3 Big Things Today, November 8, 2023
By: Tony Dreibus
Soybeans, Grains Higher Overnight; Liquidity, Income Lead Farmer Worries
1. Soybean, Grain Futures Higher Overnight
Soybean and grain futures were higher in overnight trading on signs of strong demand for U.S. agricultural products.
China purchased 110,000 metric tons of U.S. soybeans for delivery in the marketing year that started on Sept. 1, the Department of Agriculture said in a report yesterday.
On Monday, the agency reported sales of 126,000 tons of soybeans to China and 289,575 tons of corn to Mexico, all for delivery in the 2023/2024 marketing year.
Another sale of 131,150 tons of soybeans to an unnamed country was announced on Friday.
China made its largest single-day purchase of U.S. soybeans in three months on Tuesday, Reuters reported, citing trade sources. The world’s largest importer of the oilseeds bought about 600,000 metric tons from U.S. supplies, or roughly 10 cargoes, the news company reported.
Prices also may be higher overnight amid concerns about hot and dry weather that’s again headed for growing regions in Brazil, the world’s largest exporter of the oilseeds.
Stress is forecast to rebuild in about 35% of soybean- and corn-growing areas in northern regions of the South American country, Commodity Weather Group said in a note to clients. Temperatures next week will top 100° F, further stressing crops.
Soybean futures for January delivery jumped 14¾ ¢ to $13.76¾ a bushel overnight on the Chicago Board of Trade. Soymeal was up $9.30 to $456.70 a short ton and soy oil added 0.12¢ to 49.61¢ a pound.
Corn for December delivery rose 4¢ to $4.72½ a bushel.
Wheat futures for December delivery gained 8¢ to $5.78 ¼ a bushel, and Kansas City futures added 7¾¢ to $6.40¼ a bushel.
2. Liquidity, Income Top Farmer Concerns, Lenders Say
Liquidity and farm income are the biggest concerns for ag producers this year, pushing rising input costs to third place, according to a survey of ag lenders by the American Bankers Association and Federal Agricultural Mortgage Corp.
Inflation was the biggest concern in 2021 and 2022, the groups said. The survey polled 260 lenders from a range of institutions, mostly in the Corn Belt and Plains.
“After a record-setting year of farm income, producers have experienced some margin compression in 2023 and lenders are taking notice,” said Jackson Takach, the chief economist at Farmer Mac. “During economic cycle transitions, the fundamentals are increasingly important, and I think that’s why you see lenders rank balance sheet liquidity and farm income levels as their top concerns facing producers in the coming year.”
Rising interest rates are the biggest concern for lending institutions, the poll said. The Federal Reserve increased rates by 425 basis points in 2022 and another 100 points this year in a bid to control inflation. Rising rates haven’t curbed loan demand, however, and still drove costs in the second quarter of 2023 to the highest in a decade for agricultural banks, the groups said in a statement.
Bankers expect more than 75% of borrowers will remain profitable this year and two-thirds will stay in the black in 2024. Still, 28% said they saw an increase in profit margins among borrowers versus 66% a year earlier.
Demand for loans increased this year and likely will continue to do so, the statement said. About 86% of applications were approved in the year to August. That should rise to 89% in the next year, the groups said.
3. Wind Advisories Issued in North Dakota
Wind advisories have been issued for much of western North Dakota as gusty conditions are forecast throughout the day, according to the National Weather Service.
Winds will be sustained from 25 to 35 mph with gusts of up to 50 mph expected, the NWS said in a report early this morning.
The advisories will remain in effect from 8 a.m. central time through 6 p.m. tonight.
Dry weather in the southern Plains, meanwhile, will lead to tinderbox-like conditions as relative humidity drops and wind speeds increase.
“Elevated to near critical fire weather conditions are possible late morning into the afternoon across parts of western Oklahoma and adjacent north Texas, where breezy westerly winds and very low relative humidity will occur,” the agency said.
To view the full article, click here.