Evening Report | October 10, 2023

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Corn harvest passes one-third mark, in line with expectations... As of Sunday, USDA reported corn harvest reached 34% done, three percentage points ahead of average and equal to traders’ expectations. USDA reported 89% of the crop was mature, four points ahead of average.

USDA rated 53% of the crop as “good” to “excellent,” unchanged from the previous week, though there was a one-point drop in the top category. The portion of crop rated “poor” to “very poor” held at 18%.

Soybean harvest more advanced than expected... USDA reported 43% of the soybean crop was cut, up 20 points from the previous week and six points more advanced than the five-year average. Traders expected soybean harvest to be 41% done. USDA reported 93% of the crop was dropping leaves, six points ahead of average for the date.

USDA rated 51% of the soybean crop as “good” to “excellent,” down one point from the previous week. The amount of crop rated “poor” to “very poor” increased one point to 18%.

Cotton harvest one-quarter complete... USDA reported 25% of the cotton crop was picked as of Sunday, one point ahead of average. The portion of crop with bolls open stood at 82%, equal to the normal rate.

USDA rated 32% of the cotton crop as “good” to “excellent,” up two points from the previous week. The portion of crop rated “poor” to “very poor” declined two points to 41%.

Winter wheat planting on average pace... USDA reported 57% of the winter wheat crop was planted, equal to the five-year average for the first week of October. Planting stood at 55% in Texas (53% average), 50% in Oklahoma (53%) and 57% in Kansas (56%).

USDA reported 29% of the crop had emerged, one point behind average for the date.

Biden announces increased military assistance to Israel; will ask Congress for more aid... In response to the recent surprise attack by Palestinian militant group Hamas, President Joe Biden declared a surge in military assistance to Israel. During a press briefing at the White House on Tuesday, Biden revealed this aid package includes ammunition and interceptors to replenish Israel’s “Iron Dome” anti-missile systems. He also expressed his intention to urgently request Congress to fund the national security requirements of critical partners, potentially including Ukraine. Biden emphasized the importance of ensuring that Israel does not deplete its essential defense assets, which are crucial for protecting its cities and citizens.

Biden condemned the Hamas assault as an “act of sheer evil” that reminded him of the worst atrocities committed by ISIS. He reaffirmed Israel’s right and duty to defend itself, stating that every nation in the world shares this responsibility.

Biden said at least 14 U.S. citizens have lost their lives in the attacks and Americans are among those being held hostage by Hamas.

Ukraine farmland abandoned in war... A new analysis by NASA’s Harvest program and shared exclusively with NPR shows that between 5.2 million and 6.9 million acres (2.1 million to 2.8 million hectares) of prime farmland have been abandoned as a result of the war since 2021. The abandoned fields represent between 6.5% and 8.5% of Ukraine’s total cropland. The losses represent “a massive amount of land,” says Inbal Becker-Reshef, the program director for NASA Harvest and a research professor at the University of Maryland and the University of Strasbourg in France. Much of the fallow land lies in a vast swath along the front line of the war, while other fields are in areas recently retaken by Ukrainian forces, she says.

Fertilizer makers surge amid concerns over impact of Israel conflict on global supplies... Fertilizer manufacturers experienced a significant uptick in their stock prices following a surprise attack by Hamas on Israel, which has raised concerns about the potential impact of the conflict on global fertilizer supplies. The conflict has disrupted operations at Israel’s Port of Ashdod, a vital hub for the country’s potash fertilizer exports. This disruption has placed approximately 3% of the global potash supply at potential risk, according to Ben Isaacson, an analyst at Scotiabank.

If Iran, a major nitrogen exporter in the region, becomes involved in the conflict, it could lead to supply constraints and potential price spikes for nitrogen-based fertilizers. These price spikes could be exacerbated by increased premiums in benchmark Dutch TTF natural gas, a key component in nitrogen-based fertilizer production.

U.S. lawmakers propose joint aid package for Israel and Ukraine amid some pushback... A group of U.S. lawmakers suggested the Biden administration pursue a joint aid package for both Israel and Ukraine, leveraging broad bipartisan support for Israel to overcome potential opposition from some Republicans regarding continued funding for Ukraine. The proposal was raised in discussions with White House officials over the weekend, with the goal of addressing the funding needs of both countries simultaneously.

White House officials said President Joe Biden could utilize existing authorizations to provide immediate assistance. Additionally, they emphasized the uncertainty of the extent of aid required by Israel following the recent attack by the Hamas militant group.

The idea of linking aid for both nations is already facing challenges in Congress, as some House Republicans argue that assistance for Israel and Ukraine should be addressed separately.

U.S. prepares crackdown on evasion of sanctioned Russian oil price cap... The U.S. is gearing up to address violations of its primary sanction on the Russian oil industry by enforcing the $60-a-barrel price cap that was imposed by the U.S. and its allies. Treasury Secretary Janet Yellen emphasized in an interview the U.S. is very likely to take action to ensure compliance with the price cap. Yellen stated the U.S. is closely examining enforcement measures and aims to convey the seriousness of adhering to the price cap to market participants. She emphasized the U.S. is resolute about upholding the cap and will act against any Western services that are involved in violating it. Russia has managed to sell its crude oil above the $60 limit for several weeks, leading to concerns that some firms may be evading the cap through fraudulent means.

The Justice Department has also launched an extensive effort to crack down on violations of sanctions imposed on Russia’s energy exports and is investigating the activities of a prominent oil trader.

IEA predicts slower growth in global natural gas demand through 2026, highlighting China’s role... The International Energy Agency (IEA) forecasts a slowdown in the growth of global natural gas demand through 2026. This prediction emphasizes the significant role China plays in driving demand. While consumption in mature markets, including North America, Europe, Japan and Australia peaked in 2021, nations in the Asia-Pacific, Africa and the Middle East are expected to lead the growth in natural gas demand over the next few years. China alone is projected to account for almost half of the global increase in gas demand during this period. IEA’s outlook also raises questions about Europe’s position considering the loss of Russian gas supplies and notes cautious optimism due to high storage levels in the European Union for the upcoming heating season.

Yellen: No disfunction in bond market... Treasury Secretary Janet Yellen told the Financial Times the rise in bond yields has not created dysfunction in U.S. bond markets. “I haven’t seen any evidence of dysfunction in connection with the increase in interest rates. When rates are more volatile, sometimes you see impact on market function, but that is pretty standard.”