Good morning!
Some light short-covering overnight... Corn futures are a penny higher in most contracts as of 6:35 a.m. CT, thanks to some corrective short-covering. Soybeans are up 4 to 6 cents, as traders were encouraged by yesterday’s midrange close. Wheat futures are also enjoying fractional to 3-cent gains, with the winter wheat markets leading to the upside. The U.S. dollar index is marginally lower. Of note, the rally in global stocks is easing after U.S. equities closed at record highs for the second consecutive session Tuesday.
China plans nationwide ethanol use by 2020... China plans to expand use of ethanol in gasoline nationwide by 2020 to curb smog and fossil fuel demand, the government said today. Plans call for China to develop a demonstration facility by 2020 that can make 50,000 tons of ethanol a year from cellulose, according to the Cabinet’s National Energy Administration (NEA). It said that would expand to commercial scale by 2025. The NEA gave no indication what level of ethanol would be required, but Xinhua said it would be 10%. On Saturday, a deputy industry minister said Beijing is developing a timetable to phase out production and sales of traditional fuel cars. France and Britain announced similar plans in July. China is the world’s biggest energy consumer and auto market.
IEA calls for strong global oil demand... The International Energy Agency said in its monthly report published this morning that global oil demand will climb by the most since 2015 this year. On the supply side, OPEC and its allies are discussing extending by more than three months the oil production cuts that are due to expire in March 2018.
FSA certified acreage data: September 2017... Reports from U.S. producers participating in farm programs show they have reported planting 87.258 million acres of corn, 88.666 million acres of soybeans, 43.170 million acres of wheat and 12.151 million acres up upland cotton, according to the September release of certified acreage data from the Farm Service Agency (FSA). The totals are up from levels released in August. The updated release shows a total of 2.568 million acres were prevented from being planted in 2017, up slightly from 2.565 million acres in August and well below the 2016 total of 3.412 million acres. The info will likely result in adjustments to planted acres in the October U.S. Crop Production report (likely more soybean acres and perhaps more corn). Click here for more details.
Record-setting Black Sea wheat shipments to Asia... Russia and Ukraine shipped a record 2.762 MMT of wheat in August, according to Thomson Reuters flows data, up 683,000 MT from year-ago. This signals that suppliers in the Black Sea region took advantage of record-large, higher-quality crops as well as new handling infrastructure, to the detriment of Australia. Wheat consumption is on the rise in Asia thanks to its growing population and changing eating patterns.
Heavy rains worrisome in Argentina as farmers get ready to plant corn and beans... Around 4.8 million hectares in Buenos Aires, Argentina are dealing with too much moisture, according to the farm group Carbap, raising concern about whether these acres will be planted. Buenos Aires made up around a third of the country’s total bean crop and a quarter of its corn crop in 2016-17. Drier weather is expected the second half of September, but rains are slated to return in October. Meanwhile, the Buenos Aires grains exchange is considering raising its estimate of the the amount of wheat that has been damaged by recent heavy rains from 80,000 hectares. Argentina planted 5.35 million hectares to wheat.
Final survey data confirms the high quality of this year’s French wheat crop... Final results from a quality survey show that the 2017 French wheat crop had an average protein content of 12.3%, reports FranceAgriMer, stressing that this represents a high level. It went on to detail that 91% of the crop had protein above 11.5%, a level used by importers like Egypt and West Africa. Around 75% of the crop had specific weights (a measure of grain density) topping the widely used commercial benchmark of 76 kilograms per hectolitre. As a result, the French farm office expects the country to export 10.2 MMT of wheat outside the EU in 2017-18, more than double last year’s total. But that would still be shy of the three-year average.
Improving economy lifts Baltic Dry Index... The Baltic Dry Index, the key measure for the cost of moving commodities like coal and iron ore, is hovering near its highest point in nearly three years, and ship brokers say an improving global economy along with China’s moves to limit its own production of industrial materials are fueling the upturn, according to the Wall Street Journal. The growth is expected to continue because China’s industrial limitations come even as the country steps up infrastructure spending, boosting demand for seaborne imports. Broader economic growth is also building up shipments of grain, lumber and other goods. The shipping rates are rising after years of downsizing that left capacity relatively tight, but the stronger demand is sure to tempt carriers to bulk up fleets again.
Estate tax repeal under pressure by Senate Democrats... Eliminating the estate tax would be a giveaway to a small number of very rich families, key Senate Democrats charge. Senate Democratic leader Chuck Schumer (D-N.Y.) and Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, released data that showed that about 0.2% of families nationwide would benefit from repealing the tax. “Repealing this tax is not a tax cut for the middle class. It’s a tax cut for the wealthy elites in this country the president promised to stand up to,” Schumer said. The lost revenue is an estimated $269 billion over 10 years.
Two USDA nominees on tap for Sept. 19 confirmation hearing, sans Clovis... The Senate Agriculture Committee has announced plans for its confirmation hearing Sept. 19 next week, but it won’t include the controversial nomination of Sam Clovis to be USDA’s undersecretary for research, economics and education. Clovis has come under scrutiny for a lack of scientific experience and for statements he made as a talk show host and political activist in Iowa. The hearing will be on Steve Censky, the nominee for deputy secretary, and Ted McKinney to be undersecretary for trade. Censky is head of the American Soybean Association and also held posts at USDA in the late 1980s. McKinney is the Indiana director of agriculture, a position he was appointed to by Vice President Mike Pence when Pence was governor of the state.
Select beef now at a premium to Choice... Beef movement has been encouraging this week. Yesterday 163 loads changed hands on mixed price action. Choice cut values fell 77 cents, while Select values gained 48 cents, which moved Select values to a 7-cent premium to Choice. Packers continue to enjoy strong cutting margins, which now stand at more than $151 per head. This has weekly slaughter running around 10,000 head above week-ago. So far, there has only been a very light cash market test at $103 to $105 in Iowa, steady with week-ago for the state.
Weight data signals hog supplies are backing up... Hog packer profit margins are strong and rising, standing at $44.05 a head as of Tuesday. But while this plus added slaughter capacity has led to high daily kill numbers, average hog weight data for the Iowa/southern Minnesota market continues to show marketings are not keeping up with building supplies. Weights climbed 2.2 lbs. from week-ago and they are up 1.8 lbs. from last year at this time.
Overnight demand news... Iran failed to make any purchase in its tender to buy 200,000 MT of barley and 200,000 MT of corn. Egypt purchased 16,500 MT of sunflower oil, but it did not purchase anything in its tender to buy 30,000 MT of soyoil. South Korea tendered to buy up to 138,000 MT of optional origin corn. Japan’s Ag Ministry will import 100 MT of feed-quality wheat and 6,000 MT of feed barley via its simultaneous buy and sell auction.
Today’s reports:
- 8:00 a.m., Feed Grains Database-- ERS
- 2:00 p.m., Dairy Data (Dairy Monthly Tables) -- ERS
- 2:00 p.m.,Wheat Data-- ERS
- 2:00 p.m.,Broiler Hatchery-- NASS
