First Thing Today | October 17, 2023

Good morning!

Another quiet overnight session for grains... Corn, soybean and wheat futures again held in tight trading ranges during the overnight session. As of 6:30 a.m. CT, corn futures are trading a penny lower, soybeans are mostly 3 cents higher, SRW wheat is 5 to 6 cents lower, while HRW and HRS wheat futures are 1 to 2 cents lower. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is trading just below unchanged.

Biden to visit Israel, Jordan... President Joe Biden is set to visit Israel and Jordan to reinforce America’s support for Israel and prevent the escalation of its conflict with Hamas in the region. During his visit to Jordan, Biden is expected to meet with Mahmoud Abbas, the Palestinian president. The World Health Organization has issued a warning that the Gaza Strip is on the brink of a humanitarian catastrophe, with only “24 hours” of essential resources like water, electricity and fuel remaining. Meanwhile, Iran’s foreign minister warned Israel that a ground offensive in Gaza would trigger “pre-emptive action.” In a broadcast on state television, Hossein Amirabdollahian suggested Iran would respond to the “war crimes” committed in Gaza and that “all options are open.” On Tuesday the Israel Defense Forces launched several strikes targeting Hezbollah, an Iran-backed Shia militia based in Lebanon.

Aid to Israel... Senate Majority Leader Chuck Schumer (D-N.Y.) said Monday the Senate must take the lead in passing aid for Israel, adding he will work with the Biden administration to craft an emergency supplemental package to provide Israel with the “tools it needs to defend itself.” That includes “military assistance, intelligence assistance, diplomatic assistance” and humanitarian assistance. Meanwhile, pressure is mounting on President Biden from both Democratic and Republican lawmakers to impose more stringent financial sanctions on Iran in the wake of the Oct. 7 Hamas attacks. However, such a move against Iran carries the risk of escalating regional conflicts, which the Biden administration is working to de-escalate. Additionally, restricting Iranian oil sales could lead to a spike in global gas prices.

Consultant raises U.S. yields, but still lower than USDA’s... Crop consultant Dr. Michael Cordonnier raised his U.S. corn yield estimate 1 bu. to 172.5 bu. per acre, though that is still 0.5 bu. below USDA’s forecast this month. His soybean yield was increased 0.3 bu. to 49.3 bu. per acre, which is 0.3 bu. below USDA’s October estimate. Cordonnier now forecasts U.S. production at 15.02 billion bu. for corn and 4.08 billion bu. for soybeans.

Crop progress report highlights… Following are highlights from USDA’s crop progress and condition update as of Oct. 15.

• Corn: 95% mature (92% average); 45% harvested (42% average); 53% good/excellent (53% last week).
• Soybeans: 97% dropping leaves (93% average); 62% harvested (52% average); 52% good/excellent (51% last week).
• Cotton: 87% bolls opening (88% average); 33% harvested (32% average); 30% good/excellent (32% last week).
• Winter wheat: 68% planted (68% average); 39% emerged (43% average).

Jordan getting closer to 217 votes needed to become House speaker... Rep. Jim Jordan (R-Ohio) seems to be edging closer to the necessary 217 votes amid a pressure campaign by his allies to win support for the conservative Republican and ally of former President Donald Trump. “My gut tells me we’re somewhere south of 10 who are still being recalcitrant,” Rep. Chip Roy (R-Texas) told conservative radio host Erick Erickson on Monday when asked about the opposition to Jordan. Former House Speaker Kevin McCarthy (R-Calif.) on Monday also expressed his optimism for Jordan’s prospects, according to The Hill. Jordan was able to recruit House Armed Services Committee Chairman Mike Rogers (Ala.) along with Reps. Ann Wagner (Mo.), Ken Calvert (Calif.) and Vern Buchanan (Fla.) to his cause, despite past statements indicating they would not do so. In total, Jordan can only afford to lose four Republican votes, assuming full attendance. Lawmakers still opposed to Jordan include Reps. Mike Lawler (R-N.Y.), Carlos A. Giménez (R-Fla.), Mario Diaz-Balart (R-Fla.), Don Bacon (R-Neb.) and Ken Buck (R-Colo.). They all indicated Monday they still oppose Jordan, putting his math on shaky ground. And GOP sources told Axios there’s a high possibility Jordan will lose more support if the vote goes to a second ballot. A vote on the House floor is slated for around noon ET today. Even if Jordan wins, it could take multiple ballots. As many as 12 people could vote against Jordan on the first round, reports note, but Jordan spent the evening making calls to the holdouts.

Jordan proposes unorthodox plan to prevent government shutdown... Rep. Jordan has put forth an unconventional proposal to avert a government shutdown on Nov. 17 when the current stopgap spending measure will expire. The plan involves passing a stopgap bill to maintain existing funding levels beyond April. This move is intended to trigger an automatic 1% across-the-board budget cut, a provision recently embedded in a debt-limit law. Jordan believes that these automatic cuts could provide Republicans with leverage in negotiations for full-year funding bills. However, the proposal has received mixed reactions among his party members, with some advocating for passing individual funding bills instead. The plan’s success would depend on approval in the Democratic-controlled Senate.

Treasury may allow clean energy tax credits to be sold to individuals...The Treasury Department is exploring the possibility of permitting companies to sell clean energy tax credits to individual taxpayers. Currently, the Inflation Reduction Act (Climate Bill) allows companies to sell these tax credits to third parties, but this option is largely unavailable to individuals. Treasury is actively considering the removal of this restriction, acknowledging the challenges it presents, according to Sarah Haradon, an attorney-adviser at Treasury’s Office of Tax Policy.

China tells banks to roll over local gov’t debts... China told state-owned banks to roll over existing local government debt with longer-term loans at lower interest rates, as part of Beijing’s efforts to reduce debt risks in a faltering economy, two sources with knowledge of the matter told Reuters. The People’s Bank of China (PBOC) issued orders last week to major state lenders to extend terms, adjust repayment plans and reduce interest rates of outstanding loans to local government financing vehicles, according to the sources. Loans that were originally due in 2024 or before will be categorized as “normal” instead of non-performing loans if overdue, and that won’t affect banks’ performance evaluations, one of the sources said. To ensure banks do not incur heavy losses from the debt restructuring, interest rates on rolled over loans should not be below China’s Treasury bond rates, said one source, adding that loan terms should not exceed 10 years. China’s benchmark 10-year government bond is now yielding around 2.7%, while the benchmark one-year loan prime rate is 3.45%.

Packers well positioned on slaughter needs... Packers bought 96,000 head of cattle last week as the average price firmed $1.58 to $184.30, the highest in three weeks. With packers well supplied on near-term slaughter needs, their urgency to actively bid for cattle this week will be reduced. As a result, packers will likely be slow to establish bids, which could push active cash trade until after Friday afternoon’s Cattle on Feed Report.

Cash hogs drop, pork cutout firms... The CME lean hog index is down 51 cents to $81.60 (as of Oct. 13), the lowest level since June 2 and $11.49 below last year at this time. The pork cutout value firmed 72 cents to $91.22, which is more than $12.00 below last year.

Overnight demand news... Japan is seeking 89,873 MT of milling wheat in its weekly tender. Indonesia plans to import 500,000 MT of corn through year-end, of which half will come from Latin American countries.

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

• 11:00 a.m. Feed Grains: Yearbook Tables — ERS