First Thing Today: Wheat leads overnight price strength
Wheat leads overnight price strength... Wheat futures followed the European market higher overnight, with December HRS wheat scoring a new contract high. As of 6:30 a.m. CT, wheat futures are mostly 7 to 14 cents higher, while corn and soybeans are mostly 4 to 5 cents higher. The U.S. dollar index is around 180 points lower and front-month crude oil futures are about 50 cents higher this morning.
White House presses to get House vote next week on both BIF and BBB... White House officials are urging Democratic congressional leadership to move toward a House floor vote next week on both the bipartisan infrastructure bill (BIF) and the Build Back Better (BBB) reconciliation package ahead of President Joe Biden’s trip to Europe at the end of the month. Most observers think the timeline while not impossible is improbable. In the Senate, Sens. Kyrsten Sinema (D-Ariz.) and Joe Manchin (D-W.Va.) remain the focus. House Ways and Means Chairman Rep. Richie Neal (D-Mass.) met Thursday Sinema on tax and revenue proposals the BBB/reconciliation measure. Neal said he explained to Sinema his point of view — that raising rates is the most efficient way to generate revenue. Sinema was non-committal, he said. Neal told Sinema, “It's the ninth inning.” Neal said, “The conversation was really good… If you're going to start offering other options, you're going to have to have time to vet all of it right? I mean I think that that's a minimal requirement, right, so that we have a public understanding of what is being asked.”
China encouraging coal production but cracking down on price gouging, speculation... China is pushing coal miners to maximize output and hiking imports in an attempt rebuild stockpiles before the winter heating season amid the country’s energy crunch. But China’s National Development and Reform Commission (NDRC) will send teams of inspectors to major coal producing regions to probe the costs of coal production and distribution and will strictly punish firms reaping exorbitant profits. Also, China's securities regulator has said it would ask futures exchanges to raise fees, restrict trading quotas and come down heavily on coal price speculation. China's Zhengzhou Commodity Exchange widened the trading limits on some thermal coal futures contracts to 14% from 10% as of today.
China makes rare diesel purchase... China’s state-run China National Offshore Oil Corp. booked two cargoes of diesel for import in November, according to trade sources cited by Reuters. Tight domestic supplies and high prices prompted the rare Chinese buying of diesel.
Evergrande averts default... China Evergrande Group made an overdue interest payment to international bondholders, state-owned Securities Times reported today, an unexpected move that allows the property company to stave off a default. Evergrande was nearing the end of a 30-day grace period before bondholders could send a notice of default to the company after it failed to make the interest payment on about $2.03 billion of dollar bonds on Sept. 23. A default on those bonds would likely have spiraled into the biggest corporate default in Asia.
U.S. intelligence report warns about the geopolitical costs of climate change... The report says rising global temperatures pose a growing national-security risk, as nations battle over who will pay for climate-related costs, maneuver for advantage in a melting Arctic and grapple with drought and migration. Poor nations disproportionately affected are already seeking help from wealthier ones. In the years ahead, the report predicts, China — the largest emitter of greenhouse gasses — and India, the fourth largest, will struggle to wean themselves from coal. Some countries could unilaterally deploy geoengineering technologies to cool their climates, potentially sparking conflict. Global competition will also grow over access to minerals and technologies key to producing renewable energy. China is in a strong position to compete, the report says, as it controls more than half of the global processing capacity for such resources, including rare earth minerals used in wind turbines and others used in electric-vehicle batteries. The intelligence assessment comes ahead of a global climate summit that begins in Glasgow, Scotland, on Oct. 31.
ADM to sell Peoria, Illinois ethanol plant... ADM will sell its Peoria, Illinois, ethanol plan to BioUrja, a commodity trading firm. The sale will trim 135 million gallons from ADM’s annual ethanol capacity.
Fed announces stricter investment rules for officials... The Federal Reserve on Thursday announced stricter investment rules for officials of the central bank following recent controversies over trading activities. The rules would prevent Fed officials from holding individual stocks, prohibit trading during times of unusual market stress, require pre-approval of trades, and more frequent disclosure of trading activity to “help guard against even the appearance of any conflict of interest,” the Fed said. Fed Chair Jerome Powell’s reappointment may be on shaky ground after disclosure documents showed he sold between $1 million and $5 million worth of stock from his personal account on Oct. 1, 2020, just before a sharp single-day drop in the U.S. market.
Add Vilsack to list of those seeking workers – thousands of them… USDA is faced with agency staffing challenges including several of President Joe Biden’s undersecretary nominees waiting for Senate confirmation. USDA Secretary Tom Vilsack, who previously served in the same role for nearly eight years under President Barack Obama, said his department is operating with 3,000 to 4,000 fewer employees than when he last headed the agency. Vilsack said USDA is employing different tools to combat the staffing problem, such as direct-hire authority to get employees on board more quickly. The fiscal 2022 appropriations for USDA should also include resources to help boost employee numbers, Vilsack said, though that measure may not be resolved until later in the year.
Larger placements expected again for September... USDA’s Cattle on Feed Report at 2:00 p.m. CT is expected to show Oct. 1 feedlot inventories down fractionally from year-ago. But the number of cattle placed into feedlots in September is expected to be up 1.2%, which would be the second month in a row with placements above year-ago levels. Traders expect marektings likely declined by 2.7% versus September 2020.
Cold Storage Report also out this afternoon... Beef and pork stocks typically build during September. The five-year average increase in frozen meat stocks during the month is 16.1 million lbs. for beef and 15.3 million lbs. for pork. USDA’s Cold Storage Report will be released at 2 p.m. CT.
Slow developing cash cattle market... Just light cash cattle trade has been reported at steady to firmer prices so far this week. Most feedlots are asking around $126 for cattle, while packers haven’t actively established bids. Unless there’s a major shift this morning, it looks like the bulk of this week’s cash trade will wait until after the Cattle on Feed Report.
December hogs extend discount to cash... December lean hog futures are falling faster than the cash index, extending their already wide discount. December hogs settled at $73.20 on Thursday, $11.63 below where the cash index will be quoted today. Given the technical breakdown in front-month futures, there could be more near-term price pressure, despite the much wider-than-normal discount.
Overnight demand news... Exporters reported no tenders or purchases.
Today’s reports
- 11:00 a.m. Cotton Ginnings — NASS
- 11:00 a.m. Rice Stocks — NASS
- 2:00 p.m. Tree Nuts: World Markets and Trade — FAS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Chickens and Eggs — NASS
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders Report — CFTC
