Good morning!
Soybeans push to new highs for the month... Corn and soybean futures started the overnight session under pressure, but both markets are now trading high-range, with corn up a penny and soybeans 7 to 8 cents higher. Winter wheat futures are up 1 to 2 cents, with spring wheat posting even stronger gains. The U.S. dollar index is under moderate pressure, with crude oil futures also favoring the downside.
Harvest-friendly forecast... The National Weather Service forecast for Sept. 27 through Oct. 1 calls for normal temperatures and dry weather in the western Corn Belt and into Illinois. Indiana and Ohio are expected to see warm temperatures and normal rainfall. The Central and Southern Plains are expected to see cool, wet weather over this timeframe.
North Korean tensions rise... North Korea reacted to President Donald Trump’s latest sanctions, announced yesterday, with Kim Jong Un warning of the “highest level of hard-line countermeasure in history.” The country’s foreign minister suggested this could include testing a hydrogen bomb in the Pacific. Asian stocks closed slightly lower into the weekend following the increase in tensions.
NAFTA 2.0 negotiators meet for third round of talks in Ottawa... Round 3 of North American Free Trade Agreement (NAFTA) modernization renegotiations will include sensitive topics like dispute settlement and rules of origin for automobiles as negotiators meet Sept. 23-27 in Ottawa. An agreement on digital trade is expected to be an early win for the negotiators. Commerce Secretary Wilbur Ross is getting ahead of a more challenging third round of NAFTA negotiations with Mexico and Canada by pushing for tougher rules of origin, based on the Trump administration’s belief that auto imports in particular have too little U.S. content. U.S. Trade Representative Robert Lighthizer will submit new proposals covering rules of origin, labor standards in Mexico and dispute resolution. U.S. negotiators view achieving several changes to NAFTA as necessary for meeting Trump’s goal of cutting the U.S. trade deficit. This includes: limiting Buy American procurement waivers, increasing U.S. content in rules of origin, raising Mexican wages, and changing investment rules.
Strong Russian wheat shipments thus far in 2017-18... Russia will likely export 4.1 MMT of wheat in September, projects the ag consultancy SovEcon. This would be a 15.8% increase from year-ago and 195,000 MT increase from August. For the first three months of the 2017-18 marketing year, the consultancy projects grain exports will total 9.4 MMT, up 1.058 MMT (12.7%) from this point in 2016-17. Egypt has been its top customer.
Rainy weather reportedly slows Russian winter grain seeding... Rainy weather has delayed winter grain plantings in Russia, reports Pyotr Checkmarev, head of the ag ministry’s crop growing department. He also said “next year does not really promise a good harvest,” which is why the country should have reserves for next year. But the latest ag ministry data does not reflect any major delays. As of Sept. 21, 10.0 million hectares had been planted, or 57.5% of the intended winter grain area. That compares to seedings of 10.1 million hectares at this point last year. Regarding the 2017 grain crop, the ag ministry is sticking with its 110 MMT by clean weight peg, which is well below crop estimates from other analysts topping 130 MMT. The ministry explains that there is risk some areas won’t harvest their crop before cold weather hits.
Lagging EU wheat shipments... From the start of the 2017-18 marketing year through Sept. 19, The European Union has exported 3.7 MMT of soft wheat, down 42% from last year at this point, official trade data shows. The region has struggled to compete against an influx of cheap wheat out of the Black Sea region.
Arkansas advances a measure to ban dicamba use over growing season... Arkansas’ State Plant Board advanced a proposal that would ban the use of dicamba weed killers from April 16 to Oct. 31, 2018, meaning the state is just one step away from enacting an official ban on the herbicide that farmers charge can drift and damage crops not meant to withstand the chemical. Monsanto’s Vice President of Global Regulatory Ty Vaughn said the decision was not based on science and warned that “all options are on the table for Monsanto’s next move.” Previously, the company said it may file a lawsuit if the board denied its petition for it to reject the proposed cutoff date for sprayings, which the board did with a unanimous vote. BASF and DuPont also sell dicamba herbicides under different brand names. After a public comment period and public hearing on Nov. 8, the proposal will move to the Arkansas legislative subcommittee for final approval.
Senators push for more funding of ag export promotion programs... A group of lawmakers have introduced bipartisan legislation that would double funding over the course of five years for two of USDA’s export promotion programs -- the Market Access Program and Foreign Market Development Program. The measure was introduced by Senators Joe Donnely (D-Ind.), Angus King (I-Maine), Joni Ernst (R-Iowa) and Susan Collins (R-Maine). “As American farmers and ranchers are struggling with historically low commodity prices, maintaining and strengthening U.S. trade relationships around the world is critical to the survival and profitability of the agricultural community,” Ernst explained, adding that these programs have “proven to be effective in expanding foreign markets for American agricultural goods.”
Exchange lowers initial margins on live cattle... CME Group has lowered initial margins for speculators in live cattle futures from $1,925 per contract to $1,650 per contract; the rates will take effect after the close of business today.
Another week of extended cash cattle negotiations... Cash negotiations are again stretching late into the week. So far, just a few hundred head have changed hands in Kansas around $107. Trade could be limited leading up to the Cattle on Feed and Cold Storage Reports this afternoon. The former is expected to show a 2.9% drop in Placements from year-ago.
Pork tumbles as aggressive slaughter continues... For the third day in a row, packers slaughtered an estimated record-high 455,000 hogs on Thursday, keeping this week’s kill ahead of week-ago and well ahead of year-ago levels. In fact, this week’s kill could be near the fall high. An abundance of pork has also weighed on the product market. The pork cutout value plunged $3.01 yesterday and it is now down $4.58 from last Friday. Movement also slowed after strong load counts the prior two days.
Overnight demand news... South Korea issued a tender to buy 55,000 MT of corn from worldwide origins.
Today’s reports:
- 2:00 p.m., Cattle on Feed-- NASS
- 2:00 p.m., Chickens and Eggs-- NASS
- 2:00 p.m., Cold Storage-- NASS
