Good morning!
Grains lower, soybeans higher to start the week... Corn futures saw two-sided trade overnight but as of 6:35 a.m. CT most contracts are trading low-range with losses around a penny. Soybean futures are also trading low-range, but with gains of 1 to 2 cents. Wheat futures are 3 to 5 cents lower across all three flavors. The U.S. dollar index is slightly higher, as are crude oil futures.
Irma pummels Florida... After making landfall in the Florida Keys Sunday morning as a Category 4 storm, Hurricane Irma weakened as it traveled through the state’s west coast, with the latest reports downgrading it to a Category 1 storm with top winds of 85 miles per hour. Damage estimates have dropped to $49 billion from as high as $200 billion. Expected to be even more dangerous than the powerful winds are the storm surges that threaten Florida’s coastal cities. “The threat of catastrophic storm surge flooding is highest along the southwest coast of Florida, where 10 to 15 feet of inundation above ground level is expected,” the hurricane center said. The storms that have battered the southern United States are making it more difficult to read the economy’s pulse, with William Dudley, president of the New York Fed, warning that it could affect the timing of short-term rate increases. Get more details.
Warmth and rain in the forecast for the Midwest... Warm temperatures are likely across the bulk of the Midwest and Plains Sept. 16-20, according to the National Weather Service. It also calls for some precip for most of the Corn Belt, with the exception of Indiana and far southern areas where normal rainfall is anticipated. Texas and southern Oklahoma should be dry over this period while other areas of winter wheat country should see normal precip.
North Korea update... The U.S. is pressing for a United Nations Security Council vote by Monday on tough, sweeping measures against North Korea, including an oil embargo, the authorization to board its ships, and a freeze on the assets of the leader, Kim Jong-un. Russia and China are expected to block the resolution. The less-severe-than-anticipated developments in Florida and North Korea (no new missile launch) over the weekend helped the dollar recover from a 2015 low, while Treasuries and gold weakened.
President signs disaster aid, CR, debt ceiling bill... On Friday, President Donald Trump signed the hurricane emergency aid package that also addresses the debt ceiling and government funding through Dec. 8, Press Secretary Sarah Huckabee Sanders tweeted. The action came after House lawmakers cleared the bill by a 316-90 vote earlier in the day, with all 90 nay votes being Republican, in part because it bundled up the funding and debt ceiling suspension provisions with hurricane aid. The Senate passed the bill Thursday.
The week ahead... With the passage if the aforementioned measure, the focus now turns to rewriting the U.S. tax code by the end of the year and working on additional disaster aid funding. The House wants to complete work on an eight-bill appropriations measure for fiscal 2018, which begins Oct. 1. The Senate Ag Committee will continue its new farm bill hearings. Trump on Tuesday will meet with Malaysian Prime Minister Najib Razak at the White House. Razak is embroiled in a corruption scandal at home. Prior to the meeting, senior trade officials for both countries will meet, with discussions likely to touch on the U.S.'s $24.8-billion trade deficit with Malaysia for 2016. USDA’s Supply & Demand and Crop Production that will be released Tuesday are a big focal point for ag.
Ross is latest Trump official to warn on trade policy... Commerce Secretary Wilbur Ross said Friday that if talks to renegotiate the North American Free Trade Agreement (NAFTA) don’t benefit the United States, the president will withdraw from the trade pact. “That shouldn’t be a shock to anyone,” Ross said at a Washington Post event. Regarding ongoing NAFTA 2.0 negotiations, Ross said negotiators from the U.S., Canada and Mexico tackled the easiest issues in recent rounds, adding the strategy “is to try to build some momentum, a feeling of togetherness as you move into the harder issues.” Ross said it is “too early to really tell” whether Canada and Mexico are bargaining in good faith, noting that only 10 days of talks have been held so far, over two sessions. He also stressed that NAFTA 2.0 talks can’t “drag on too long because of the political calendar.” Read more from him.
Chinese inflation data surprises to the upside... China’s Consumer Price Index (CPI) was up 1.8% from year-ago levels in August, according to its National Bureau of Statistics. Traders had expected this gauge of inflation to rise just 0.2 points from July to 1.6%. This also marked the first CPI uptick in three months. The Producer Price Index also came in stronger than expected, climbing to 6.3% over year-ago, whereas analysts polled by Reuters had anticipated just a 0.1-point rise from July to 5.6%. A breakdown of the numbers shows food prices were down 0.2% from year-ago in August, largely due to a 13.4% year-over-year drop in pork prices.
Soybean shortfall means India may need to import more soyoil and palm oil... Indian officials and farmers expect an extended dry spell in key production areas to slash its 2017-18 soybean crop by around 20% from year-ago. Plus acreage was already down. The reduced supply situation likely means India, the world’s top edible oils importer, will need to boost its soyoil and palm oil imports in 2017-18. Its soymeal exports may also decline.
Canadian wheat crop not as bad as thought... With Canada’s spring wheat harvest nearing half complete, many expect Stats Canada to raise its 25.5 MMT total wheat crop peg. While yields have not been great, they have been better than expected, especially in Manitoba. But crop quality remains a concern. Protein levels have been very variable, maintaining concerns about a tight supply of high-protein wheat around the world.
Trade questions whether poppy seed is the new ergot for Egypt... Egypt’s quarantine authority is examining a 56,000 MT wheat shipment from France that is suspected of containing poppy seed, the second such cargo to be examined for such reasons. If they do prove to be poppy seeds, Egypt will reject the shipment and transfer the case to the general prosecutor, an ag ministry spokesman told Reuters. The situation has traders nervous, with some saying poppy seeds are “the new ergot” and an attempt by the country’s ag quarantine service to tighten up import rules after he lost his battle to fight the fungus last year.
Extended cash cattle negotiations result in mostly steady trade... Ideas the cash cattle market would bottom lifted futures last week, but cash negotiations extended until late in the the week. Late Friday cash cattle traded across the Plains around $105 -- steady with the week prior -- with a few sales taking place at lower prices of $103 in Iowa. But sales volume was light, especially in Texas and Kansas. That means some supplies could be carried forward into this week.
Cash hog market performing better than futures signal... Hurricane Irma could disrupt slaughter in the southeastern U.S. this week, but this should be temporary. Last week, cash hog bids were mixed across the Midwest, which signaled that futures’ discount to the cash index is likely overdone given added slaughter capacity. In fact, cash hog prices strengthened nationally on Friday, according to USDA.
Weekend demand news... An Israeli group of private buyers issued international tenders to buy up to 90,000 MT of corn from the Black Sea region, along with 50,000 MT of feed wheat and 20,000 MT of feed barley from optional origins.
Today’s reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
- 3:00 p.m., Crop Progress-- NASS
