First Thing Today | September 27, 2022

Good morning!

Grains rebound as outside market pressure eases... Corrective buying was seen in the grain and soy complex overnight as the U.S. dollar pulled back and crude oil firmed. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents higher, soybeans are 8 to 11 cents higher and wheat futures are mostly 11 to 13 cents higher. Front-month crude oil futures are nearly $1.00 higher and the U.S. dollar index is around 475 points lower this morning.

Hurricane Ian update... World Weather Inc reports: “Hurricane Ian was over western Cuba this morning and was a Category Three storm. The storm is still expected to further intensify to a Category Four storm today over the southeastern Gulf of Mexico, but some weakening is expected prior to hitting the Tampa Bay area of Florida Wednesday night into Thursday morning. The storm’s latest track and intensity will reduce the impact on the interior southeastern U.S., but central and northern Florida will take the brunt of the storm. This new storm path will further spare Georgia’s most important cotton production areas from the hurricane’s wrath. Rain will impact the production region as well as in much of the Carolinas resulting in some fiber quality declines, but complete losses to the cotton crop are not expected. Soybeans in the region will also be impacted by some flooding rain, but most of the crop will survive as will peanuts and unharvested corn as well as other crops.”

Stopgap funding bill text released... Senate Democrats released a short-term funding bill (CR) to avert a government shutdown, but it includes a measure to speed up energy project permits opposed by most Republicans and some Democrats. A procedural vote to keep government open to Dec. 16 may be held tonight. It does not include ag disaster funding.

World Bank slashes China’s economic growth forecast... The World Bank slashed its economic outlook for China, in part because of the country’s zero-Covid policy and property crisis. China’s economy is now projected to grow 2.8% this year, a significant deceleration from the bank’s previous forecast of 5.0%. For 2023, China’s economy is projected to grow 4.5%. The economic outlook for the 23-country Asia-Pacific region is now expected to grow 3.2% this year, down from its 5.0% forecast in April, as China constitutes 86% of the region’s economic activity. Perspective: China’s GDP is forecast to be lower than its neighbors in East Asia for first time since 1990.

China vows positive trade growth during second half of this year... China can achieve positive foreign trade growth in the second half of 2022 despite slowing external demand, Vice Commerce Minister Wang Shouwen said on Tuesday, amid growing pressure to stabilize the country’s import and export flows. In order to stabilize the sector, the commerce ministry released measures, including supporting firms’ order delivery and encouraging some regions to explore second-hand auto exports. China will lower port dues on cargo priced by the government by 20% in the fourth quarter and vowed to keep normal operation of ports and freight depots, state media quoted the cabinet as saying last week.

China tries to stabilize markets ahead of Communist Party Congress... China’s securities regulators recently told some fund managers and brokers to avoid major transactions ahead of next month’s Communist Party Congress in an effort to avoid big market fluctuations, two sources with direct knowledge told Reuters. The instructions were given verbally by the Shanghai and Shenzhen Stock Exchanges through so-called “window guidance” or unofficial policy directives with no written documents, one of the sources said. “They asked (us) to avoid abnormal trading activities, including massive sell-offs and buy-ins. Basically it’s a move to stabilize the market,” one source said.

Ukraine grain shipments since export deal top 5 MMT... A total of 231 ships carrying 5.3 MMT of agricultural products, including nine vessels with 345,3000 MT that departed today, have left three Ukrainian Black Sea ports since Aug. 1 when the grain export deal started. Prior to the war, Ukraine exported up to 6 MMT of grain per month and the three ports included in the export deal could load 100 to 150 ships per month.

Extended decline in corn, bean CCI ratings continues... When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 1.8 points to 335.2 and the soybean crop slipped 0.7 point to 338.2. CCI ratings have dropped 11 consecutive weeks for corn and eight straight for soybeans. The corn CCI rating was 25.7 points (7.1%) below the five-year average, while the soybean rating was 15.0 points (4.2%) below average. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Sept. 25.

• Corn: 92% dented (94% average), 58% mature (61% average), 12% harvested (14% average), 52% good/average (52% last week).
• Soybeans: 63% dropping leaves (65% average), harvested 8% (13% average), 55% good/excellent (55% last week).
• Spring wheat: 96% harvested (97% average).
• Winter wheat: 31% planted (30% average), emerged 9% (6% average)
• Cotton: 67% bolls opening (62% average), 15% harvested (14% average), 31% good/excellent (33% last week).

China to auction wheat reserves... China will auction 40,000 MT of wheat from state-owned reserves on Oct. 12. The sale will include wheat from the 2014 crop offered at 2,410 yuan (around $336) per metric ton and wheat from the 2015, 2016 and 2017 crops at 2,500 yuan (around $348.50) per metric ton. Spot prices for wheat in China are currently above 3,000 yuan per metric ton.

China to release fourth batch of pork stocks... China will sell an unspecified amount of pork from state reserves as it tries to increase supplies ahead of the week-long National Day holiday that begins Oct. 1. In total, Beijing plans to sell 200,000 MT of pork from state-reserves to ease prices, which were 30% higher than year-ago last week.

Futures selloff could sway cash cattle trade... Traders came into the week expecting firmer cash cattle trade again after last week’s average price firmed $1.75 to $144.94. But Monday’s poor technical performance could negatively impact this week’s cash trade. At a minimum, packers will likely delay initial bids, especially after buying a lot of cattle last week. And feedlots, who are current, won’t likely be willing sellers at lower prices. There’s potential for an extended cash standoff this week.

Washout in hog futures... Hog futures faced heavy selling on Monday that led to a downside breakout from the broad sideways trading range that’s been in place since February. While traders are likely overly bearish, it’s going to be difficult for bulls to regain their footing amid the technical breakdown and growing global recession concerns.

Slight uptick in USDA aid payments... Payments under the Emergency Relief Program (ERP) totaled $6.91 billion as of Sept. 25, up from $6.74 billion the prior week. The total includes $5.94 billion in payments for non-specialty crops ($5.80 billion prior) and $961.5 million in specialty crop payments ($940 million prior). A slight increase in payments under the Coronavirus Food Assistance Program 2 (CFAP 2) were also reported, putting the total at $19.14 billion, up from $19.13 billion previously. The total includes $14.31 billion in original CFAP 2 payments ($14.3 billion prior) while the $4.83 billion in top-up payments was essentially unchanged. There were no changes in CFAP 1 payments.

USDA to provide aid for on-farm grain storage in areas impacted by recent natural disasters... USDA Secretary Tom Vilsack announced USDA will make available $20 million in cost-share assistance to help agricultural producers in Kentucky, Minnesota, South Dakota and surrounding areas to rebuild storage facilities damaged by devastating natural disaster events in 2021 and 2022. This assistance will help producers who were hard-hit by disasters and are currently struggling with a lack of available grain storage have the resources they need as they head into the 2022 crop harvest.

Overnight demand news... South Korea purchased 137,000 MT of corn expected to be sourced from South America or South African and 68,000 MT of South American corn. Japan is seeking 61,800 MT of milling wheat in its weekly tender. Jordan made no purchases in a tender that closed today to buy 120,000 MT of milling wheat but issued a similar tender with an Oct. 4 deadline.

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

• 2:00 p.m. Livestock and Meat Domestic Data — ERS