First Thing Today: Japan's Chilled Beef Imports Surge Amid Limits on Frozen Beef
Good morning!
Quiet overnight session... Corn futures stuck to less than a one-point trading range overnight and as of 6:30 a.m. CT most contracts are fractionally lower. Soybean futures are trading high-range with gains of 1 to 2 cents in most contracts after favoring the upside overnight. SRW wheat futures are steady to a penny lower, while HRW and HRS wheat futures are steady to a penny higher. The U.S. dollar index is just above unchanged, with crude oil futures down slightly.
Initial HRW CCI rating well under year-ago... When USDA's initial crop condition ratings of the fall are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the HRW crop registered a 338.10 rating, down 18.20 points from last year on this date. The SRW CCI rating starts the growing season at 379.42, up 6.96 points from last year. Get more details.
Cordonnier holds South American crop estimates steady, noting better rain in the forecast for central Brazil... Some farmers in Brazil will likely plant "in the dust" now, because the forecast for the next two weeks calls for generous rainfall, reports South American Crop Consultant Dr. Michael Cordonnier. He left his Brazilian soybean and corn crop estimates at 109 MMT and 88 MMT, respectively, steady with week-ago. He has a neutral to lower bias toward the bean crop. He explains that recent rainfall in Mato Grosso and central Brazil was lighter than expected, while southern areas have seen very heavy rainfall. This could lead to some replants. Meanwhile, he left his Argentine soybean crop estimate at 55 MMT and his corn crop peg at 42 MMT. He has a neutral bias toward both figures.
Lower Chinese wheat prices could alter wheat plantings... China's first reduction to its minimum wheat purchase price in more than a decade may give producers incentive to plant more lucrative varieties, note analysts and farmers. High- and low-gluten varieties sell at a big premium to common wheat that is used in Chinese noodles and steamed bread. Reports indicate high gluten wheat holds a premium of around 300 yuan ($45.25) per MT over common wheat. Farmers may turn to such varieties since they will be less reliant on government subsidies this year. Western-type breads and cakes are gaining favor in China, prompting millers to blend imported wheat with local wheat in order to make flour suitable for baking those items. So if China begins producing such varieties domestically, it could curb its wheat import needs.
Chinese manufacturing slows more than expected in October... China's official Purchasing Managers' Index dipped 0.8 points from September to 51.6 points in October, the lowest reading since July but still well above the 50.0-point level that separates growth from contraction. Analysts surveyed by Reuters had expected the reading to come in around 52.0 points, but the country's weakening property market and tighter environmental rules are curtailing production more than anticipated.
Emissions on track to top Paris climate accord thresholds by 30%... Greenhouse gas emissions are currently on track to top levels participants in the Paris Climate Accord agreed to by 30%. Specifically, emissions are on track to hit 53.0 billion MT to 55.5 billion MT of carbon equivalent by 2030, which is well above the 42-billion MT level needed to avoid a temperature rise of more than 2 degrees Celsius (3.6 degrees Fahrenheit) this century, the United Nations environmental agency reported. However, this "miss" is smaller than what was projected last year. President Donald Trump has threatened to withdraw the U.S. from the Paris climate accord unless it is renegotiated with more favorable terms for the United States.
Japan's chilled beef imports surge amid restrictions on frozen beef... Japan continues to import more chilled beef due to lofty tariffs on frozen beef imports from the U.S. and others. It brought in 25,225 MT of chilled beef in September, a 31.5% rise from year-ago, according to data from the country's finance ministry. On Aug. 1, Japan hiked its tariffs on frozen beef imports from the U.S. and others from 38.5% to 50.0% to protect domestic producers. These taxes will remain in effect through March 31.
China lifts restrictions on imports of Australian beef... China has lifted its suspension of red meat imports from Australia put in place after six Australian meat companies were disallowed from exporting beef to China in July. Australia's Minister for Trade, Tourism and Investment Steven Ciobo confirmed the beef exports would resume, noting the six facilities in question were about 30% of all Australian beef exports to China. "The Turnbull Coalition Government is pleased China has lifted the suspension of red meat imports from six Australian meat-processing facilities," Ciobo said in a media release. "This positive outcome reflects the high level of cooperation between Australian and Chinese authorities, and our red meat industry."
Cattle futures well above last week's cash trade... Strong gains in cattle futures Monday pushed them well above where cash cattle traded last week. USDA's five-state cash cattle price last week averaged just shy of $117, though there was plenty of trade in the $118 to $119 range late Friday. December live cattle futures ended Monday at more than a $6 premium to last week's average cash price, which should limit followthrough buying and could trigger profit-taking.
Cash hogs started the week firmer... The national direct cash hog price firmed 45 cents Monday, driven by a nearly dollar rise in the Iowa/southern Minnesota market. With the cash market firmer yesterday, it suggests price pressure late last week was temporary. The discount futures hold to the cash market should provide at least mild price support.
Overnight demand news... Japan tendered to buy a total of 144,585 MT of food-quality wheat from the U.S., Canada and Australia. The Saudi Grains Organization will import 484,000 MT of solid wheat from Europe, North or South America or Australia.
Today's reports:
- 11:00 a.m., Cotton Ginnings -- NASS
