Good morning!
Corn and soybeans under pressure as harvest picks up... Corn and soybean futures faced pressure overnight as harvest pressure is building for both markets. Corn futures are down a penny as of 6:30 a.m. CT, while soybeans are around a nickel lower. Winter wheat futures also faced pressure overnight and are trading 3 to 4 cents lower. Spring wheat is fractionally lower. The U.S. dollar index is posting solid gains, with crude oil futures also higher to start the week.
Wide-open weather for harvest... Unseasonable heat along with mostly dry conditions around the Midwest have pushed a lagging crop toward the finish line, easing concerns that frost could clip yields. Rains are possible for northwest regions of the Corn Belt early this week, but the National Weather Service forecast for Sept. 30 to Oct. 4 signals that farmers should be able to make good progress on harvest in the days ahead as dry conditions are expected across the Corn Belt, with warm temperatures in the western Corn Belt and Upper Midwest and normal temperatures expected elsewhere in the region. Dryness is expected to extend into Kansas, Oklahoma and northeast Texas, with temperatures expected to be cool in Texas and Oklahoma. Normal temperatures are likely for Kansas, according to NWS. Also of note, weekend rains in Brazil were disappointing, but there are more chances for rain this week.
Kim Jong Un: ‘Deranged’ Trump will ‘pay dearly’ for threat... North Korean leader Kim Jong Un called President Donald Trump “deranged” and said he will “pay dearly’ for his threats,” a possible indication of more powerful weapons tests on the horizon. North Korea’s foreign minister reportedly said his country may test a hydrogen bomb in the Pacific Ocean to fulfill Kim’s vow to take the ‘highest-level’ action against the United States. The N.Y. Times said the remarks are “believed to be the first time a North Korean leader directly issued a statement to the world under his name.” Foreign Minister Ri Yong Ho said Trump’s “rocket man” insult for Kim Jong Un makes a military clash more likely. Eight U.S. aircraft flew close to the North Korean coastline while remaining in international airspace, the Pentagon said in a statement, describing the mission as a “demonstration of U.S. resolve and a clear message that the president has many military options to defeat any threat.”
Congress returns to focus on tax reform, budget and more... Congress returns to work on lingering big issues, like tax reform and budget matters and possibly health care. A primary runoff election in Alabama is the key political topic of note, as it has become a proxy war between President Donald Trump and conservative Sarah Palin and former White House staffer Stephen Bannon. Roy Moore, the former chief justice of the Alabama Supreme Court, is trying to unseat Sen. Luther Strange, who was appointed in February to the seat when Jeff Sessions resigned to become attorney general and is backed by Republican leadership and Trump. Meanwhile, House Republicans will hold a retreat Wednesday to discuss tax-overhaul options.
Revised push on health care... With the Senate still expected to vote this week on a Republican proposal to repeal the Affordable Care Act (ObamaCare), Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) shifted more money to Alaska and Maine, whose senators have expressed reservations about it. Sens. John McCain (R-Ariz.) and Ted Cruz (R-Texas) announced their opposition to the bill, and it remained unclear if the changes would be enough to garner the needed votes. Sen. Susan Collins (R-Maine) said she wanted to see the final details before making a final decision, but in remarks on Sunday indicated she definitely would not support the bill.
Some tax cut details surface... Trump and Republican leaders plan to cut the top tax rate for the wealthiest Americans to 35% and significantly reduce taxes on big and small businesses, according to details leaked to Axios and first published by the Washington Post. GOP leaders and the White House plan to cut the top tax rate for small businesses -- known as “pass-throughs” -- from 39.6% to 25%. (Currently small businesses pay the same tax rates as individuals, and this puts them at a disadvantage to larger corporations, which pay lower rates.) Most Democrats have signed a letter saying they wouldn’t support any tax bill that adds to the deficit or offers new tax breaks to the wealthiest Americans. Trump is planning to give a speech unveiling the framework in Indiana on Wednesday. Final details are expected to change substantially as it goes through the normal legislative processes. Read more.
Another month of Strong Chinese corn buys... China imported 380,000 MT of corn in August, up sharply from year-ago levels as a rise in domestic prices prompted users to turn to imports, official customs data shows. This follows imports of 910,000 MT in July, the fourth highest figure on record. But for the first eight months of the year, China’s corn buys are lagging year-ago by 31.5% at 2.03 MMT.
China to auction off some of its soybean reserves... China will begin auctioning soybeans from its state reserves, the National Grain Center announced. The auction will begin Sept. 29 and a total of 300,000 MT of soybeans from Helongjiang, Inner Mongolia, Liaoning and Henan will be offered.
WTO grants U.S. request for probe of Chinese ag tariffs... The World Trade Organization granted the Trump administration’s request to investigate whether Chinese trade policies violate international trade rules during a Sept. 22 meeting in Geneva. Over the next year, the WTO will evaluate U.S. allegations that China imposed “impermissible” restrictions on farm imports, failed to provide sufficient information about its import quantities, and didn’t disclose changes to those import quotas. Should the WTO rule China’s tariff-rate quotas (TRQ) policies violate international rules, Beijing could be forced to accept increased amounts of U.S. grain imports or face retaliation from Washington. Get more details.
Some ag and food policy issues on NAFTA 2.0 agenda in Ottawa... North American Free Trade Agreement (NAFTA) negotiators discussed food safety and animal and plant health issues on Saturday and Sunday as the third round of talks continue in Ottawa. “We’re having some constructive discussions,” Canadian chief NAFTA negotiator Steve Verheul said. “We’re looking at 28 different negotiating groups at the moment,” Verheul said. Officials from Canada, Mexico and the U.S. will discuss agricultural market access issues Tuesday and Wednesday, but Verheul said he did not expect the U.S. to offer a proposal during this round for increased access to Canada’s dairy market. Nor did Verheul think the U.S. would table proposals on auto rules of origin, investor-state dispute settlement and Chapter 19. Get more details.
Ross in trade journey through Asia... Commerce Secretary Wilbur Ross is in Beijing today to meet with Chinese Vice Premier Wang Yang and other high-level officials “to discuss a range of issues including increased market access for U.S. firms,” his office announced. Ross is leading efforts to address trade issues with China through a new “comprehensive economic dialogue.”
Cattle futures likely to face pressure today... While December live cattle finally closed the wide July gap to the upside on Friday, the market is likely to face pressure today as traders react to a Placements figure that came in well above expectations in Friday’s Cattle on Feed Report. Frozen beef stocks were also significantly higher than expected. But signs the cash market has put in a low will likely limit the market’s downside after the initial wave of selling.
Cash hog bids to remain under pressure amid hefty supplies... More near-term price pressure is likely for the cash hog market, so the lean hog market could face more pressure going forward. As the week progresses, traders will increasingly ready positions for the Quarterly Hogs & Pigs Report. Supplies are expected to remain hefty into year-end.
Weekend demand news... Jordan tendered to buy 100,000 MT of wheat.
Today’s reports:
- 8:00 a.m., Food Price Outlook September 2017 -- ERS
- 10:00 a.m., Weekly Export Inspections -- AMS
- 2:00 p.m., Poultry Slaughter -- NASS
- 3:00 p.m., Crop Progress-- NASS
