First Thing Today: Freeze Warnings Stretch from the Upper Midwest to the Southern Plains
Good morning!
Markets favor the downside as overnight session winds down... Corn futures are mixed with a downside bias after sticking to a very narrow trading range overnight. Soybeans are trading near session lows with losses of 1 to 2 cents. Winter wheat futures are down 3 cents, while spring wheat is mixed in light trade. The U.S. dollar index is slightly lower, while crude oil futures are marginally higher.
Freeze warnings stretch from the Upper Midwest into the Southern Plains... Freeze warnings and hard freeze warnings are in effect from North Dakota and Minnesota southward into central New Mexico, according to the National Weather Service. The season-ending freeze for the west-central high Plains comes at a normal time in the season, limiting crop concerns. But the cold snap and the snow that is expected to precede it raises some concern about the cotton crops in the southwestern Plains. The event is expected to be far enough west to limit concerns about the winter wheat crop or livestock stress.
Hurricane Nate makes landfall, disrupting oil production... Hurricane Nate weakened to a tropical storm after making separate landfalls near the mouth of the Mississippi in Louisiana and in Biloxi, Mississippi. Oil operators shut in 1.62 million barrels per day of U.S. Gulf oil production in preparation for Hurricane Nate. The tally represents about 92% of all production. Key ports in Mobile and New Orleans were also closed as Nate approached. Early reports indicate minimal damage to Gulf operations.
Increased risk for more tropical cyclones near Australia this season... Warm ocean waters have "marginally" upped the odds of cyclones near Australia over the Nov. 1 to April 30 cyclone season, the Bureau of Meteorology said today. There is a 56% chance of more tropical cyclones than average, it details. Typically, there are 10 to 13 tropical cyclones each season around Australia, with four of them crossing the coast.
Analysts pare soybean production estimates amid slow start to Brazilian planting... Analysts polled by Reuters expect Brazil to produce a 109.98 MMT soybean crop in 2017-18, on average. In a similar poll in August, analysts projected the crop at 110.60 MMT. Conditions are expected to remain dry in Mato Grosso, Brazil, for at least another week, which has kept soybean planting moving at a slow pace. The consultancy Safras and Mercado reports that planting was around 5.6% complete as of Friday versus 10.4% last year at this time.
Immigration, NAFTA 2.0, and USDA reports some highlights of the week ahead... Immigration reform (see next item), NAFTA 2.0 talks on Oct. 11-15 (including some discussion of contentious ag matters), and a farm bill listening session in upstate New York are some key highlights of the week-ahead. The Senate is not in session, but the House will work from Tuesday forward. The Supreme Court will hear arguments Wednesday over whether legal challenges to the waters of the U.S. (WOTUS) rule should be brought to the federal district courts or the federal court of appeals. Also of note, Federal Open Market Committee minutes will be out Wednesday and on Thursday USDA will issue its Crop Production and Supply & Demand reports. Due to Columbus Day, both the crop progress and weekly export sales will be pushed back a day.
White House sends Congress plans for immigration enforcement... The White House sent Congress an expansive set of principles that would increase immigration enforcement at the border and inside the U.S. and would limit new legal arrivals, recommendations guaranteed to frustrate most if not all Democratic lawmakers. The Trump administration is calling for the funding of a border wall, a crackdown on minors from Central America, and cuts to grants for "sanctuary cities." The principles were denounced by Democratic leaders, who had hoped to forge a deal to protect younger immigrants who were brought to the country illegally as children.
EU expected to import quite a bit of corn in 2017-18... The European Union will likely import a near-record 15 MMT of corn in 2017-18, according to the European Commission. Harvest of the crop is underway, but results are expected to be disappointing due to heatwaves and drought in some areas over the summer. The commission pegs the crop at 59 MMT, down 1 MMT from last year and well under the five-year average.
Attache pegs India's 2017-18 wheat crop at a record-high... India will likely produce a record-large 98.380 MMT wheat crop in 2017-18, according to a USDA ag attache in the country. This would be a dramatic increase from 2016-17's 87.000 MMT crop. The post also lowered its import forecast by 3 MMT as big supplies have weighed on domestic wheat prices. In its latest report, USDA estimated the crop at 96 MMT and imports at 4 MMT.
Post expects some Brazilian safrinha corn acres to shift to cotton... Brazil will likely produce a 7.73 million-bale cotton crop in 2017-18, estimates an ag attache in the country. This would be a 10% increase from the year prior and it tops USDA's official crop estimate of 7.50 MMT. The post details that cotton harvested area is likely to climb around 15% from last year as higher cotton prices have encouraged farmers to shift some safrinha corn acres to cotton. The post expects Brazil's cotton exports to climb 24% from 2016-17 to 3.6 million bales due to improved crop quality and higher global demand. This is 200,000 bales above USDA's official projection.
Higher cash cattle trade Friday... Cash cattle trade reportedly picked up on Friday around $109 in Kansas and Texas, up a buck from light action earlier in the week and week-ago. Traders were signaling a higher bias for cash action heading into the week and ended at a $2 premium to these cash prices. That will likely limit any strong reaction to news of the higher trade.
Increasing confidence a low is in for cash hogs... Cash hog bids strengthened early last week, but softened as the week came to a close. Nevertheless, traders are increasingly confident the market has put in an early seasonal low. That should point futures higher near-term, though bouts of profit-taking, as was seen Friday, are certainly a possibility.
Weekend demand news... Ethiopia tendered to buy about 400,000 MT of milling wheat. Jordan tendered to buy 100,000 MT of hard milling wheat and 100,000 MT of animal feed barley from optional origins. Iran is not believed to have made any purchase in its international tender to buy 200,000 MT of soymeal. The United Nations recently purchased around 40,000 MT of wheat, likely from Ukraine, to be shipped to east Africa and Yemen. Mauritus issued an international tender to buy 52,825 MT of wheat flour from optional origins. The Philippines purchased around 165,000 MT of feed wheat, likely from the Black Sea region.
Today's reports:
- Government offices closed
