Evening Report | September 29, 2023
Check our advice monitor on ProFarmer.com for updates to our marketing plan.
Livestock producers: Extend soymeal coverage... Your cash soybean meal coverage runs out at the end of this month. Given the sharp break in meal futures today, we advise extending soymeal coverage two weeks in the cash market through mid-October. With more near-term downside price pressure likely, we don’t want to extend coverage beyond that level at this time, but be prepared to add to fourth-quarter coverage on signs of a low.
Your Pro Farmer newsletter is now available... USDA’s Grain Stocks Report set final 2022-23 ending stocks for corn and soybeans. As is typically the case, the report held some surprises. USDA also issued its final 2023 wheat crop estimate, which was higher than anticipated. While rains have fallen on some areas of the central U.S., river levels continue to fall, threatening to further restrict new-crop soybean and corn shipments through the Gulf. That is heavily pressuring basis as harvest picks up. On the livestock side, feedlot inventories contracted from year-ago for a 12th consecutive month – a trend that will continue. But the Sept. 1 hog herd unexpectedly expanded. While there are demand concerns, especially for beef, USDA’s Cold Storage Report signaled demand is more than keeping pace with supplies. We cover all of these items and much more in this week’s newsletter, which you can access here.
Bearish reaction after USDA’s reports... USDA’s Grain Stocks Report featured some surprises, as it typically does, with Sept. 1 soybean stocks coming in 26 million bu. above traders’ expectations and corn stocks falling 68 million bu. shy of the anticipated level. The final 2023 wheat crop estimate topped expectations by 83 million bushels. Grain and soybean futures faced increased price pressure after the reports, marking a poor end to the week, month and quarter. Click here for full report details.
Conservative House Republicans block GOP stopgap funding bill, gov't shutdown looms... A GOP-drafted stopgap funding bill, intended to keep the federal government operational until Oct. 31, faced opposition from conservative House Republicans. Twenty-one House Republicans voted against the measure, which was widely expected to be rejected by the Senate. This development represents a setback for GOP leadership.
As the government shutdown deadline approaches, House Republicans plan to convene at 4 p.m. ET today to strategize their next course of action. If no resolution is reached, the government is set to shut down on Oct. 1 at 12:01 a.m. ET.
Mexico says resolution to corn dispute could come in March... A resolution could be reached in March on a trade dispute between the U.S. and Mexico over the Mexican government’s policy on genetically modified corn, Mexican Economy Minister Raquel Buenrostro said, without providing any details.
Another record month of soyoil use for biofuels... Soyoil use for biofuels reached a record 1.273 billion lbs. in July, topping the previous record from June of 1.207 billion pounds. Through July, soyoil use for biofuels stood at 10.086 billion lbs., meaning use must total just 1.714 billion lbs. over the final two months of 2022-23 to hit USDA’s forecast of 11.8 billion pounds. We suspect soyoil use for biofuels will top USDA’s current forecast by 400 million to 500 million pounds.
ADM, Syngenta collaborate to develop low-carbon oilseeds for growing biofuels demand... Archer-Daniels-Midland Co. (ADM) and Syngenta AG entered into a partnership to jointly research and introduce enhanced varieties of oilseed crops. This collaboration aims to meet the surging demand for low-carbon biofuels, which are increasingly powering various modes of transportation, including trucks, buses, and airplanes. The quest for ingredients to produce eco-friendly liquid fuels has intensified, with major energy companies, including Chevron Corp., actively seeking biofuel components to capitalize on government incentives promoting cleaner energy sources. This competitive environment has sparked a race to develop oilseeds that are both more environmentally friendly and higher-yielding, encompassing familiar crops like soybeans and canola, as well as lesser-known varieties like camelina.
According to projections from the International Energy Agency (IEA), global demand for biofuels is expected to grow by 22% from 2022 to 2027. This partnership between ADM and Syngenta reflects the industry’s response to the growing need for sustainable and low-carbon energy solutions.
USDA allocates over $3 billion for climate-smart practices in FY 2024 under IRA... USDA announced the initiation of signup for more than $3 billion in funding for fiscal year (FY) 2024, as part of the Inflation Reduction Act (IRA/Climate Bill), aimed at assisting agricultural producers and forest landowners in adopting climate-smart practices. This effort includes enhancements to the Climate-Smart Agricultural and Forestry Mitigation Activities through the Environmental Quality Incentives Program (EQIP), focusing on reducing greenhouse gas (GHG) emissions and increasing carbon sequestration.
USDA’s Natural Resources and Conservation Service (NRCS) will also expand national priority areas within the Agricultural Conservation Easements Program (ACEP), with a specific emphasis on grassland areas, agricultural lands at risk of conversion to non-agricultural uses and state-specific priorities, including addressing challenges in rice production on subsiding highly organic soils.
For FY 2024, IRA allocates an additional $1.65 billion for EQIP, $472 million for the Conservation Stewardship Program (CSP), $189 million for ACEP and $754 million for the Regional Conservation Partnership Program (RCPP). Details of RCPP initiatives will be unveiled in January.
However, USDA acknowledges the possibility of a government shutdown and cautions that support for producers, including responses to inquiries and other assistance, “would not be available until the funding lapse ends.” In such an event, USDA commits to notifying producers once staff resources become accessible.
India’s sugar market faces possible export curbs following reduced monsoon rains... As India’s monsoon season nears its conclusion, attention is fixed on the state of the sugar crop amid speculation regarding potential export restrictions. Concerns have been mounting in the global sugar market for weeks, with fears that poor monsoon rains could limit sugar production and prompt India to curb exports to stabilize domestic prices, particularly in the lead-up to an election next year. India’s food secretary expresses confidence in the crop, but traders, analysts and millers anticipate export constraints, Bloomberg reports.
Fed’s preferred annual inflation gauge declines... The personal consumption expenditures (PCE) price index rose 3.5% on an annualized basis in August, up from a 3.4% gain in July. But excluding food and energy prices, the core PCE price index slipped to a 3.9% annualized increase from a 4.3% rise in July.
The Fed forecasts core PCE inflation for 2023 at 3.7%, expecting hotter prices to end the year. If core PCE inflation undershoots Fed expectations, policymakers would have a reason to continue this month’s pause to rate hikes.
UAW announces new strikes at GM and Ford plants, spares Stellantis citing ‘momentum’ in talks... The United Auto Workers (UAW) union is set to expand its strike and walk off the job at General Motors and Ford, UAW president Shawn Fain said. The strike will expand to Ford’s Chicago assembly plant and GM’s Lansing, Michigan, assembly plant, covering about 7,000 workers, Fain said, bringing the total number of workers on the picket lines to 25,000. The strike will not include any additional members at Stellantis.
