Evening Report | December 9, 2022
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Your Pro Farmer newsletter is now available... USDA’s December crop reports have a history of being relatively uneventful and this year was no exception. While there weren’t many surprising changes to the domestic and global balance sheets, building drought stress in Argentina is getting a lot of market attention in soybeans and especially soymeal, as production estimates decline. How long that market support remains will likely be determined by the expected weakening of La Niña through the first quarter of 2023. World Weather Inc. expects improved weather in areas of southern Brazil and Argentina, though it could come too late for some crops. On the macroeconomic front, China made its most sweeping changes to its strict Covid policy since the pandemic began, which is spurring hopes of increased economic activity. We cover all of these items and much more in this week’s newsletter, which you can access here.
USDA raises corn, cotton stocks more than expected... USDA’s December domestic ending stocks forecasts came in 20 million bu. higher than expected for corn and 380,000 bales larger than anticipated for cotton. USDA made no changes to its U.S. soybean and wheat balance sheets this month, which resulted in the ending stocks forecasts for both being slightly lower than traders anticipated. Globally, USDA adjusted ending stocks based on shifts to global production. Click here for details.
Budget office vetting year-round E15 sales... The Office of Information and Regulatory Affairs (OIRA) said in an online notice it is scrutinizing a draft Environmental Protection Agency policy change from at least eight Midwestern governors that would allow year-round sales of E15 gasoline, signaling possible action within weeks. The move responds to a request from governors of Iowa, Illinois, Kansas, Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin, who asked EPA for a new rule removing a 1-psi Reid vapor pressure waiver for conventional E10 gasoline, a change that would put it on the same footing as E15 that contains 15% ethanol.
Indonesia may start B35 in January... Indonesia may start implementing a program to use biodiesel with a 35% palm oil-based fuel blend, known as B35, starting in January, a senior energy ministry official said on Friday. Currently, Indonesia uses B30 that contains 30% palm oil-based fuel. The overall palm oil-based fuel allocation for 2023 is estimated to be around 13 million kiloliters in 2023, the official said, up from 11.03 million kiloliters this year.
“The B35 policy is taken in anticipation of rising world oil prices and to reduce imports, while on the other hand this policy is also aimed at increasing the use of renewable energy,” the ministry official said.
The energy ministry also is conducting tests for biodiesel containing 40% fuel made from palm oil.
NDAA, WRDA heads to Senate... When Congress returns next week, the Senate is expected to pick up the fiscal 2023 defense policy bill for consideration after the House passed it Thursday. The measure also carried the Water Resources Development Act (WRDA) of 2022 and the Don Young Coast Guard Authorization Act of 2022. The final WRDA 2022 makes permanent a 2020 change in the cost-share formula for inland waterway construction projects to 35% from the general Treasury fund and 65% from the Inland Waterway Trust Fund. The new WRDA removes a provision that would sunset the 65-35 cost-share back to 50-50 in 10 years. The bipartisan deal neither authorizes nor paves the way for the breach or removal of dams in the Columbia-Snake River System, which is the third largest grain export corridor in the world and is crucial to American agriculture’s global competitiveness, the National Grain & Feed Association noted.
U.S. consumer sentiment improves in December... U.S. consumer sentiment improved in December amid recent gains in the stock market, while inflation expectations eased to a 15-month low, according to a University of Michigan survey. The University of Michigan’s preliminary December reading on the overall index of consumer sentiment came in at 59.1, up from 56.8 in the prior month. The survey’s reading of one-year inflation expectations fell to 4.6%, the lowest reading in 15 months, from 4.9% in November. Its five-year inflation outlook was unchanged at 3.0%.
U.S. PPI rises more than expected... The producer price index (PPI) for final demand in the U.S. rose 0.3% month-over-month in November, the same as an upwardly revised 0.3% increase in October and above market forecasts of 0.2%. Cost of services went up 0.4%, led by securities brokerage, dealing, investment advice and related services, which jumped 11.3%. Cost of goods edged up 0.1%, led by 38.1% surge in prices for fresh and dry vegetables. Compared to the same month in 2021, producer prices jumped 7.4%, the smallest increase since May 2021, but higher than expectations of 7.2%.
Core PPI increased 0.4% on a monthly basis and 6.2% annually.
Sinema leaving the Democratic Party and registering as an independent... Arizona Sen. Kyrsten Sinema is leaving the Democratic Party and registering as a political independent in Arizona. She announced the change during interviews with Politico, CNN and the Arizona Republic.
“I’ve registered as an Arizona independent. I know some people might be a little bit surprised by this, but actually, I think it makes a lot of sense,” Sinema said Thursday. “I’ve never fit neatly into any party box. I’ve never really tried. I don't want to,” she added.
Sinema’s move away from the Democratic Party is unlikely to change the power balance in the next Senate. After Democrats won the Georgia Senate runoff, they had a narrow 51-49 majority that includes two independents who caucus with them: Sens. Bernie Sanders of Vermont and Angus King of Maine. Sinema told Politico she doesn’t plan to change her voting behavior or join the Republican caucus. She did not explicitly say she will continue to caucus with Democrats in the interview with CNN.
