Evening Report | September 28, 2023

Evening Report
Evening Report
(Pro Farmer)

Check our advice monitor on ProFarmer.com for updates to our marketing plan.

 

Report: China actively buying Ukrainian corn... Chinese importers are believed to have made large purchases of Ukrainian corn in the past two weeks, traders in Asia and Europe said. “Importers in China have bought around 10 to 12 Panamax cargoes of Ukrainian corn for November/December shipment,” a Singapore-based trader at an international grains trading company told Reuters.

As of Sept. 21, outstanding sales of U.S. corn to China for 2023-24 stood at only 204,537 MT – 93.1% below last year at that time and 95.7% behind the five-year average. Outstanding sales of U.S. new-crop corn to all destinations totaled 10.510 MMT, down 7.8% from last year and 34.5% behind the five-year average.

A large Chinese domestic corn crop and surging imports from Brazil are set to flood the Chinese market in coming weeks, reducing demand for other grains, Reuters reported.

 

EU cuts wheat production estimate... The European Commission cut its estimate of this year’s wheat production by 800,000 MT to 125.3 MMT, which would now be slightly below last year’s crop of 125.7 MMT. Despite the smaller crop estimate, the commission kept its 2023-24 EU wheat export forecast at 32 MMT.

 

H&P Report: U.S. hog herd unexpectedly expands... USDA estimated the U.S. hog herd at 74.319 million head as of Sept. 1, up 194,000 head (0.3%) from year-ago and 787,000 head more than the average pre-report estimate implied. The breeding herd contracted 1.2% from last year but the market hog inventory increased 268,000 head (0.4%).

Hogs & Pigs Report

USDA
(% of year-ago)

Average estimate
(% of year-ago)

All hogs on Sept. 1

100.3

99.2

Kept for breeding

98.8

98.7

Kept for marketing

100.4

99.3

 

 

 

Market hog inventory

 

 

  under 50 lbs.

100.1

98.5

  50 lbs.-119 lbs.

100.4

99.5

  120 lbs.-179 lbs.

100.7

99.9

  Over 180 lbs.

100.6

100.0

 

 

 

Pig crop (June-Aug.)

100.4

98.6

Pigs per litter (June-Aug.)

104.3

102.0

Farrowings (June-Aug.)

96.3

96.6

Farrowing intentions (Sept.-Nov.)

94.8

96.5

Farrowing intentions (Dec.-Feb.)

98.6

97.9

The summer pig crop increased 133,000 head (0.4%), despite a 3.7% decline in farrowings, given a 4.3% jump in pigs per litter to a record 11.61 head.

Looking forward, the herd expansion may be short-lived as the breeding herd is smaller and producers indicated reduced farrowing intensions for fall (-5.2%) and winter (-1.4%).

Based on the market hog inventories, slaughter will run slightly ahead of year-ago levels into next spring, whereas traders expected kill rates to decline slightly.

USDA announced revisions to past data. Most of the upward revisions to historical hog data reflect increased farrowings and pig crops in recent quarters.

The winter 2022-23 pig crop was revised up by 591,000 head, to 32.538 million, which reflected a 42,000-head revision to 2.952 million sows farrowing during the December-February period. Those boosted the March 1, 2023 U.S. hog population 875,000 head to 73.564 million. The March market inventory was adjusted up by 878,000 to 67.469 million.

The number of sows farrowing during spring was also adjusted 5,000 head higher to 2.901 million head, with the March-May pig crop revised up 316,000 head to 32.951 million.

The total U.S. June 1 hog population and the market hog herd were both revised 350,000 head higher to 72.744 million and 66.599 million head, respectively.

The report data is bearish compared to expectations given the herd unexpectedly expanded, though fractionally, and market hog numbers are higher than anticipated.

 

Senate Ag Committee explores tighter oversight of foreign farmland investment... The Senate Ag Committee is actively considering increased oversight of foreign investments in U.S. farmland, prompted by growing concerns, particularly regarding China. The current system for tracking and reporting foreign land purchases is deemed outdated and inadequate.

During a hearing Wednesday, panel members expressed support for enhancing the authority of the Committee on Foreign Investment in the United States (CFIUS) to provide more robust oversight of foreign acquisitions. This proposed move would also involve a more significant role for USDA and the Food and Drug Administration (FDA).

According to Senate Ag Chair Debbie Stabenow (D-Mich.), foreign investors currently have stakes in nearly 40 million acres of American farmland and forest land, representing over 3% of privately held agricultural land in the United States. While Chinese ownership accounts for less than 1% of the total, weaknesses in the reporting and tracking system have raised concerns about potential undercounting.

The discussion at the hearing also revolved around potential updates to the Agriculture Foreign Investment Disclosure Act of 1978 (AFIDA), which mandates USDA monitoring of foreign ownership of U.S. farmland, and the role of CFIUS, responsible for assessing the national security implications of foreign investment in the U.S.

Challenges in transaction reporting, reliance on outdated paper-based systems and the need for an automated, centralized system were all highlighted during the hearing. Verification of data submitted on foreign purchases also posed challenges due to limited resources.

Legislative actions to enhance transparency and oversight of foreign land ownership and agricultural assets were a focal point, with a particular interest in integrating these actions into the farm bill or appropriations legislation.

One proposal highlighted during the hearing was the Foreign Agricultural Restrictions to Maintain Local Agriculture and National Defense (FARMLAND) Act, which seeks to enhance reporting and scrutiny of foreign acquisitions of U.S. agricultural land. It also includes provisions for USDA and FDA officials to have permanent seats on CFIUS and extends additional authority to CFIUS for blocking foreign acquisitions.

Bottom line: While there is growing support for tighter control over foreign farmland investment, concerns about potential retaliatory actions from other countries were also raised during the hearing.

 

U.S. Q2 GDP growth confirmed at 2.1%... The final estimate of second quarter economic growth was unchanged from the previous forecast, while the first quarter recorded an upwardly revised growth rate of 2.2%. Key findings from the report include:

  • Consumer spending rose less than initially expected, increasing by 0.8% compared to the 1.7% growth in the second estimate.
  • Upward revisions were made to nonresidential fixed investment (7.4% vs. 6.1%), exports (-9.3% vs. -10.6%), and residential investment (-2.2% vs -3.6%).
  • Government spending increased by 3.3%, aligning with the previous estimate.

 Additionally, the Bureau of Economic Analysis implemented annual revisions aimed at removing fluctuations attributed to factors such as seasonal weather patterns and holidays. As a result, the economic growth rate for the entire year of 2022 was adjusted downward by 0.2 percentage points to 1.9%. This adjustment was driven by downward revisions in consumer spending, inventory investment, state and local government spending, exports, as well as an upgrade to imports.

 

Biden administration announces $500 million in climate resilience funding... The Biden administration unveiled a new funding initiative aimed at climate resilience efforts, allocating $500 million across various agencies. This announcement is part of a series of twelve actions by the White House, emphasizing the strengthening of climate resilience in buildings, fostering local engagement and partnerships, workforce and community benefits and enhancing resilience in lands and waters. 

Key allocations include $167.7 million for modernizing the electric grid through the Department of Energy (DOE), $12.7 million for the National Oceanic and Atmospheric Administration to address climate-related hazards in communities and $16 million from the Department of Labor to create climate resilience job opportunities in underserved areas.

 

U.S./EU summit on Oct. 20 to address Ukraine, clean energy and emerging technologies... President Joe Biden is scheduled to host European Council President Charles Michel and European Commission President Ursula von der Leyen at the White House on Oct. 20 for the upcoming U.S./EU summit. The summit will primarily revolve around their joint commitment to supporting Ukraine in its efforts to defend its sovereignty and imposing consequences on Russia for its aggressive actions, as stated in a White House announcement. Additionally, the leaders will focus on advancing the clean energy economy through secure and resilient supply chains, along with ongoing collaboration in critical and emerging technologies, encompassing digital infrastructure and artificial intelligence. This gathering will be the second such summit since President Biden assumed office.

 

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