First Thing Today | January 12, 2024

Good morning!

Grains firmer overnight... Corn, soybeans and wheat traded higher overnight amid light corrective buying ahead of USDA’s January crop reports later this morning and support from rising crude oil tied to increased Middle East tensions. As of 6:30 a.m. CT, corn futures are trading fractionally higher, soybeans are mostly 6 to 7 cents higher, SRW wheat is 3 to 4 cents higher, HRW wheat is around a penny higher and HRS wheat is mostly 3 cents higher. Front-month crude oil futures are around $2.75 higher and the U.S. dollar index is more than 200 points higher.

Major USDA report day... Today is one of the busiest report days of the year for the grain markets as USDA will release its Annual Production Summary, monthly Supply & Demand Report, Quarterly Grain Stocks and Winter Wheat Seedings at 11:00 a.m. CT. Much of the focus will be on USDA’s “final” crop estimates for corn and soybeans. But Dec. 1 grain stocks have a history of providing market-moving surprises, especially for corn. With corn, soybeans and wheat struggling to attract buyer interest, bullish data is likely needed to put in market bottoms.

Middle East tensions rise as U.S., UK strike Houthi militants in Yemen... The U.S. and Britain carried out air and sea strikes on Houthi military targets in Yemen in response to attacks by the Iran-backed group on shipping in the Red Sea. The attacks represent a significant escalation in the conflict and add to concerns about potential impacts of a broader conflict in the Middle East. President Joe Biden characterized the strikes as a necessary retaliation to protect against Houthi violence, which had affected several countries. He said attacks by the Houthis endangered U.S. personnel, civilian mariners and international partners. They also posed a threat to trade and freedom of navigation in the Red Sea. Biden expressed a willingness to take further measures to protect people and international commerce if necessary. The AP quoted Houthi spokesman Brig. Gen. Yahya Saree in a videotaped address on Friday as warning the “American and British enemy bears full responsibility for its criminal aggression against our Yemeni people, and it will not go unanswered and unpunished.”

MLK Jr. Day schedule... Grain and livestock markets will trade normal hours today. All markets and government offices are closed on Monday, Jan. 15, for Martin Luther King Jr. Day, so there will be no Pro Farmer updates. Grain markets will reopen with the overnight session at 7:00 p.m. CT on Monday, Jan. 15, while livestock markets will resume trading at 8:30 a.m. CT on Tuesday, Jan. 16.

China’s 2023 soybean imports rise for first time in three years... China imported 9.82 MMT of soybeans during December, up 1.9 MMT (24.0%) from November but 740,000 MT (7.0%) less than last year. For 2023, China imported 99.41 MMT of soybeans, up 11.4% from last year.

China’s exports, imports rise in December... China’s exports increased 2.3% from year-ago to a 15-month high of $303.6 billion in December. That was the second straight month of growth in exports, signaling that global trade is starting to recover. China’s imports edged up 0.2% to $228.2 billion. While that was up from a 0.6% decline in November, it still signals domestic demand remains fragile. That left China with a trade surplus of $75.34 billion, up from $68.39 billion the previous month, and the largest trade black ink in three months. For 2023, China posted a trade surplus of $823 billion, with exports falling 4.6% to $3.38 trillion while imports dropped 5.5% to $2.56 trillion. Trade with the U.S. was $664 billion in 2023, down 11.6% from 2022, the first decline since 2019.

China’s deflation concerns persist... China’s consumer price index (CPI) fell 0.3% from year-ago in December, marking the third straight monthly decline – the longest streak since October 2009. Food prices declined the least since September (-3.7%) as pork prices fell at a softer rate. Non-food inflation edged 0.5% higher. China’s producer price index (PPI) fell 2.7% from year-ago in December, the 15th straight month of producer deflation. For 2023, China’s CPI rose 0.2%, the slowest pace since 2009. The full-year PPI fell 3.0%, marking the steepest downturn since 2015.

China raises corn crop estimate, cuts soybean production... China’s ag ministry raised its 2023 corn production estimate by 610,000 MT to 288.84 MMT due to increased planted acreage. The ministry trimmed its 2023 soybean crop estimate 50,000 MT to 20.84 MMT. It made no changes to its forecasts for corn or soybeans imports in 2023-24, which stand at 17.5 MMT and 97.25 MMT, respectively.

Court dismisses challenge to SRE; ruling sends case to D.C. Circuit... The U.S. Court of Appeals for the 11th Circuit dismissed the case of Hunt Refining Co. v. U.S. Environmental Protection Agency (EPA), stating the small refinery exemption (SRE) challenge should be heard by the U.S. Court of Appeals for the D.C. Circuit. This decision, welcomed by Growth Energy, validates that EPA’s SRE petition denials have a nationwide effect, emphasizing the importance of a consistent approach in handling challenges related to the Renewable Fuel Standard (RFS).

USDA announces resumption of continuous CRP, CREP signup... The extension of the 2018 Farm Bill signed into law in November allowed USDA to resume continuous Conservation Reserve Program (CRP) signup for Fiscal Year (FY) 2024, including the Conservation Reserve Enhancement Program (CREP). Producers can begin to offer land for enrollment today (Jan. 12), with the agency also noting that producers participating in continuous CRP with land expiring this year can also apply to re-enroll starting today. Those wanting to offer land in the continuous CRP need to do so by July 31.

China lifts five-year ban on Belgium pig, pork products... China’s customs lifted a five-year ban on pig and pork products from Belgium that was implemented because of an outbreak of African swine fever in 2018. Belgium’s pig and pork products exported to China must comply with statutory inspection and quarantine requirements, China’s customs authority and ag ministry said.

China’s 2023 meat imports slip below year-ago... China imported 566,000 MT of meat during December, up 1.6% from November but nearly 19% below year-ago. For 2023, China imports 7.38 MMT of meat, down 0.3% from the previous year.

Eggs getting more expensive at grocery stores as HPAI again strikes industry... The price of eggs shot up 8.9% from November, marking the highest monthly increase since January of last year as highly pathogenic avian influenza (HPAI) outbreaks impacted the industry. For now, economists believe this latest HPAI outbreak won’t be as severe as the one in 2022 that devastated flocks and sent egg prices sky-high – at one point rising 70% annually. Of note: For the 12 months that ended in December, egg prices were down 23.8%.

Inclement weather supports wholesale beef prices... Wholesale beef prices continued their strong rebound this week with gains of $2.82 for Choice and $3.00 for Select on Thursday, aided by weather-induced production slowdowns at slaughter plants. While the weather slowdowns are supportive for wholesale beef prices, they have reduced packers’ urgency to aggressively bid for cattle, with only light sales so far this week at generally steady prices in the far northern market.

Cash hog index rises again... The CME lean hog index is up another 31 cents to $66.77 (as of Jan. 10), marking five of the last seven days with gains. February lean hog futures finished Thursday at a $5.83 premium to the cash index, suggesting traders anticipate the cash market continuing to strengthen.

Overnight demand news... Exporters reported no tenders or sales.

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

• 11:00 a.m. Cotton Ginnings — NASS
• 11:00 a.m. Crop Production — NASS
• 11:00 a.m. Crop Production - Annual — NASS
• 11:00 a.m. Grain Stocks — NASS
• 11:00 a.m. Rice Stocks — NASS
• 11:00 a.m. Winter Wheat and Canola Seedings — NASS
• 11:15 a.m. Cotton: World Markets and Trade — FAS
• 11:15 a.m. Grains: World Markets and Trade — FAS
• 11:15 a.m. Oilseeds: World Markets and Trade — FAS
• 11:15 a.m. World Agricultural Production — FAS
• 2:00 p.m. Livestock and Poultry: World Markets and Trade — FAS
• 2:00 p.m. Peanut Prices — NASS
• 2:00 p.m. Turkey Hatchery — NASS
• 2:30 p.m. Commitments of Traders — CFTC