First Thing Today | September 22, 2022

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Good morning!

Two-sided price action overnight... Winter wheat markets and corn futures are mildly favoring the downside after two-sided trade overnight, while soybeans and spring wheat are mixed. As of 6:30 a.m. CT, corn futures are fractionally lower, soybeans are fractionally lower to a penny higher, SRW wheat is 6 to 8 cents lower, HRW wheat is 1 to 4 cents lower and HRS wheat is 3 cents lower to 4 cents higher. Front-month crude oil futures are around 75 cents higher and the U.S. dollar index is nearly 500 points higher this morning, reaching a new 20-year high.

Biden accuses Putin of irresponsible nuclear threats, violating UN charter... President Joe Biden warned world leaders Wednesday that a nuclear war “cannot be won and must never be fought,” as he accused Russia and its leader Vladimir Putin of violating the United Nations international charter in its “brutal, needless war” against Ukraine. Biden also stressed the U.S. “does not seek conflict” or a “Cold War” with China. His comments came after Putin earlier this week ordered Russia’s first mobilization since World War II and warned the U.S. and its western allies he would be prepared to use nuclear weapons to defend Russia.

Weekly Export Sales Report out this morning... For the week ended Sept. 15, traders expect:

 

2021-22 expectations (in MT)

2021-22

last week

2022-23

expectations (in MT)

2022-23

last week

Corn

NA

NA

400,000-850,000

583,110

Wheat

NA

NA

200,000-500,000

217,336

Soybeans

NA

NA

500,000-1,000,000

842,989

Soymeal

0-100,000

34,132

75,000-250,000

141,827

Soyoil

0-20,000

4,315

0-12,000

4

Exchange cuts Argentine corn, wheat crop forecasts amid drought... The Rosario Grain Exchange cut its Argentine wheat crop estimate by 1.2 MMT to 16.5 MMT as drought has trimmed yield potential. It now forecasts the country’s 2022-23 corn production at 56 MMT, down 2 MMT from the previous outlook as drought has delayed planting of the crop. The exchange raised its soybean crop forecast by 1 MMT to 48 MMT as it now expects 200,000 hectares originally intended for corn to be switched to soybeans.

India considering rice export requests... India’s government is mulling requests from exporters to allow shipment of some rice cargoes that have been stuck at ports since the country barred exports of broken rice earlier this month, Reuters reported, citing a government official. India banned broken rice exports and applied a 25% duty on various other types. The requests are for shipments of 100% broken rice and the export of other white rice stocks at ports without paying the export tax, the report said, noting there are at least 20 ships waiting to load some 600,000 MT of rice with another 400,000 MT said to be stuck at port warehouses and container freight stations.

As expected, Biden announces new food aid... President Biden announced $2.9 billion in fresh U.S. government assistance to address global food insecurity during his speech Wednesday to the United Nations General Assembly. The new funds are a response to growing concerns about hunger worldwide due to rising food, fertilizer and energy prices caused in part by Russia’s war in Ukraine, according to the White House. The U.S. will spend $2 billion in humanitarian assistance from the Agency for International Development, including money for food aid, health care and safe drinking water in vulnerable countries, the White House said in a statement. More than $780 million will go toward development funding to help farmers develop sustainable growing methods and improve food delivery systems, among other projects. The U.S. is also contributing $150 million to the Global Agriculture and Food Security Program. The new money comes on top of $6.9 billion to address food security the U.S. already committed this year. “We’re calling on all countries to refrain from banning food exports or hoarding grain while so many people are suffering,” Biden said.

China says U.S. EV subsidy regs likely violate WTO rules... China said the U.S. Inflation Reduction Act is suspected of violating World Trade Organization (WTO) rules and will adopt measures to safeguard its rights, the commerce ministry said on Thursday. But China will follow and evaluate the implementation of the law before acting. The new law eliminates federal tax credits for electric vehicles (EVs) made outside North America.

BOE raises rate, willing to risk recession in fight against inflation... The Bank of England (BOE) raised its key interest rate 50 basis points to 2.25% and said it would continue to “respond forcefully, as necessary” to inflation, despite the economy entering recession. This is its seventh consecutive increase and takes U.K. interest rates to a level last seen in 2008. BOE now expects inflation to peak at just under 11% in October, below the 13.3% peak it forecast last month. But BOE also estimates Britain’s economy will shrink 0.1% in the third quarter, which would be the second straight quarterly contraction, which meets the technical definition of recession.

Japan intervenes in FX market to support yen but sticks with dovish stance... Japan intervened in the foreign exchange market on Thursday to buy yen for the first time since 1998 in attempt to shore up the battered currency after the Bank of Japan (BOJ) stuck with ultra-low interest rates. The yen immediately surged amid the intervention. But analysts doubted the move would halt the yen’s prolonged slide for long as BOJ Governor Haruhiko Kuroda said the central bank could hold off on hiking rates or changing its dovish policy guidance for years. Japan’s currency has depreciated nearly 20% this year, sinking to 24-year lows, largely as aggressive U.S. interest rate hikes push the dollar to 20-year highs.

U.S. banks would act if China attacks Taiwan... If China attacks Taiwan, the chief executives of three major U.S. banks — JPMorgan Chase, Citigroup, and Bank of America — have pledged to withdraw from China if the U.S. government orders it, the Financial Times reported.

Britain lifts moratorium on fracking for shale gas... The controversial practice, banned in 2019 for fear of causing earth tremors in the process, was allowed to resume in an attempt to expand domestic energy production. Jacob Rees-Mogg, Britain’s business and energy secretary, said the country needed to “explore all avenues available to us” amid spiraling energy prices.

Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of August. The five-year average is a 20.1-million-lb. increase in beef stocks and a 12.3-million-lb. rise in pork stocks during the month.

Choice beef under $250... Choice boxed beef prices dropped another $2.51 on Wednesday to $249.13. That was the lowest level since March 2021 as the recent fall in wholesale prices continues. Falling boxed beef prices have tightened margins, but packers are still cutting in the black. Still, packers may look to reduce cattle purchases until wholesale prices stabilize.  

Pork cutout down sharply... The pork cutout value fell $4.60 on Wednesday to $100.35 as belly prices plunged more than $19 and all cuts except butts weakened. The cutout value appears poised to drop below $100.00 for the first time since May 12 as packers are cutting prices to keep product moving through the pipeline amid reduced retailer interest.

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

 

Latest News

Friday Wrap Up | September 23, 2022

Davis Michaelsen and Editor Brian Grete discuss this week's market action...

After the Bell | September 23, 2022

Corn, soybean futures plunge to two-week lows on surging dollar, escalating recession concerns; wheat also down sharply.

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Both placements and marketings were near the top end of pre-report estimates.

Dollar Continues Bull Run | September 23, 2022

Prolonged drought plagues China, Russia opens polls in Ukraine and the British pound taps long-time low...