First Thing Today | November 22, 2023
Soybeans face profit-taking overnight, wheat gains, corn caught in the middle… Soybeans turned lower after rallying 60 cents in two sessions to start the week, wheat futures continue to bounce from near-contract lows and corn saw light trading on both sides of unchanged overnight. As of 6:30 a.m. CT, corn futures are fractionally to a penny higher, soybeans are 8 to 10 cents lower and wheat futures are 6 to 8 cents higher. Front-month crude oil futures are facing steady losses, while the U.S. dollar index is around 100 points higher.
Happy Thanksgiving from Pro Farmer... Grain and livestock markets will trade normal hours today. Markets and government offices are closed on Thursday for Thanksgiving. As a result, there will be no Pro Farmer market updates tomorrow. On Friday, markets are open for an abbreviated trading session from 8:30 a.m. to 12:05 p.m. CT. Due to the shortened schedule, we will only send out two reports – “First Thing Today” Friday morning around 8:00 CT and “After the Bell” briefly highlighting the day’s price action after the closes. Happy Thanksgiving from your Pro Farmer staff.
Light trading expected… The rest of the week is expected to be relatively calm in terms of trading activity due to the Thanksgiving holiday tomorrow. Traditionally, the Friday following Thanksgiving is one of the least active trading days in the year. Traders are likely to leave their positions early today to take advantage of an extended holiday break.
UN warns of Ukrainian wheat production challenges… The UN World Food Program (WFP) issued a warning about the potential consequences for Ukrainian wheat production due to ongoing issues. The WFP states that if Black Sea shipping routes remain blocked and attacks on food infrastructure continue, Ukraine may struggle to meet both domestic and export demands for wheat in the coming years. According to EFP Ukraine director Matthew Hollingsworth, a forthcoming UN Human Rights Office report will reveal 31 documented attacks on Ukrainian grain production and export facilities since mid-July, with 28 of these attacks occurring in the Odesa oblast, where critical Black Sea and Danube River terminals are located.
Romanian port of Constanta set new record for grain shipments… The port shipped 29.4 million metric tons (MMT) during the first 10 months of 2023. This data, reported by Reuters and attributed to the Romanian port authority, reveals that 40% of this total, equivalent to 11.7 MMT, consisted of Ukrainian shipments. In comparison, in 2022, the port handled 8.6 MMT of Ukrainian grain. This marks a significant increase, surpassing the previous record of just over 25 MMT at the Constanta port.
Israel and Hamas reach deal to release prisoners… The groups reached an agreement to pause fighting for four days as Hamas releases 50 civilian hostages held by militants in Gaza in return for the release of 150 Palestinian prisoners from Israeli jails. At least three of the civilians released by Hamas are Americans. Approximately 200 hostages will remain in Hamas’ custody. During the pause, humanitarian relief aid will be allowed to enter Gaza.
Fed minutes hinted at rates higher for longer… Federal Reserve officials were unwilling to conclude they were done raising interest rates when they decided earlier this month to extend a pause in rate increases. Most members felt comfortable holding rates steady for at least the rest of the year. All participants felt that the committee was in a position to proceed carefully, though noted that another rate increase is more likely than a rate cut. Traders disagree, as futures are pricing in four 25-bps rate cuts in 2024.
Home sales fall to 13-year low… Home-buying affordability sits near its lowest level in decades, pushing many buyers out of the market. Existing-home sales for the full year in 2023 are on track to be the lowest since 2011 with October sales following lower than expected. Lack of housing inventory and the highest mortgage rates in a generation continue to weigh on the market, with steep competition for starter and mid-priced homes despite a break in prices happening in the upper end of the market.
Ford downsizes Michigan battery plant due to weaker EV demand outlook... Ford Motor is proceeding with the construction of a battery plant in Michigan, but the project will be downsized due to a more cautious outlook on future electric vehicle (EV) demand. The scaled-down facility will manufacture approximately 40% fewer batteries than initially envisioned and will employ around 1,700 workers when it opens in 2026, down from the previous estimate of approximately 2,500.
ECB's Lagarde urges patience on inflation control… Christine Lagarde, President of the European Central Bank (ECB), has cautioned against premature celebration regarding inflation control, emphasizing the need for patience to gauge the effectiveness of disinflationary measures. Despite raising interest rates by an unprecedented 4.5 percentage points over the past year, the ECB kept borrowing costs unchanged at its October policy meeting, with a similar stance expected for December. While market expectations have grown for potential rate cuts in the future, Lagarde noted that the ECB is currently in an "attentive and focused" phase of its policy cycle.
Canadian inflation eases… Inflation in Canada cooled in October, continuing the recent trend that likely comforts central bankers and likely leads to steady rates in the near-term as the Canadian economy shows signs of struggling. Consumer prices edged up .1% in October and rose 3.1% from a year earlier, the slowest pace since June and well below the peak of 8.1% in the middle of last year.
Panama Canal squeeze takes toll on energy exports… The ongoing drought in Central America could reduce Panama Canal transit capacity from the current 60% to 45% by early 2024, resulting in higher shipping costs, extended voyages and diminished tanker availability, according to Energy Intelligence Group. The canal is crucial for shipments of U.S.-sourced liquefied petroleum gases and natural gas liquids in route to the Asia-Pacific region.
North Korea claimed the successful launch of its first spy satellite into orbit… Although this claim has not been independently confirmed by South Korea, the United States, or Japan. If the satellite is functional, it could potentially enhance North Korea's military capabilities, particularly in terms of targeting opponents' forces more accurately. The rocket carrying the satellite was launched in a southerly direction, passing over Japan's Okinawa prefecture. South Korea has labeled this launch as a "clear violation" of a UN Security Council resolution that prohibits North Korea from using ballistic missile technology and has pledged to conduct further investigations into the matter.
Cash cattle trade quiet… There have been no reported trades yet this week in the cash cattle market. The wholesale market continues to base sideways, with Choice rising 6 cents to $295.81 and Select falling $2.18 to $268.77 on Tuesday.
Wholesale pork posts fresh low… Pork cutout posted a new for-the-move low on Tuesday as prices slipped 88 cents to $85.21, marking the lowest close since early June. The CME lean hog index fell another 34 cents to $74.18, as of Nov. 20, a fresh seasonal low.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
- 8:00 a.m. Food Price Outlook — ERS
- 9:30 a.m. Weekly Ethanol Production — EIA
- 11:00 a.m. Cotton Ginnings — NASS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. Farm Labor — NASS
- 2:00 p.m. Livestock Slaughter — NASS
