Good morning!
Soybeans lead gains overnight... Cool weather for early September lifted the corn and soybean markets overnight. As of 6:35 a.m. CT most corn contracts are 3 cents higher, while soybean futures are up 8 to 11 cents after a gap-higher start. Winter wheat futures are 4 to 6 cents higher in most contracts, while spring wheat is narrowly mixed. The U.S. dollar index is down slightly, while crude oil futures are posting solid gains.
North Korea claims test of ‘missile-ready’ nuclear bomb... North Korea said Sunday that it had developed a more advanced nuclear bomb with “great destructive power,” releasing photos of Kim Jong Un inspecting what it said was a hydrogen bomb that could be attached to a missile capable of reaching the mainland United States. North Korean state media said that the test was carried to test “the accuracy and credibility” of its “H-bomb to be placed at the payload of the ICBM.” North Korea tested its intercontinental ballistic missile for the first time in July, and its second test later the same month showed the rocket could theoretically reach Denver or Chicago. Analysts say the claims should be treated with caution, but the North’s nuclear capability is clearly advancing. Get more details.
Treasury to propose cutting off trade with countries doing business with North Korea... Treasury Secretary Steven Mnuchin promised to consider a sanctions package that may cut off “all trade and all other business” with North Korea’s trading partners after North Korea’s latest nuclear test, saying the rogue country’s behavior is “unacceptable.” He added that, We are going to strongly consider everything at this point and, again, I will draft a package for [President Donald Trump’s] strong consideration that would go as far as cutting off all trade and other business,” Mnuchin said in response to whether a package would also censure Chinese financial institutions and companies on Fox News Sunday.
Trump wants plans to withdraw from South Korea trade deal... Trump has instructed advisers to prepare a withdrawal from the Korea-U.S. (KORUS) free-trade agreement, a move that would raise economic tensions with the U.S. ally at a time both countries confront a crisis over North Korea’s nuclear weapons program. Under the terms of the KORUS pact, either side can pull out by giving 180 days’ notice. Negotiators from the U.S. and South Korea held several meetings over the summer with American officials leaving unhappy with what they felt was Seoul’s unwillingness to make significant changes to the KORUS. The president could decide to stay in the agreement in order to renegotiate its terms, but internal preparations for terminating the deal are far along and the formal withdrawal process could begin as soon as this week. Some believe the latest threat is a negotiating tactic to bring Seoul back to the bargaining table. Read more.
Warm in the western Corn Belt, cool in the east... More cool air moved into the the central and eastern U.S. early this week, and overnight lows in the 30s are possible in the Upper Midwest and Northern Plains early this week. However, no serious damage is expected. The National Weather Service forecast for Sept. 10-14 calls for warm temperatures in the western Corn Belt and into Wisconsin, with cool temperatures for the eastern Belt. Over this timeframe, dry weather is expected across the Midwest and Plains, with normal precip likely for Illinois and Indiana and wet weather expected in Ohio.
Cordonnier leaves yield estimates unchanged... Crop Consultant Dr. Michael Cordonnier left his corn yield estimate at 166 bu. per acre and he has a neutral bias going forward. He noted concerns about the recent trend of cool, dry weather for the central Corn Belt with more of the same expected early this month, which he says increases the risk the crop will run out of water in addition to slowing crop development and increasing the threat of frost. Cordonnier also left his soybean yield estimate unchanged at 48 bu. per acre and he has a neutral bias toward the crop. He expressed similar concerns about cool, dry weather affecting the bean crop in the central Corn Belt, but says recent rains likely helped the crop in southern and far eastern growing areas.
Consultancy raises grain crop and export forecast for Ukraine... UkrAgroConsult raised its 2017-18 grain export projection by 3.4% to 42.06 MMT, noting the crop was even bigger than expected. It raised its grain production estimate by 1.5 MMT to 63.2 MMT, and said the wheat crop could total 26 MMT, just 100,000 MT shy of last year’s crop and up 1 MMT from its crop peg last month. Meanwhile, the country’s grain traders’ union said it expects Ukraine to have an exportable wheat surplus between 16 MMT and 17 MMT in 2017-18, with production pegged at 26.6 MMT.
Congress returns to a full agenda... Lawmakers return from their long summer recess to must-pass issues that have they lingered for months. One exception is aide for Hurricane Harvey victims, with the White House sending the initial aid requests late Friday. The House will vote on a shutdown-avoiding spending package that pulls together all eight appropriations bills that weren’t passed before the recess. Meanwhile, an across-the-board, stopgap spending measure known as a continuing resolution (CR) will be necessary to prevent a shutdown, as none of the 12 spending bills for the new fiscal year beginning Oct. 1 have been sent to the president. By the end of the month, Congress must come up with a plan to raise or suspend the nation’s debt limit to steer away from a default. Click here for more congressional issues in the month(s) ahead. Also of note is a likely decision by Trump soon that he will end protections for young immigrants who were brought into the country illegally as children (DACA), but with a six-month delay.
EPA reportedly considers a cutoff date for dicamba usage... The Environmental Protection Agency (EPA) is considering a ban on spraying the ag herbicide dicamba after a set cutoff date, possibly sometime during the first half of 2018, according to state officials advising the agency, Reuters reports. This comes amid concerns that drift of the chemicals has damaged soybeans and other crops this season.
Beef market in focus... Traders will monitor the boxed beef market for a read on clearance of red meat over the long holiday weekend. If clearance is strong, retailer buying should be solid this week. But since Labor Day marks the unofficial end of grilling season, retailer buying may not last long.
Lean hog futures start week at double-digit discount to the cash index... Supplies are building seasonally, which has been a weight on the lean hog market and kept momentum on the side of market bears. But traders could work to narrow futures’ wide discount to the cash hog index. While the index has softened, losses in futures have far outpaced those of the cash hog market.
Overnight demand news... Algeria tendered to buy a nominal 50,000 MT of durum wheat.
Today’s reports:
- 10:00 a.m., Weekly Export Inspections -- AMS
- 2:00 p.m., Dairy Products-- NASS
- 3:00 p.m., Crop Progress-- NASS
