First Thing Today | November 24, 2023

Good morning!

No overnight trade; abbreviated trading session today... There was no overnight grain trade due to the Thanksgiving holiday. Grain and livestock markets open at 8:30 a.m. CT and will close at 12:05 p.m. CT.

Weekly Export Sales Report... For the week ended Nov. 16:

USDA announces daily soybean sales... USDA reported daily soybean sales of 129,000 MT to China and 323,400 MT to unknown destinations – all for 2023-24 delivery.  

White House stalls E15 expansion plans... The White House is stalling action on requests by Farm Belt states to allow regional sales of gasoline blended with higher volumes of ethanol after oil industry warnings that the move could cause regional supply disruptions and price spikes, two sources familiar with the matter told Reuters. Governors from eight Midwestern states – Illinois, Iowa, Kansas, Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin – petitioned EPA last year to let them sell E15 gasoline year-round. The sources said the White House decided to delay action on the matter following the oil industry’s warnings in part because of concern that higher pump prices in certain states could hurt President Joe Biden’s re-election chances.

Argentine grain trade ‘paralyzed’... Argentina’s grains trade is largely “paralyzed” by a lack of soybeans due to drought and farmers holding onto produce, anticipating a devaluation of the peso under President-elect Javier Milei, the head of the main export chamber told Reuters. The comments were the first from the crushing and export body CIARA-CEC, which represents major grains firms in Argentina, including Cargill and Bunge, since the election of Milei on Nov. 19. He takes office on Dec. 10. While the government has rolled out preferential exchange rates for farmers, many are waiting to see what Milei does when he takes office. He has pledged to scrap the currency controls and cut taxes.

Exchange: Argentine soybean crop one-third planted and in generally good shape... The Buenos Aires Grain Exchange estimated 34.8% of Argentina’s soybean crop was planted as of Thursday, with “good emergence and growth” noted. Corn planting stood at 26.2%, with the exchange rating the crop 29% excellent, 67% good and 4% poor.

China imports Canadian durum wheat for first time... China’s state-run food company COFCO Group said it had imported Canadian durum wheat for the first time, which it would process into flour. China mainly imports finished pasta or flour processed from durum wheat. China has already imported almost 2 MMT of durum wheat from Canada this year, according to customs data.

Plans to again change Ukrainian grain trading rules concerning to exporters... Ukrainian traders’ union UGA said parliament’s “ill-considered” plans to change grain trading rules could completely halt Ukraine’s key grain exports. On Nov. 21, a bill passed its first reading in parliament that would change rules on the taxation of grain export transactions and could also introduce minimum export prices for grain. The bill is designed to minimize tax evasion on certain agricultural products, such as grain and oilseeds. UGA noted that some of the new requirements are impossible to fulfil and others may result in significant losses for both traders and farmers. UGA said the bill proposed that minimum export prices should not be lower than the average grain prices quoted on international exchanges for the previous 10 days, which the group called “unenforceable, as at some point the minimum export price from Ukraine set by this mechanism will exceed the real prices on the world market.”

Russia cuts wheat export tax... Russia’s wheat export tax for Nov. 29-Dec. 5 will be 3,820.2 rubles ($42.94) per metric ton based on an indicative price of $253.70. That’s down from a rate of 4,395.4 rubles per metric ton the previous week and the second straight weekly decline.

Beijing unveils plan to enhance public services in key ag regions to support food security... China’s National Development and Reform Commission (NDRC) recently published an action plan aimed at increasing the capacity of public services, such as education and healthcare, in “major grain-producing counties,” says Trivium China. Every year, Beijing designates approximately 800 “major grain-producing counties” and provides them with additional fiscal funds as incentives. The new action plan has a specific goal: to ensure that these counties, which play a crucial role in national food security, have sufficient public service infrastructure and staff to operate them. The plan emphasizes that residents should not have to leave their counties to access education or healthcare services. Pilot initiatives are scheduled to commence in Inner Mongolia, Heilongjiang, Jilin, Anhui, and Henan provinces in 2024. By 2030, all major grain-producing counties across China are expected to benefit from these improvements in public services. One of the key objectives of this initiative is to counteract the issue of “brain drain,” which is a common problem in rural areas worldwide, including China. By offering better public services, China aims to incentivize talented individuals to stay in these regions rather than moving away in pursuit of better opportunities. This retention of skilled workers can lead to the availability of experienced managers and technicians, which in turn can support the growth of larger agribusinesses in these areas.

China’s global economic share shrinking fast... China’s share of the global economy is declining at the fastest rate since Mao Zedong’s era, with a projected two-year drop of 1.4 percentage points, according to Ruchir Sharma, chair of Rockefeller International, writing in the Financial Times. This decline in China’s economic superpower status comes as the nation’s share of global GDP slips due to strict Covid-19 measures. Sharma highlights that this shift could “reorder the world,” as emerging markets like India, Indonesia, Mexico, Brazil and Poland are expected to gain ground, potentially reshaping global power dynamics. The factors contributing to China’s economic slowdown include government intervention in businesses, debt issues, declining productivity, labor force constraints and foreign investor departures. Despite Chinese President Xi Jinping’s optimism and hints at policy changes, the decline in China’s global economic share appears likely to continue.

China provides WHO requested info on child pneumonia surge. The World Health Organization (WHO) formally asked China for information regarding a surge in reported clusters of pneumonia cases in children. There have been reports indicating that hospitals in northern China are experiencing a high number of cases. Chinese authorities have attributed this increase in respiratory illnesses to the relaxation of strict Covid-19 measures. Chinese health authorities arranged a teleconference with the WHO on Thursday to provide the requested data, the UN agency said in a subsequent statement, indicating that the clusters came from known pathogens. Chinese authorities said they have neither detected “any unusual or novel pathogens” or unusual symptoms in patients, nor experienced patient numbers that exceed hospital capacities, according to WHO.

Japan’s inflation rate highest in three months... Japan had an annual inflation rate of 3.3% in October, which marked an increase from the previous month’s rate of 3.0% and was the highest since July. Notable price increases were seen in categories like furniture, culture, recreation and food. However, the core inflation rate remained slightly below the central bank’s target, and certain sectors like housing, transport, clothing and healthcare saw price decreases or easing inflation. The rise fueled speculation the Bank of Japan might soon tighten its ultra-loose monetary policy.

Pork stocks fall more than average, beef stocks rise more than normal... USDA’s Cold Storage Report showed 444.3 million lbs. of beef in frozen storage at the end of October, up 23.5 million lbs. (5.6%) from September. The five-year average was a 12.2-million-lb. increase in beef stocks during the month. Beef inventories dropped 65.9 million lbs. (12.9%) from last year and were 48.8 million lbs. (9.9%) under the five-year average. Pork stocks stood at 435.9 million lbs., down 25.7 million lbs. (5.6%) from September. The five-year average was a 15.7-million-lb. decrease during the month. Pork inventories fell 73.8 million lbs. (14.5%) from year-ago and were 80.5 million lbs. (15.6%) below the five-year average.

USDA raises forecasts for food and grocery prices in 2024... USDA forecasts all food prices will increase 2.9%, restaurant prices 4.3% and grocery store prices 1.6% next year. While these increases are lower than those seen in 2023, they remain above the 20-year averages for all food and restaurant prices. This year, USDA forecasts food price inflation to be at 5.8%, with restaurant prices rising 7.1% and grocery prices increasing by 5.2%. Bottom line: The data suggests that consumers are still paying considerably more for food than they were before the pandemic, which could lead to changes in consumer behavior if sustained over a lengthy period.

Iowa confirms another case of HPAI... Iowa’s Department of Agriculture confirmed an outbreak of highly pathogenic avian influenza (HPAI) in a commercial layer flock in Sioux County. Since October, this was the 15^th outbreak of HPAI in either commercial or backyard flocks impacting 11 counties in Iowa.

China to buy third batch of pork for state stockpiles... China will buy a third batch of pork for its state reserves this year to support declining pig prices, state planner the National Development and Reform Commission (NDRC) said, with specifying an amount. To ensure a stable supply of the pork market and promote a reasonable recovery in pig prices, NDRC will start the purchase and storage of the third batch of central pork reserves within the year.

Hong Kong finds second recent case of ASF near mainland China... Hong Kong has ordered the culling of around 1,900 pigs after confirming a second case of African swine fever (ASF) in a month. The licensed pig farm at Lau Fau Shan, in the rural Yuen Long area near the border with mainland China, tested positive for the ASF virus. Earlier this month, authorities ordered the culling of around 5,600 pigs after detecting an ASF outbreak at a farm in Yuen Long. It was not immediately clear if the second case was found at the same farm or a different one.

Holiday demand news... China purchased 66,000 MT of Ukrainian corn. South Korea purchased 52,000 MT of corn expected to be sourced from Brazil and tendered to buy up to 20,000 MT of optional origin non-GMO soybeans. Iran purchased 120,000 MT of corn from unspecified origins.

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.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Peanut Prices — NASS
• 2:30 p.m. Commitments of Traders — CFTC