First Thing Today | Sept. 27, 2021
Quiet start to the week… Corn futures are fractionally to 2 cents lower to start the week after a quiet overnight session. Soybeans are posting similar gains. HRW wheat futures are mixed, SRW wheat is down roughly a penny, and HRS wheat futures are up 1 to 4 cents in light trade. The U.S. dollar index is slightly higher, while crude oil futures are posting strong gains.
Reuters poll: Analysts expect record Brazilian bean crop of nearly 144 MMT… Analysts polled by Reuters on average expect the country to harvest a record-high 143.75 MMT of soybeans during 2021-22, a 5.8% jump from the previous season. They expect better early season rains to encourage earlier soybean planting, which should also benefit corn and cotton. Those surveyed expect Brazilian producers to plant 40.31 million hectares to the crop, which would be a 4.6% jump from the year prior, with better returns and strong demand at home and abroad encouraging production.
Drying to worsen on the U.S. Plains and Canadian Prairies… Hot, dry and windy weather on Sunday exacerbated the drying trend in U.S. HRW wheat areas, reports World Weather Inc., and it now says rains this week will miss the High Plains region. Showers are expected for eastern wheat areas of the central and western Midwest. “The northwestern U.S. Plains, Canada's Prairies and much of the far western U.S. will be dry over the coming week to 10 days,” World Weather reports.
Russian wheat prices still rising… Russian wheat with 12.5% protein loading from Black Sea ports for supply the first half of October climbed $3 from the week prior to $304 per MT, free on board, by last week’s close, reports the consultancy IKAR. That would represent the 11th week in a row prices have climbed. The consultancy SovEcon reports wheat prices held steady last week at $304.50 per MT. The combination of rising prices and export taxes has Russian wheat exports lagging year-ago by 22%, according to SovEcon. The consultancy also noted that sowing of the country’s winter grains is lagging year-ago in the Central region, with dryness in the Volga region also slowing efforts. “If the campaign does not speed up significantly in the Centre shortly, our earlier estimate of the decrease in winter crops area could be revised higher from 500,000 hectares to 1.0 million hectares,” Sovecon warned.
Ukraine wraps up harvest of a bumper wheat crop… Milling wheat accounts for 60% of Ukraine’s 2021 wheat crop, near steady with year-ago levels, the country’s ag minister, Roman Leshchenko, said Saturday. Harvest is basically complete, with producers bringing in 33.0 MMT of wheat and likely to export 24.4 MMT of the grain, up 600,000 MT from the ministry’s previous estimate. Last season, the country brought in a 25 MMT wheat crop, of which 16.6 MMT was exported.
The week ahead… Democratic Party leaders this week must deal with an end-of-year funding deadline, expired federal borrowing authority, and tough hurdles to pass a massive social welfare/climate change and infrastructure spending package. One thing is becoming clearer: Dems will likely have to figure out a way to raise the debt ceiling without the GOP, perhaps by attaching it to the social welfare spending package or taking other unilateral action. House Speaker Nancy Pelosi (D-Calif.) plans to bring up the $1.2-trillion bipartisan infrastructure measure today, but whether the measure will pass is an open question. The House Budget Committee passed the $3.5-trillion Build Back Better Act on Saturday, but that’s not the reconciliation package that the House will vote on. The markup didn’t settle issues such as the price tag or key policy disputes. For agriculture, the focal point this week will be Thursday’s Grain Stocks and Small Grains Summary from USDA.
$3.5-trillion price tag will drop... Pelosi said it "seems self-evident" that the final price tag for the Democrats' spending plan would be smaller than $3.5 trillion originally proposed. “I think even those who want a smaller number support the vision of the president," Pelosi said on ABC’s This Week, referring to Democratic divisions surrounding the reconciliation measure. "We have to find our common ground, respectful of each other’s views. This isn't about moderates versus progressives," Pelosi added. Pelosi also voiced confidence that the bill would pass and called the legislation "transformative.” Bottom line comes from Sen. Chris Van Hollen (D-Md.): “It’s not at all surprising this is going to be a turbulent moment. The challenge is landing the airplanes on a very narrow runway, in the middle of a hurricane.”
Highway Trust Fund gets infusion ahead of infrastructure vote… The Federal Highway Administration says it has enough money to keep highway projects running in the coming weeks, as Congress faces a Sept. 30 deadline to reauthorize surface transportation. The agency said the IRS’s Highway Trust Fund certification increased the highway account balance by $2.1 billion. The Senate-passed traditional infrastructure measure carries a multiyear reauthorization of surface transportation programs.
The wait is still on for an EPA announcement on RFS details… Friday came and went with no word on the Renewable Fuel Standard (RFS) from the agency. Early in the week, Senator Chuck Grassley (R-Iowa) told reporters that had had been advised the information would come out on Friday. But as Friday unfolded, other lawmakers indicated that would not be the case, including Rep. Cindy Axne (D-Iowa) on AgriTalk. The lack of an announcement Friday has spurred speculation on whether the lack of an announcement means the White House has gotten involved as renewable fuels backers had pushed to try and alter the proposed levels that reportedly would be lower for 2020, 2021 and 2022 than the final levels that were approved originally for 2020.
Are government advisory committee members required to get vaccines?... Dr. Francis Collins, director of the National Institutes of Health, on Friday’s AgriTalk program, said private citizens on various government advisory boards would not be required to take Covid vaccines, unlike government employees. A listener emailed: “My son is on the county FSA advisory board here in Minnesota and he received an email this week stating he is required to receive the Covid-19 vaccine if he wants to stay on this board.”
DHS: More than 12,000 migrants from Del Rio surge have been released into U.S…. The secretary of the Department of Homeland Security stated on Sunday that the majority of Haitian migrants who recently crossed the Mexican border to Del Rio, Texas, have been released into the United U.S., with possibly more to follow. "Approximately, I think it's about 10,000 or so, 12,000," DHS Secretary Alejandro Mayorkas told Fox News Sunday, adding that the number could go up as the 5,000 other cases are processed. Citing Department of Justice data, Fox News host Chris Wallace suggested that 44% of migrants released into the U.S. miss court appearances, raising questions about the Biden administration's handling of the cases of thousands of Asylum seekers. Mayorkas underscored that the system for immigration is working and that "enforcement guidelines" would be met for those who do not appear for court hearings.
China frees two jailed Canadians as Huawei CFO is allowed to return to China… Prime Minister Justin Trudeau of Canada confirmed the release of Michael Kovrig and Michael Spavor. Their detention was widely seen as retaliation for the arrest of Meng Wanzhou, who returned to China after cutting a deal with U.S. prosecutors. Meng Wanzhou landed in China on Saturday evening, after nearly three years under house arrest in Canada to a hero's welcome cheered by supporters in a homecoming state media is portraying as a sign of a strong country and a diplomatic coup for Beijing. The nationalist propaganda blitz surrounding Meng’s return was an indication that U.S./China relations remain rocky, especially after Biden’s recent announcement of a trilateral military pact with Australia and the U.K.
Potential leadership shakeup for Germany… Olaf Scholz of the center-left Social Democrats defeated Chancellor Angela Merkel’s conservativism in an extremely tight German election. There now will likely be months of complex coalition talks to decide who will lead Europe’s biggest economy, as Scholz didn’t receive a majority of the vote. Leaders of both parties said they aim to head the next government, while the Greens and the pro-business Free Democrats will hold sway in the new political order.
China still working to shore up domestic pork prices… China’s government announced it will buy 30,000 MT of frozen pork for state reserves on Oct. 10. Its state planner has pledged to continue buying pork to support weak prices. The country’s pork prices have tumbled more than 56% since January.
Cattle on Feed Report disappoints… The report data was negative compared with the average pre-report estimates in all three categories, with the number of cattle on feed as of Sept. 1 down 1.4% from year-ago vs. expectations for a 2.1% decline. But market impact should be fairly limited. Traders are likely to quickly shift their attention to the floundering product market. Choice and Select boxed beef values fell $2.28 and 46 cents, respectively on Friday, and movement was lackluster at 104 loads. Choice boxed beef values finished $11.15 lower on the week.
Bullish H&P Report Friday, with pork prices also surging… USDA estimated the Sept. 1 hog herd down 3.9% from year-ago, which compared to expectations for just a 1.7% drop. The breeding herd and market hog inventory numbers also came in lower than expected at 97.7% and 95.9% of year-ago levels, respectively. USDA made some significant revisions to past data, too. The report should boost futures to start the week, with added support coming from a late-week surge in pork prices. The pork cutout value jumped $6.48 on Friday, with 360.59 loads changing hands. Hams and loins both jumped double digits.
Overnight demand news… The United Nations has issued an international tender to buy about 200,000 MT of milling wheat on behalf of the Ethiopian government. Jordan’s state grains buyer issued a new international tender to buy 120,000 MT of animal feed barley. Algeria tendered to buy a nominal 50,000 MT of milling wheat from optional origins.
Today’s reports
- 10:00 a.m. Weekly Export Inspections — AMS
- 2:00 p.m. Peanut Stocks and Processing — NASS
- 3:00 p.m. Crop Progress — NASS
