First Thing Today | December 20, 2023
Good morning!
Quiet overnight grain trade... Corn, soybean and wheat futures traded narrowly on either side of unchanged during quiet overnight price action. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are mostly 1 to 4 cents higher and wheat futures are mostly 1 to 2 cents lower. Front-month crude oil futures are around $1.00 higher and the U.S. dollar index is more than 250 points higher this morning.
Red Sea tensions elevated... Greece advised commercial vessels sailing in the Red Sea and the Gulf of Aden to avoid Yemeni waters. Greek ship owners control about 20% of the world’s commercial vessels in terms of carrying capacity. Recent attacks by the Iran-aligned Houthi militant group on vessels have forced leading shipping companies to reroute via the cape of Good Hope to avoid the Suez Canal.
Brazil overtakes U.S. in corn shipments to China, extends lead for soybeans... Brazil overtook the U.S. in November to become China’s biggest corn supplier this year. China imported 3.22 MMT of corn from Brazil last month, pushing the tally for the first 11 months of 2023 to 8.8 MMT – 39.7% of its total. China imported 6.5 MMT of U.S. corn through November – 29.3% of its total. China imported 5.29 MMT of soybeans from Brazil in November, increasing this year’s total to 64.97 MMT. China’s imports of U.S. beans totaled 2.3 MMT last month for a total of 20.36 MMT through November.
China to promote increase in grain yields... China will promote increases in grain yields across large areas and consolidate the results of expanding the planting of soybeans, state broadcaster CCTV reported. The remarks by President Xi Jinping at the annual central rural work conference came as China reported a record corn crop this year. Under a push for food security, Beijing continued to offer subsidies to farmers planting staple grains. China’s soybean harvest also expanded this year.
SovEcon raises Russian 2024 wheat crop forecast... SovEcon raised its Russian 2024 wheat production forecast by 1.5 MMT to 91.3 MMT as recent rains and snow have provided improved moisture conditions for the winter wheat crop. That would still be 400,000 MT smaller than SovEcon’s estimate of Russia’s wheat crop this year.
APK-Inform raises Ukraine’s grain crop, export forecasts... Agriculture consultancy APK-Inform increased its 2023 Ukraine grain production forecast by 1.6 MMT to 56.3 MMT amid a larger corn crop. The firm raised its Ukraine corn production estimate 1.6 MMT to 27.6 MMT, while leaving the wheat crop at 21.5 MMT. APK-Inform now forecasts Ukraine’s 2023-24 grain exports at 38.1 MMT, including 22 MMT of corn and 13.5 MMT of wheat, up 3.4 MMT from its prior outlook.
Brazil to increase biodiesel blend rate, suspend imports... In early 2024, Brazil is planning to enhance its biodiesel blend in diesel fuel and stop importing biodiesel. The country’s CNPE energy council decided to increase the mandated biodiesel blend level to 14% in March, which will further rise to 15% in 2025, up from the current 12%. Initially, CNPE had announced plans to incrementally increase the biodiesel percentage, with targets set for 13% in April 2024, 14% in 2025 and 15% in 2026. Additionally, the energy policy council has formed a working group to address biodiesel imports and will suspend imports until the group completes its discussions. Another working group has been established to explore the possibility of increasing the mandatory ethanol blend in fuel from the current 27% to 30%.
China leaves benchmark lending rate unchanged... The People’s Bank of China maintained its lending rates in December, as the central bank continued its attempt to revive a sputtering economy. The one-year loan prime rate, which is the medium-term lending facility used for corporate and household loans, was held at a record low of 3.45% for the fourth consecutive month. The five-year rate, a reference for mortgages, was left at 4.2% for the sixth straight month.
What Xi told Biden about Taiwan... Chinese President Xi Jinping “bluntly told President Joe Biden during their recent summit in San Francisco that Beijing will reunify Taiwan with mainland China but the timing of when that will occur has not been decided,” according to three current and former U.S. officials, NBC News reports. Xi told Biden in a group meeting attended by a dozen American and Chinese officials that China’s preference is to take Taiwan peacefully, not by force, the officials said. The Chinese leader also referenced public predictions by U.S. military leaders who say Xi plans to take Taiwan in 2025 or 2027, telling Biden they were wrong because he has not set a timeframe.
UK inflation plunges in November... British inflation plunged in November to its lowest rate in over two years, prompting investors to further raise its bets the Bank of England will cut interest rates in the first half of next year. Consumer prices dropped to an annualized rate of 3.9% last month, the lowest reading since September 2021, from 4.6% in October. Core inflation, minus food and energy costs, declined to 5.1%, the lowest since January 2022.
Lengthy cash cattle standoff likely... Packers and feedlots have yet to establish bids and asking prices in this week’s cash cattle market, signaling negotiations are likely to extend deep into the week. That’s typically the case during weeks when there’s a Cattle on Feed Report.
Seasonal weakness continues for hogs/pork... The CME lean hog index is down another 22 cents to $66.37 (as of Dec. 18), extending the seasonal price drop. The pork cutout value dropped 91 cents on Tuesday to $83.06. While wholesale pork prices have held up better than the cash hog market, that’s a new low on the seasonal decline.
Overnight demand news... South Korea purchased 65,000 MT of optional origin corn. Jordan tendered to buy up to 120,000 MT of optional origin 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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Coffee: World Markets and Trade — FAS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. National Hop Report — NASS
