First Thing Today | September 21, 2023

Good morning!

Renewed selling in grains overnight... Corn, soybeans and wheat pulled back from corrective gains earlier this week during the overnight session. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents lower, soybeans are 13 to 14 cents lower and wheat futures are mostly 3 to 4 cents lower. Front-month crude oil futures are around 60 cents lower and the U.S. dollar index is more than 450 points higher.

Weekly Export Sales Report out this morning... For the week ended Sept. 14, traders expect:

House Republicans make progress on stopgap bill, but face Senate divide... House members took steps toward reaching an agreement to fund the government, garnering support from Republicans. However, their path appears to diverge significantly from the Senate’s stance. The latest GOP plan involves a stopgap bill as a precursor to more significant spending cuts and the establishment of a commission to address the federal debt. Additionally, the House Rules Committee sent the Defense appropriations bill back to the floor, a sign of reduced tensions within the Republican caucus. Previously, a floor vote on a rule for the Defense appropriations bill faced challenges due to disputes over funding differences only loosely related to the legislation. House Republicans still must resolve various details to secure support for their stopgap measure, even though it faces little chance of passing in the Senate. Bottom line: House Speaker Kevin McCarthy (R-Calif.) still lacks the necessary votes following a closed-door meeting. Renegade GOP members, including prominent McCarthy critic Matt Gaetz and Cory Mills of Florida, oppose the stopgap spending bill and instead advocate for a prolonged government shutdown while Congress works to pass 12 individual spending bills.

Ukraine wheat shipment reaches Turkey... The cargo ship “Resilient Africa,” loaded with 3,000 MT of Ukrainian wheat, arrived off Turkey’s Bosphorus Strait on Thursday. It is the first vessel loaded with grain from Ukraine to sail in and out of the Black Sea using a temporary corridor. Another ship “Aroyat” has yet to leave the port of Chernomorsk.

U.S. urged JPMorgan to ‘be patient’ before halt to processing Russia grain payments... Washington urged JPMorgan to “be patient” before the U.S. bank stopped processing agricultural payments for Moscow after it quit the Black Sea grain export deal, a senior State Department official told Reuters. “It was JPMorgan’s decision, and in fact, we had... made clear to the Russians that if they could show signs they were returning to the deal, it would be much easier to keep this payment system alive,” James O'Brien, head of the State Department’s Office of Sanctions Coordination, told Reuters. He said JPMorgan made a “completely commercial decision based on business and reputational factors.”

Ukraine agrees on grain trade deals with Slovakia, Poland... Slovakia and Ukraine have agreed to establish a licensing system for trading grains, allowing a ban on imports of four Ukrainian commodities to Slovakia to be lifted once the system is set up, the Slovak ag ministry said. The ministry did not give details on how the licensing system would work. Ukraine’s ag minister also agreed to “work out an option to cooperate on export issues” with Poland.

Aussie wheat crop likely to face further losses... Hot, dry weather this month has further reduced wheat production prospects in Australia. With El Niño conditions expected to continue and strengthen, there’s risk of continued adverse weather for the wheat crop, which some traders believe will decline to the 22 MMT to 23 MMT range. Earlier this month, the Australian Bureau of Agricultural and Resource Economics and Sciences cut its Aussie wheat crop forecast to 25.4 MMT.

India takes steps to avoid sugar hoarding... India has asked its traders are big retailers to disclose their sugar stockpiles and also requested mills sell their excess stocks to local markets in an attempt to tame prices. The country’s food secretary says sugar production prospects have improved amid favorable rains this month after less-than-average rainfall in August. He contends there will be no sugar shortage as production will outpace consumption.

ERP Phase 2 payments nearly reach $11 million... As of Sept. 19, total payments made under the Emergency Relief Program (ERP) have climbed to $7.45 billion. This represents a significant increase since the last update in late August. Additionally, payments under ERP Phase 2 now total $10.99 million, benefiting 6,839 recipients. This marks a substantial rise from the previous update, which reported $7.14 million distributed to 4,763 recipients in the week ended Aug. 27. Notably, there have been no reported changes to the Coronavirus Food Assistance Program (CFAP) efforts. As for ERP Phase 2 payments for 2020-21 losses, a USDA official told us: “We are doing our best at getting these payments out the door and doing a college try to get them out before the possible shutdown. Originally, they were scheduled for mid-October, but we are trying to move that up. Obviously, no guarantees but we are scrambling.”

BOE pauses interest rate hikes... The Bank of England (BOE) kept interest rates at 5.25%, marking the first halt in its tightening cycle in almost two years. This decision comes after a series of rate hikes totaling 515 basis points, with the Monetary Policy Committee voting 5-4 in favor of maintaining the current rate. BOE anticipates a significant decline in consumer inflation, despite upward pressure from oil prices. The BOE pause in monetary tightening followed a similar move by the Fed on Wednesday.

Cash cattle trade uncertainty... Initial light cash cattle trade in Iowa pointed to higher prices, though some cash sources have backed down from earlier predictions given falling wholesale beef prices. Boxed beef prices fell 86 cents to $301.26 for Choice and dropped $3.10 to $278.68 for Select on Wednesday. But wholesale prices may be getting “cheap enough,” as movement surged to 196 loads on the day.

Pork cutout back below $100... The pork cutout value dropped $1.91 on Wednesday, falling to $99.22. Once again, packers proved unable to hold the cutout above $100.00 for long, signaling that’s an area where retailers are resistant buyer. But prices haven’t needed to drop much below that level in the past to attract fresh retailer buying. Movement picked up to 328.2 loads on yesterday’s price drop.

Overnight demand news... South Korea purchased 94,400 MT of U.S. milling wheat. Japan purchased 89,940 MT of milling wheat, including 26,450 MT U.S., 34,910 MT Canadian and 28,580 MT Australian. Algeria purchased around 600,000 MT of milling wheat from unspecified origins over the past two days and bought 30,000 MT of corn to be sourced from Brazil or Argentina.  

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
• 7:30 a.m. Extended Weather Forecast — NWS
• 2:00 p.m. Livestock Slaughter — NASS