First Thing Today | October 6, 2022

Good morning!

Price pressure overnight... Corn, soybean and winter wheat futures traded lower in a light overnight price action. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 10 to 12 cents lower, winter wheat futures are mostly 8 to 10 cents lower and spring wheat is narrowly mixed. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is about 350 points higher this morning.

WSJ: U.S. looks to ease Venezuela sanctions... The Biden administration is preparing to scale down sanctions on Venezuela’s authoritarian regime to allow Chevron Corp. to resume pumping oil there, paving the way for a potential reopening of U.S. and European markets to oil exports from the country, the Wall Street Journal (WSJ) reported, citing people familiar with the proposal. In exchange for the significant sanctions relief, the government of Venezuelan President Nicolás Maduro would resume long-suspended talks with the country’s opposition to discuss conditions needed to hold free and fair presidential elections in 2024, according to WSJ. U.S. officials said details are still under discussion and cautioned that the deal could fall through, because it is contingent on Maduro’s top aides resuming talks with the opposition in good faith. “There are no plans to change our sanctions policy without constructive steps from the Maduro regime,” Adrienne Watson, spokesperson for the National Security Council, said. If the deal goes through, it would put only a limited amount of new oil on the world market in the short term.

Reports: Recharging EVs using some renewable energy would trigger e-RINs... EPA will reportedly include a plan in its coming Renewable Fuel Standard (RFS) proposed levels that will allow generation of Renewable Identification Numbers (RINs) for charging electric vehicles (EVs) with some types of renewable energy or e-RINs. The e-RINs could start in 2024, according to Bloomberg, and could allow them to be generated when EVs are charged using biogas or methane harvested from landfills and manure ponds. It is murky as to who would own those e-RINs under the still sketchy proposal. EPA previously was expected to propose RFS levels for 2023, 2024, and 2025 by Nov. 16 in an agreement worked out in court. EPA is expected to soon send its proposals to the Office of Management and Budget (OMB) for review. An agency spokesman told Bloomberg the agency “intends to meet the deadlines to implement the RFS program.”

Weekly Export Sales Report out this morning... For the week ended Sept. 29, traders expect:

Ukraine’s 2023 winter grain production could fall at least 50%... Ukraine’s winter grain sowing area for the 2023 harvest will unlikely to exceed 2 million hectares and the harvest could fall by at least 50%, the head of a large Ukrainian agriculture company was quoted as saying. “The harvest of early grains (mostly wheat and barley) will be 50% to 70% less (in 2023 versus 2022). In fact, we will cover our own needs, but not everything will be so rosy with exports,” Alex Lissitsa, CEO of IMC integrated agricultural business, was quoted by Interfax Ukraine as saying. Lissitsa said a lack of funds for the planting remains a huge problem for farmers in a situation where when local grain prices fell while cost of inputs rose sharply. “I think that next year we will have a huge decline in productivity and yields, and at the end of the year we will come out quite beaten: not dead, but badly beaten,” he said.

Russia’s southern breadbasket is dry... Soil moisture reserves are low in Russia’s southern Krasnodar, Rostov and Stavropol regions – the main wheat producing and exporting areas of the country, an ag ministry official said. Low soil moistures pose risks for next year’s harvest if weather conditions don’t improve. The Russian ag ministry has not issued its initial estimate for 2023 production.

Putin asserts control over Ukraine nuclear plant... Russian President Vladimir Putin ordered his government on Wednesday to take control of Ukraine’s Zaporizhzhia nuclear power plant, Europe’s largest, as the United Nations nuclear watchdog warned that power supply to the site was “extremely fragile.” The plant is located in the southern Ukrainian region also called Zaporizhzhia, one of four regions Putin formally incorporated into Russia on Wednesday in a move condemned by Kyiv as an illegal land grab. The head of the UN nuclear watchdog, Rafael Grossi, will visit Moscow to discuss safety at the plant, Russian state-owned news agency TASS reported.

Yara: Europe should cut dependency on Russia for food, fertilizers... Europe should urgently act to cut the continent’s dependency on Russian food and fertilizers and boost its own supplies, Norwegian fertilizer-maker Yara International said on Thursday. The company has as curtailed production this year due to soaring gas prices.

Slow developing cash cattle trade... So far, only a limited number of cattle have traded at roughly steady prices compared with last week. Most feedlots are still holding out for firmer prices, but packers may resist with their cutting margins just slightly above breakeven and knowing they will face an extended period of tight market-ready supplies.

Cash hog index continues to drop... The CME lean hog index is down 51 cents to $92.93 (as of Oct. 4). The index has fallen $29.32 since the first week of August and is showing no signs of letting up as packer margins are in the red and supplies are building seasonally. October lean hog futures finished Wednesday $2.43 below today’s cash index quote.

Overnight demand news... Japan purchased 97,343 MT of milling wheat from its weekly tender, including 64,523 MT U.S. and 32,820 MT Canadian.

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

• 7:30 a.m. Weekly Export Sales — FAS
• 10:00 a.m. Livestock and Meat International Trade Data — ERS
• 2:00 p.m. U.S. Agricultural Trade Data Update — ERS