First Thing Today | October 7, 2022
Good morning!
Corrective buying overnight... Corn, soybean and wheat futures regained a portion of Thursday’s losses amid corrective buying overnight. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are mostly 2 to 3 cents higher and wheat futures are 11 to 15 cents higher. Front-month crude oil futures are around $1 higher and the U.S. dollar index is 150 points lower.
Slower jobs growth expected for September... Economists polled by Reuters expect the Labor Department to report non-farm payrolls increased 250,000 in September, which would be down from jobs growth of 315,000 in August. The unemployment rate is expected to hold at 3.7%.
Global food prices decline for sixth straight month... The UN Food and Agriculture Organization (FAO) global food price index fell another 1.1% in September – the sixth straight monthly decline – though it was 5.5% above year-ago. The decline last month was driven by a sharp fall in prices of vegoils and moderate decreases in sugar, meat and dairy, which more than offset a rise in cereal grain prices. Compared to year-ago, prices were up 7.7% for meat, 20.7% for dairy and 11.3% for cereal grains, while vegoils and sugar both declined 9.5%.
Food price deflation... Conagra Brands Inc. expects the soaring transportation and raw-material costs that have helped drive up food prices over the past year will moderate in the coming months, company officials said. Sean Connolly, Conagra’s chief executive, said the cost of some meats, edible oils and shipping expenses are starting to ease, bringing some relief to companies’ balance sheets. “We are seeing some commodities moderating; we are seeing some actually improve,” Connolly said in an interview with the Wall Street Journal.
Fed official sees ‘almost no evidence inflation coming down’... Minneapolis Fed President Neel Kashkari, who is typically considered one of the more dovish members of the central bank, said he sees “almost no evidence that underlying inflation is coming down.” As such, he is “not comfortable saying we are going to pause [hiking rates].” Meanwhile, Chicago Federal Reserve Bank President Charles Evans said the U.S. central bank’s policy rate is likely headed to 4.5% to 4.75% by the spring of 2023 as the Fed increases borrowing costs to bring down too-high inflation.
FAO lowers global cereal grain production forecast... FAO cut its 2022-23 global cereal grain production to 2.768 billion MT, down 5.9 MMT (0.2%) and now 1.7% below its estimate for 2021-22. FAO’s projected global stocks-to-use for 2022-23 is now 29.7%, down from 31.0% in 2021-22 but still relatively high historically.
Ukraine wheat, barley production falls more than 40%... Ukrainian farmers have completed this year’s wheat and barley harvests, according to the country’s ag ministry, which produced 19.2 MMT of wheat and 5.5 MMT of barley. Wheat production fell 13 MMT (40.4%) from last year, while the barley crop was 3.9 MMT (41.5%) smaller.
Russian wheat export tax drops again... Russia’s wheat export tax for Oct. 12-18 will be 1,926.8 rubles ($31.42) per metric ton based on an indicative price of $307.70. That’s down from a rate of 2,119.0 rubles per metric ton the previous week and the ninth straight weekly decline.
China’s foreign exchange reserves falls to lowest in five-and-a-half years... China’s foreign exchange reserves in China declined by $26 billion to $3.029 trillion in September, the lowest since March 2017, as the dollar climbed against other major currencies. The yuan fell 3.2% against the dollar in September, while the dollar rose by about the same margin against a basket of other major currencies. China’s gold reserves dropped to $104.72 billion at the end of September from $107.49 billion the previous month.
UN body rejects debate on China’s treatment of Uyghur Muslims... The United Nations rights council on Thursday voted down a Western-led motion to hold a debate about alleged human rights abuses by China against Uyghurs and other Muslims in Xinjiang in a victory for Beijing. The rejection is seen by observers as a setback to both accountability efforts, the West’s moral authority on human rights and the credibility of the United Nations itself. The U.S., Britain, Germany, Canada and others vowed to continue to work toward holding China accountable despite Thursday’s outcome.
Cash cattle steady/firmer... Cash cattle trade was rather active around $144 in the Southern Plains and the $145 to $146 range in the northern market. On a weighted basis, cash prices will likely end up steady to a tad higher than last week’s $144.78 average. Traders weren’t overly impressed, however, as October live cattle firmed 65 cents to $145.325, holding near the cash market.
Pork cutout back above $100... The pork cutout value firmed $2.00 on Thursday to $101.29 behind strength in bellies, hams, picnics and ribs, which more than offset weaker primal loin and butt prices. While we don’t anticipate a sustained rally in the pork cutout value as the market works through the heaviest slaughters of the year through the fourth quarter, there appears to be solid underlying retailer demand below $100.00.
Overnight demand news... Exporters reported no sales or tenders.
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. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC
