expected, as authorities held off additional monetary easing following rapid declines in the yuan and as other global central banks continued to tighten monetary policy. The one-year loan prime rate (LPR) was kept at 3.65%, while the five-year LPR was unchanged at 4.30%. Widening divergence in the monetary policies between China and the U.S. could stoke fears of capital flight out of China, just as Beijing seeks to marshal resources to revive sluggish growth.

Final rule on canola/rapeseed oil RFS pathways at OMB... EPA sent the Office of Management and Budget (OMB) its final rule on Renewable Fuel Standard (RFS) pathways for certain biofuels produced from canola/rapeseed oil. It deals with the analysis of the lifecycle greenhouse gas (GHG) emissions associated with diesel, jet fuel, heating oil, naphtha and liquefied petroleum gas produced from canola/rapeseed oil via a hydrotreating process. There were 34 comments filed on EPA’s proposal that canola derived renewable diesel, jet fuel, heating oil, naphtha and liquified petroleum gas as meeting the lifecycle GHG emissions reduction threshold of 50% required to qualify as advanced biofuels and biomass-based diesel under the RFS.

DOE offers more crude from strategic reserves... The U.S. Department of Energy (DOE) will offer an additional 10 million barrels of low-sulfur crude from its strategic reserves ahead of plans by the European Union to ban most Russian oil in December. The government’s offer comes at a time when global benchmark oil prices have retreated to levels seen before Russia’s invasion of Ukraine. The timing coincides with the Organization of Petroleum Exporting Countries discussing the possibility of curbing production. OPEC and its allies agreed to cut output next month by 100,000 barrels a day.

ERP payments near $7 billion mark as of Sept. 18... Payments under the Emergency Relief Program (ERP) increased to $6.74 billion as of Sept. 18, up from $6.63 billion the prior week. The total includes $5.80 billion in payments for non-specialty crops ($5.71 billion prior) and $940 million for specialty crops ($918 million prior).

Wholesale beef prices holding up amid heavy supplies... Wholesale beef values have slipped recently but considering it is coming the face of hefty slaughter totals, high carcass weights and during a period of typical weakness, the price pressure isn’t overly concerning. Cash sources suggest the modest price pressure under these conditions actually signals retailer demand is stronger than expected.

Cash hog fundamentals firming... The national direct cash hog price firmed $1.30 on Monday, while the CME lean hog index is up 45 cents to $98.42 (as of Sept. 16). Despite the firming cash fundamentals, October lean hog futures slipped 42 1/2 cents on Monday and finished $1.945 below today’s cash index quote. Traders are likely to maintain a slight discount in the lead contract as any upturn in the cash index is likely to be temporary before seasonal pressure resumes.

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

• 10:00 a.m. Fruit and Tree Nuts Data — ERS
• 10:00 a.m. Vegetables and Pulses Data — ERS