First Thing Today: U.S. Exporters Struggling to Find Enough High-quality Beans for China
Good morning!
Markets didn't stray far from unchanged overnight... Corn futures are fractionally to a penny lower as the market faced followthrough pressure overnight. Soybeans, on the other hand, enjoyed a bit of short-covering overnight and are steady to fractionally higher. SRW wheat futures are fractionally to a penny lower, HRW wheat is posting similar gains and HRS wheat futures are narrowly mixed. The U.S. dollar index is facing some pressure early today.
U.S. exporters struggling to find enough high-quality beans for export to China... U.S. soybean exports to China will likely be delayed by at least two weeks, as suppliers are struggling to find enough high-quality beans to meet commitments, according to two trade sources cited by Reuters. Back-to-back hurricanes compromised the quality of the early-harvested crop that exporters have on hand and Midwest supplies are flowing slowly to the Gulf due to low river levels, plunging basis and some lock and dam issues. Exporters have reportedly asked Chinese buyers to lower their quality specifications, but they have refused to do so. Meanwhile, waiting times for ships in the Gulf have climbed to 10 to 12 days versus the usual five days at this time of year.
Proposed EPA changes to biofuel/RFS policy will likely surface today... Bill Wehrum, President Donald Trump's nominee to oversee Environmental Protection Agency's Office of Air and Radiation, is one of four people nominated as assistant administrator positions at EPA. He will likely face Renewable Fuel Standard (RFS) questions from several members of the panel who represent ethanol-producing states, including Joni Ernst (R-Iowa), Deb Fischer (R-Neb.) and Tammy Duckworth (D-Ill.).
Grassley, others to have session with EPA's Pruitt Oct. 17... Senators Chuck Grassley (R-Iowa), Joni Ernst (R-Iowa) and Deb Fischer (R-Neb.) will have a session with EPA Administrator Scott Pruitt Oct. 17 to discuss the RFS. Grassley talked with Trump Friday and requested a session with Pruitt in the wake of EPA seeking comments on potentially lowering the biodiesel mandates under the RFS for 2018 and 2019. Grassley has been outspoken about his displeasure with the possibility of a reduction in the RFS levels.
Senate confirms two USDA nominations. The Senate yesterday evening confirmed Steve Censky to be deputy secretary and Ted McKinney to become the department's first undersecretary for trade. The Senate agriculture panel on Thursday will hold a confirmation hearing for two more nominees: Bill Northey to be undersecretary for farm and conservation programs and Greg Ibach to be undersecretary for marketing and regulatory programs.
U.S., South Korea to discuss trade pact today... South Korean and U.S. trade negotiators today will discuss the 2012 trade pact between the two allies (KORUS) as the Trump administration presses for changes to reduce the U.S. trade deficit with Seoul and increase market access for American goods. Today's meeting is the second direct trade discussion between the two sides. They held the first talks on Aug. 22 via video conference.
EU offers annual import quotas for beef and ethanol in trade talks with Mercosur bloc... Trade talks between the European Commission and South America's Mercosur bloc are underway, and as part of those negotiations the EU presented its farm trade offer yesterday. While details were scarce, we do know the offer included meat, ethanol and other farm products, but not sugar. Brazilian officials expected the EU offer to include an annual import quota of up to 70,000 MT of beef and 600,0000 MT of ethanol, which they said would be disappointing since EU offered more than that in 2004. A European official cited by Reuters says that after a difficult unveiling of the offers, negotiations are "off to a good start."
Canada and EU reach agreement on long-running dispute over hormone-treated beef... Canada has agreed to drop all complaints over the EU's ban on hormone-treated beef after securing enhanced market access as part of the Comprehensive Economic and Trade Agreement (CETA). In a communication to the World Trade Organization (WTO), Canada and the EU say they have reached a "mutually agreed solution" to a dispute that dates back more than two decades.
Tightening barley supplies send users to alternatives... Saudi Arabia will likely trim its barley imports to around 8 MMT from 9.1 MMT last season, as the country plans to partially substitute domestic consumption of barley with corn and soybeans. Barley prices have been on the rise amid a shrinking international supply of the grain. Plus, major exporters like Russia and Ukraine are likely to prioritize wheat and corn exports over barley. Of note, USDA forecasts global barley ending stocks will total just 18.6 MMT for 2017-18, the lowest level in 34 years.
'Structural changes' needed for Brazil to give Monsanto/Bayer merger the green light... Cade, Brazil's competition regulator, has delayed a decision on whether to approve Monsanto Co.'s $66-billion takeover of Bayer SA. It explained that efficiencies from the combination of the companies were not enough to ease its competition concerns. Therefore, it recommended the companies make some structural changes to garner final approval.
Gains in equities help cattle futures to rally... Cattle futures were bolstered by the record-setting run in the Dow Jones Industrial Average yesterday, which kept attention away from some less-than-rosy cash market prospects. While boxed beef prices climbed on Tuesday, movement was again fairly light. And showlist estimates are up this week as gains in Nebraska and Texas easily offset smaller numbers elsewhere. Today's online Fed Cattle Exchange auction could provide some insight as to likely cash direction, though no details were released last week.
Lean hogs firm on cash market optimism... The October lean hog contract surged amid optimism the cash market has likely put in an early seasonal low. Therefore, traders are comfortable with the front-month at a bit of a premium to the cash hog index. Cash hog bids strengthened nationally on Tuesday.
Overnight demand news... Egypt purchased 180,000 MT of wheat from Russia. Japan received no offers in its simultaneous buy and sell auction where it was seeking 120,000 MT of feed wheat and 200,000 MT of barley. Jordan purchased 50,000 MT of barley. Tunisia bought 100,000 MT of durum wheat and 25,000 MT of feed barley from optional origins.
Today's reports:
- 9:30 a.m., Weekly Ethanol Production -- EIA
- 2:00 p.m., Broiler Hatchery-- NASS
