First Thing Today | August 17, 2022

( )

Good morning!

Mild price recovery overnight... Corn, soybeans and wheat posted two-sided trade overnight but are mildly firmer this morning amid light corrective buying. As of 6:30 a.m. CT, corn futures are trading fractionally to 2 cents higher, soybeans are 8 to 10 cents higher and wheat futures are 1 to 4 cents higher. Front-month crude oil futures are trading just below unchanged and the U.S. dollar index is around 250 points higher this morning.

Four more grain ships depart Ukraine... Four more ships have left the Ukrainian ports at Chornomorsk and Odesa carrying sunflower meal, sunflower oil and corn, according to Turkey’s defense ministry. Two dozen ships carrying grain trapped at Ukrainian ports since Russia’s invasion have departed since Aug. 1.

U.S. buys Ukrainian wheat to donate as aid... The U.S. Agency for International Development is providing over $68 million in additional funding to the UN World Food Program (WFP) to purchase, move and store up to 150,000 MT of Ukrainian wheat to help with the world hunger. USAID Administrator Samantha Power said the wheat will be purchased and sent to countries suffering from “severe hunger and malnutrition” in the Horn of Africa. The U.S. has provided $4.8 billion to WFP this year.

China warns U.S. against underestimating Beijing’s Taiwan resolve... Beijing’s envoy to Washington, Ambassador Qin Gang, rejected U.S. officials’ argument that lawmakers act independently of the White House or that the administration had no control over the agenda of House Speaker Nancy Pelosi (D-Calif.), who visited Taiwan in early August. Qin said that trips by Pelosi and other members of Congress violate existing U.S./China agreements. “We are handling a serious fallout from Pelosi’s visit,” Qin told reporters in Washington. He warned the U.S. not to “underestimate the strong resolve, determination and the capability of the Chinese government and the people to defend national sovereignty and territorial integrity.” He said, “Congress is part of the government of the U.S. — it’s not an independent, uncontrollable branch. Congress is obliged to abide by the foreign policy of the United States. That’s why we feel very frustrated and dissatisfied with Sen. Markey’s visit to Taiwan. It’s provocative, it’s unhelpful.” Senator Edward Markey (D-Mass.) wrapped up a trip to Taiwan over the weekend, further irritating Beijing and heightening tensions between the two countries.

India raises wheat crop estimate despite declining forecasts from others... India raised its wheat production estimate on Wednesday even as other forecasters and traders were scaling down output numbers because of a heatwave. India estimates its wheat crop at 106.84 MMT, up 430,000 MT from its prior forecast. USDA on Friday cut its wheat production forecast for India by 3 MMT to 103 MMT. USDA’s Foreign Agricultural Service has pegged India’s production at 99 MMT, while some traders estimated output fell to as low as 95 MMT because of the heatwave.

UK inflation surges to 40-year high... British consumer price inflation jumped to 10.1% in July, its highest since February 1982, up from an annual rate of 9.4% in June. Surging energy prices in the wake of Russia’s invasion of Ukraine are the main driver of inflation. Financial markets are pricing in a 98% chance the Bank of England will raise its main interest rate by half a percentage point to 2.25% – which would be its second big rate hike in a row – at the end of its next meeting on Sept. 15.

ING Economics: U.S. strength in 3Q to give way to renewed 4Q weakness... “A rebound in manufacturing and industrial output, coupled with a decent performance from the consumer sector and net trade and inventories being less of a drag support our view of 3%+ GDP growth in 3Q. However, the housing market, a weaker external environment, higher rates and deteriorating business surveys suggest tougher times ahead,” says ING Economics.

FSA certified acreage data to be released next week... The first batch of FSA certified acreage originally scheduled to be released Aug. 12 will be posted on Aug. 22 at 2 p.m. CT, according to USDA. FSA issues the initial certified acreage data in August and then updates the figures each month until January.   

Malaysia maintains palm oil export duty, cuts reference price... Malaysia will maintain its export tax for crude palm oil at 8% for September but it lowered the reference price to 3,907.51 ringgit ($875.34) per metric ton, down from 5,257.91 ringgit per metric ton this month. The export tax structure starts at 3% for crude palm oil in a 2,250 to 2,400 ringgit-per-metric-ton range. The maximum tax rate is set at 8% when prices exceed 3,450 ringgit per metric ton.

Emergency Board provides report to White House on railroad labor dispute... The Presidential Emergency Board (PEB), which was established to find a solution to the labor dispute between Class I railroads and labor unions, recommended railroads raise pay structures by one percentage point more than they offered for three out of the five years of the contracts. Carriers had proposed an increase of 2% for 2024 while PEB recommended a rise of 4.5%. PEB recommended that railroads pay a $1,000 “service recognition” bonus annually versus the $1,000 signing bonus they had proposed, and recommended an increase in health benefits, an additional personal day each year and changes in how travel expenditures are reimbursed. PEB recommendations are not binding and provide a pathway for the two sides to reach agreement during a 30-day cooling off period following issuance of the report. Labor unions are prevented from going on strike during that 30-day period. If no accord is reach during that time, Congress could step in and mandate the PEB recommendations or some other settlement. Congress could also impose additional cooling off periods to avert a strike. The earliest possible date a strike could take place is Sept. 16.

Bullish cash cattle hopes build... Traders started the week cautiously optimistic cash cattle prices would firm. After Tuesday’s strong rally in futures, it appears cash expectations are building. This week’s cash negotiations have been slow to develop, though one source signaled bids of $151 were passed in Nebraska, suggesting feedlots may be digging in their heels. Unless packers get really aggressive with cash bids, active trade may not be seen until late in the week for a change.

Hog traders take bearish stance... October lean hog futures hold an unusually wide discount to the cash index, but that didn’t stop a heavy wave of selling on Tuesday that produced what looks like a seasonal top. While the cash index, which is down 65 cents today (as of Aug. 15) has weakened four of the past five days, October hogs finished Tuesday at nearly a $24.50 discount. Traders clearly fear the cash market is going to face heavy pressure over the next two months.

Overnight demand news... Bangladesh tendered for 50,000 MT of optional origin milling wheat.

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

 

Latest News

H&P report reflects larger than expected herd contraction

USDA estimated the U.S. hog herd has contracted to 73.8 million head as of Sept.1, down 1.1 million head (1.4%) from year-ago and 468,000 head smaller than the average pre-report estimate.

After the Bell | September 29, 2022

Grain, soybean futures end mixed ahead of USDA's quarterly stocks; USDA reports further hog herd contraction.

Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

Putin to Ratify Election Results | September 29, 2022

NATO rules Nordstream breech sabotage, Ian shuts-in some Gulf energy production and today's H&P Report expected to show mild herd contraction...

Market Watch | September 29, 2022

Sharp drop in cash corn and soybean prices over the past week.

Currencies
Analysts/economists keeping a close watch on major currency fluctuations

Sharp fluctuations in some of the world’s major currencies are injecting new uncertainty into the global economic outlook.