First Thing Today | Aug. 26, 2021

Good morning!

Light pressure on corn and soybeans, but wheat bounces back… Corn futures faced light pressure overnight and the market is currently down 1 to 3 cents. Soybean futures are up 5 cents in the front month and down 2 to 4 cents in deferreds. Winter wheat futures have rebounded 5 to 9 cents, while spring wheat futures are 2 to 4 cents higher. The U.S. dollar index is marginally higher and crude oil futures are facing pressure. Markets have been boosted by signs Delta variant cases could be peaking.

Expectations for today’s Weekly Export Sales Report… The report is for the week ending Aug. 19. 

Argentina’s new National Ports Administration will manage dredging operations on the Parana River… Argentina has formed a new government agency to manage dredging operations along the Parana River, a key thoroughfare for transporting around 80% of the country’s grain exports from farm country out to sea. Until now, cargo ships have paid tolls directly to the private dredging company tasked with keeping the river open. The shift has some in the industry worried about government intervention, bureaucracy and added costs. But one Transportation Ministry source cited by Reuters indicated costs could decline, explaining, “The price of tolls paid by cargo ships to the dredging company is something that will be determined in the bidding process. … One of our objectives is to lower logistics costs.”

Belarus bans grain exports for six months… The country cites a weather-clipped crop for its ban that applies to wheat, rye, corn and other types of grain and cereal. Belarus brought in just 6.2 MMT of grain, a 1-MMT retreat from 2020.

Bipartisan House bill would promote ethanol use… Representative Cheri Bustos (D-Ill.) and five other Democrats and Republicans introduced legislation Tuesday aimed at increasing the use of low-carbon, high-octane fuels including ethanol to improve vehicle efficiency and performance, as well protect the environment and public health. The Next Generation Fuels Act of 2021 would phase in higher gasoline octane levels through greater use of low-carbon renewable fuels, starting with a 95 Research Octane Number and increasing to 98 RON. The bill would require automakers to use a test fuel that contains 20% ethanol with a minimum 95 RON octane value for new vehicle emissions and fuel economy standards starting with model year 2026 cars.

Timeline for B40 in Indonesia is slipping… Indonesian authorities had planned to hike the mandatory bio-content in its palm oil-based biodiesel from 30% to 40% in July, but when will that occur is up in the air due to the high price of vegetable oil. Indonesia funds the biodiesel program with proceeds from its palm export levies. Dadan Kusdiana, a director general at the energy ministry, in an interview with Reuters said that form the technical side, the country is ready. But the levies are not sufficient for funding the increase in blending. “That is what we're considering, how capable are we in terms of the levies. We have to provide bigger financing, but it doesn't have to come from higher levies,” Dadan said. The Indonesian Palm Oil Association in January said it expected B40 to be pushed beyond 2022.

Philippines approves Golden Rice for commercial use… The Philippines have approved the commercial use of genetically modified Golden Rice. The Philippines is one of the world’s biggest importers of rice and the first country to approve the Vitamin A-enriched grain for planting, according to the International Rice Research Institute that is based in the Southeast Asian country and helped develop golden Rice. This green light was expected a decade ago, but opposition from anti-GMO activists and public concern about any health risks stalled approval. Australia, New Zealand, Canada and the U.S. have granted Golden Rice food safety approval, with final regulatory review also underway in Bangladesh.

South Korea became first big Asian economy to raise interest rates since the start of the pandemic… Record household debt and rocketing property prices outweighed fears over Seoul’s struggle to contain the Delta coronavirus variant. In a closely watched decision today, the Bank of Korea (BoK) raised its benchmark rate to 0.75%, increasing the seven-day repurchase rate 25 basis points from a record low of 0.50%. It marked the country’s first rate rise since September 2018, while interest rates have remained unchanged since the BoK cut them by 50 basis points in May last year.

U.S. Covid-19 hospitalizations have surpassed 100,000 for the first time since January… That’s nearly double the number of hospitalizations at the start of August. While the figure remains below the country’s winter peak, hospitals in some parts of the U.S. are straining under the load, and officials in states including Georgia, Kentucky, Tennessee and Idaho have requested extra personnel and resources.

Afghanistan update… U.S. and allied planes flew an additional 19,200 people out of Kabul in the past 24 hours, but more than 10,000 people were still inside the international airport awaiting flights out of the country. The State Department says up to 1,500 Amercians are still seeking to leave Afghanistan. The U.S. embassy, along with the British and Australian governments, warned citizens to stay away from Kabul’s airport, going so far as to warn Americans to avoid certain entrances to the airport. Secretary of State Antony Blinken on Wednesday promised that all American citizens who want to leave will be able to do so, even after next Tuesday’s deadline for withdrawal of Western troops from the country. Blinken also vowed to use “every available tool” to eventually rescue vulnerable Afghans whose lives under Taliban rule would be especially perilous but whose transport from the country is vastly more complicated, particularly those who worked with the U.S. over the last two decades.

Another West African country reports an outbreak of H5N1 avian flu… The West African country of Benin has reported an outbreak of highly contagious H5N1 avian flu in two districts near its capital of Porto Novo. This comes soon after Ivory Coast identified the disease last week nears its commercial capital of Abidjan. Bird flu cases have also been reported this year in Ghana, Togo, Niger, Burkina Faso, Nigeria, Mauritania and Senegal.

Oregon may classify animal slaughter as aggravated abuse, AI and castration as sexual assault… An Oregon ballot initiative (Initiative Petition 13, or IP13) is proposed for 2022 that would classify slaughter of animals as aggravated abuse, would redefine artificial insemination and castration as sexual assault and would classify tethering of an animal as neglect. The related webpage details, “IP13 does not ban any industry outright and the proposed changes in statute would not prohibit a rancher from raising and caring for bovines. It would only require that the rancher did not abuse, neglect, or sexually assault the animals under their care. This means that animals being raised for their meat would have to be processed after they died of natural causes, such as old age. This would certainly increase the cost to raise animals.” The initiative’s sponsor, a group called End Animal Cruelty. is working to gather the 112,000 signatures needed by next summer. Initiatives like this one would set a precedent that could be used to pass similar legislation in other states. Hannah Thompson-Weeman, vice president for strategic engagement at the Animal Agriculture Alliance, discussed this on AgriTalk earlier this summer.

Beef prices soften for second day in a row… Live and feeder cattle futures saw a mix of followthrough buying and profit-taking on Wednesday, resulting in a mixed finish, with October live cattle above $130 but well off this week’s highs. Strong domestic demand for beef has powered an impressive rally in beef prices as summer winds down, but it would appear that rally is coming to an end. Choice boxed beef fell 69 cents and Select climbed $1.21 on Wednesday following a price pullback for both grades on Tuesday that broke a five-week streak of gains. Cash cattle action was quiet yesterday. There was some light trade at $120 in Texas.

Pork demand questions heading into fall… Sliding pork prices have limited buying in the lean hog market to corrective gains this week, with traders uncertain regarding retail demand strength heading into fall when supplies will rise. On Wednesday, the pork cutout value slipped 77 cents to $110.24, the lowest daily price since June 23. Also of note, through Wednesday, this week’s kill is down roughly 3% from week- and year-ago levels. Today, the market will turn its attention to USDA’s weekly export sales update. Pork sales last week were down 31% from the prior four-week average at 20,000 MT, with shipments of the meat in line with recent tallies.

Overnight demand news… Turkey tendered to buy around 300,000 MT of milling wheat. Pakistan provisionally purchased around 160,000 MT of milling wheat in an international tender for up to 400,000 MT of the grain. Jordan bought around 60,000 MT of hard milling wheat to be sourced from optional origins. It has at least two participants in its tender to buy 120,000 MT of animal feed barley. South Korea’s largest animal feed maker Nonghyup Feed Inc. bought around 135,000 MT of animal feed corn in an international tender. A group of importers in the Philippines are through to have rejected all offers and made no purchase in a tender for up to 168,000 MT of animal feed. Japan’s ag ministry purchased 29,805 MT of food-quality wheat from the U.S. and 52,048 MT from Canada.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Agricultural Exchange Rate Data Set — ERS
• 2:00 p.m. Livestock and Meat Domestic Data — ERS
• 2:00 p.m. Outlook for U.S. Agricultural Trade: August 2021 — ERS