First Thing Today | Oct. 12, 2021

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Good morning!

Corn, soybeans soften leading up to USDA’s reports… Corn futures are a penny or two lower leading up to USDA’s big production and balance sheet adjustments at 11:00 a.m. CT. Soybean futures are 3 to 4 cents lower, with the November contract hitting its lowest level since March 31 overnight. Winter wheat futures are fractionally to 2 cents higher, while spring wheat futures are up 1 to 5 cents. Crude oil futures are firmer and the greenback is near unchanged. The troubled Chinese property Giant, Evergrande, reportedly missed another big debt payment and traders are increasingly worried about a contagion effect. Rising inflation, driven in part by surging energy prices, adds to marketplace unease.

Big S&D revisions expected… USDA’s 2021-22 domestic balance sheets will reflect the Sept. 1 stocks data and the final 2021 wheat crop estimate, along with any changes to corn and soybean production. That could produce some major adjustments, especially for soybeans, which will see projected 2021-22 ending stocks rise sharply — potentially above 300 million bushels. Find full pre-report expectations.

Wet late-season weather lowers Chinese corn crop prospects… China lowered its 2021-22 corn crop estimate by 850,000 MT to 271 MMT in its monthly China Agriculture Supply and Demand Estimates report. The ministry lowered its yield estimate given the negative impact of unrelenting rain since September in northern China. The soggy conditions have delayed harvest and compromised crop quality. But China’s forecast for imports and consumption of the grain were unchanged.

Timely soybean planting for Brazil… Brazil’s 2021-22 soybean crop will likely climb 7 MMT (5.1%) from last year’s big crop to a record 144 MMT, forecasts South American Crop Consultant Dr. Michael Cordonnier. He expects an increase in acreage to drive the decline. As of Oct. 7, 10% of the crop had been planted, which was a six-point advance from the week prior, according to AgRural. This year’s start has been much better than last year’s, Cordonnier comments. “Even though it is only the second week of October, I think we can say with some level of confidence that there is a good chance that most of Brazil’s 2021-22 safrinha corn will be planted within the ideal planting window because the soybeans are being planted faster than average and much faster than last year,” he says, adding that timely planting is critical when it comes to the crop reaching its yield potential. Cordonnier estimates the Brazil’s 2021-22 corn crop at 118 MMT, up 32 MMT (37%) from last season. While the growing season is off to a good start, farmers are worried about delivery delays/cancellations for inputs like fertilizers and chemicals.

Reports Argentina plans to meddle with corn exports… Reuters is reporting that Argentina will prioritize international sales of corn to ensure crops already harvested are exported before sales can be registered for next season’s crop that’s currently being planted, according to an ag ministry source. “An order of priorities has been established over export declarations. Priority will be given to exporters who have corn purchased and cargo ships assigned,” the source detailed. Farmers say the move is yet another unnecessary intervention meant to curb food prices leading up to the November elections that could limit corn sowing. Santiago del Solar, a farmer in Buenos Aires, told the newswire: “The cost of fertilizers has gone up, the weather is very dry and at the same time they are telling us it will be very difficult to sell our corn abroad, so we will have to sell in the domestic market. This is not good for farmers who are making planting decisions right now.”

Russian wheat export prices have climbed for the 13th week in a row… Russian wheat with 12.5% protein loading from Black Sea ports for supply the second half of October climbed $3 by late last week to $310 per metric ton, free on board, reports Dmitry Rylko, head of the consultancy IKAR. SovEcon reported an even greater $6 rise to $312 per MT. Limited supplies, strength in Russia’s currency and rising global prices have lifted prices. That price rise paired with rising export duties have Russian wheat exports lagging year-ago by 27%.

France makes another cut to its wheat crop estimate… France’s farm ministry lowered its soft wheat crop estimate by 900,000 MT to 35.2 MMT, citing untimely rain. But that would still be a notable 21% jump from last year’s crop. The rain has benefited the country’s corn and sugar beet crops, however. The ministry raised its estimate of this year’s corn crop from 13.0 MMT to 13.9 MMT, which would top last year’s crop by 4.3%. Harvest of the crop is currently underway. Its sugar beet estimate also climbed 900,000 MT to 34.0 MMT, which would be a 29.6% surge from last year’s weather and pest-hit crop.

IMF expected to lower its 2021 economic growth projection given uneven recoveries… Later this morning, the International Monetary Fund (IMF) is expected to estimate slightly lower economic growth in 2021 than the 6% it forecast in June. The expected reduction is based in part on the uneven growth trajectories of wealthy countries and their poorer counterparts. Most advanced economies would return to pre-pandemic levels by 2022 while emerging economies would take “many more years” to recover.

IMF to keep Georgieva as leader after review of China data situation… IMF Managing Director Kristalina Georgieva will remain in her role after the IMF executive board reviewed the situation surrounding a data manipulation scandal that arose during the time she headed the World Bank. ‘‘The information presented in the course of its review did not conclusively demonstrate that the Managing Director played an improper role,” the IMF’s executive board said Monday, adding they trust her “commitment to maintaining the highest standards of governance and integrity in the IMF.” Georgieva also spoke with US Treasury Secretary Janet Yellen Monday, with a readout of the call from Treasury indicating that Yellen said that “legitimate issues and concerns” were raised in the investigation into the Doing Business report released in 2018 which boosted China’s rating, reportedly at the urging of China. But Yellen also said there was “not a basis for a change in IMF leadership.”

Little change in CFAP 1, 2 payments as CFAP 2 signup draws to close… Payments authorized under the Coronavirus Food Assistance Program 1 (CFAP 1) or CFAP 2 changed little as of Oct. 10, with CFAP 1 payouts at $10.6 billion and total CFAP 2 at $18.66 billion. The CFAP 2 total includes $13.86 billion in original CFAP 2 payments with another $4.81 billion in top-up payments made for acreage-based commodities. USDA will halt accepting new and modified CFAP 2 applications today after reopening signup April 2.

WHO urges China to increase scrutiny after rise in human infections with deadly strain of bird flu… The World Health Organization (WHO) is calling on China to increase surveillance of a deadly H5N6 variant of bird flu after a recent spike in human infections. The overall number of cases is low and there’s no evidence of human-to-human transmission, but the virus has a fatality rate of 50%. One of the victims in China says she had not had any contact with poultry before her illness. There are 47 known human cases of the virus, and a third of those have been reported in the past three months; half of them have been reported in the last year.

Average cash cattle prices edge higher, but beef still under pressure… Cattle traded at an average price of $122.96 last week, up 40 cents from the week prior and the first uptick in weeks. But support from the cash market gains could be limited given that nearby contracts are already trading above the index and ongoing weakness in the product market. Choice boxed beef values fell $2.15 to start the week, while Select climbed 90 cents. The two grades have recently diverged. Meanwhile, feeder steers at traded for $2 to $4 higher prices amid moderate to good demand at the first day of an Oklahoma City auction.

Bulls need to step up soon in lean hog market… December Lean hog futures have moved into the wide gap area left by the post-Hogs & Pigs Report price. While the gap is wide, bulls likely need to step up in next two or three days to prevent the gap from being filled, which would be a negative technical signal. HedgersEdge.com estimates packers continue to enjoy strong profit margins of $60.55 a head as of Monday, but that is down from Friday and week-ago levels. The CME lean hog index projected at $91.60 for today, down another 35 cents. The pork cutout value ended yesterday with gains of $1.02, well off its morning high but a gain, nonetheless. Cash hog bids fell an average of 92 cents yesterday.

Overnight demand news… Japan’s ag ministry is seeking to buy 119,512 MT of food-quality wheat from the U.S., Canada and Australia in a regular tender. Egypt tendered to buy an unspecified amount of grain from global suppliers; Ukraine is believed to have the lowest offer.

Today’s reports

 

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