First Thing Today | November 30, 2023

Good morning!

Another quiet overnight session... Corn, soybeans and wheat again traded in relatively tight ranges during a quiet overnight session. As of 6:30 a.m. CT, corn futures are trading narrowly mixed, soybeans are fractionally to 2 cents lower, winter wheat markets are mostly 1 to 3 cents lower and spring wheat is fractionally to 2 cents higher. Front-month crude oil futures are around 65 cents higher and the U.S. dollar index is more than 500 points higher.

Weekly Export Sales Report out this morning... For the week ended Nov. 23, traders expect:

Vilsack expects China’s U.S. corn buys to rise again but urges end to over-reliance on single markets... USDA Secretary Tom Vilsack told Reuters Chinese buyers took advantage of lower prices for corn in Brazil, leading to a nearly 20% drop in U.S. exports to China, but he expected the numbers to rise again over time. At the same time, he said the U.S. government was working hard to reduce American exporters’ over-reliance on China and other big markets and encourage greater diversification. Vilsack told the President’s Export Council USDA would start accepting applications for an initial $300 million to help U.S. agricultural exporters break into new markets outside of China, Canada, Mexico and the European Union. The new Regional Agricultural Promotion Program (RAPP) established by USDA in October will provide a total of $1.2 billion over five years to non-profit U.S. ag trade groups, state trade groups and ag cooperatives to help them tap new markets and expand market share in others. USDA said diversification would focus on three regions – Africa; Latin America and the Caribbean; and South and Southeast Asia – in the first phase of the new program, with $25 million set aside specifically for work in Africa.

EPA offers March 28 deadline to finalize rule allowing year-round E15 sales in eight states... This move comes in response to a lawsuit brought by the attorneys general of Iowa and Nebraska. EPA initially proposed allowing year-round E15 sales in these states following their petition on the matter. Although there were reports suggesting a delay in finalizing the rule, court filings now establish March 28, 2024, as the target date for EPA to issue the final rule. EPA stated it had received numerous administrative petitions requesting a delay related to its proposal to permit E15 sales. According to the law, EPA must consider these petitions, along with input from the Department of Energy, to assess whether the rule might lead to an insufficient gasoline supply. Bottom line: The significance of this rulemaking lies in it being the first instance of EPA finalizing a rule under this Clean Air Act provision. While it will apply to only eight states, the impact will extend to a considerable portion of the U.S. fuel system.

IKAR expects smaller 2024 Russian wheat crop... Russia’s IKAR agricultural consultancy said it expects Russia’s 2024-25 grain crop to total 145 MMT, including 92 MMT of wheat. IKAR projects Russia will export 63 MMT of grain in 2024-25, including 48 MMT of wheat.

Limited deliveries against December grain contracts... Today marks the start of the delivery process for CBOT December contracts. There were no deliveries for corn, soymeal and soyoil, while 1,347 contracts of SRW wheat and 100 contracts of HRW wheat were put up for delivery.

China’s factory sector faces deeper contraction... China’s official purchasing managers index (PMI) dropped to 49.4 in November, the lowest reading since June, highlighting the need for more government support amid weak demand. New orders shrank faster (49.4 vs. 49.5 in October), with foreign sales falling the most in four months (46.3 vs. 46.8). Business sentiment improved to its highest level since February, suggesting an increase in optimism among manufacturers despite the challenging economic conditions. The official PMI, which tracks large and state-owned factories, has been below the 50.0 mark signaling contraction for seven of the past eight months. A reading of smaller and privately owned factories will be released Thursday evening.

Euro zone consumer inflation falls to 28-month low... Consumer inflation in the euro zone declined to an annual rate of 2.4% in November, according to the initial reading, the lowest level since July 2021. Core inflation, minus food and energy prices eased to 4.2%, while an even narrower measure that excludes food, energy, alcohol and tobacco fell to 3.6%.

Cash cattle expectations improving... Light cash cattle trade this week started at $1.00 to $2.00 lower prices after Monday’s sharp futures selloff. But most feedlots passed and are now hoping to get steady/firmer prices given the corrective rebound in futures. Packers are also thought to be short-bought on near-term slaughter needs after small purchases the three previous weeks.

Big hogs pressuring cash market... Hog slaughter weights are rising seasonally, running well above both year-ago and the five-year average. While a seasonal top in weights should come soon, there are no indications it will happen this week. The extra pork is likely to keep pressure on the cash hog market. The CME lean hog index is down another 13 cents to $71.53 as of Nov. 28.

Overnight demand news... Taiwan purchased 109,325 MT of U.S. milling wheat.

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
• 10:00 a.m. Highlights From the November 2023 Farm Income Forecast — ERS
• 2:00 p.m. Dairy products: Per capita consumption (Annual) — ERS
• 2:00 p.m. Outlook for U.S. Agricultural Trade: November 2023 — ERS
• 2:00 p.m. Per capita consumption of selected cheese varieties (Annual) — ERS
• 2:00 p.m. Supply and allocation of milk fat and skim solids by product (Annual) — ERS