First Thing Today: Another round of new contract highs in winter wheat futures

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Good morning!

Firmer price tone overnight... Grain and soy futures traded both sides of unchanged overnight but are firmer this morning and trading high-range, with the winter wheat markets posting new contract highs. As of 6:30 a.m. CT, corn and soybean futures are trading 3 to 4 cents higher, while the wheat market is being led by 5- to 6-cent gains in HRW contracts with SRW around a penny higher and HRS 1 to 3 cents higher. Front-month crude oil futures are holding near unchanged, while the U.S. dollar index is around 250 points higher this morning.

Happy Thanksgiving from Pro Farmer... Markets and government offices are closed on Thursday for Thanksgiving. As a result, there will be no Pro Farmer market updates. On Friday, markets are open for an abbreviated trading schedule from 8:30 a.m. CT to 12:05 for grains and 12:15 for livestock. 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” highlighting the day’s price action after the closes. Happy Thanksgiving from your Pro Farmer editorial staff.

Granholm pins blame on U.S. oil producers for elevated gas prices... Energy Secretary Jennifer Granholm said U.S. oil companies were making “enormous profits” and failing to sufficiently increase output in the wake of the Covid pandemic, noting they have not returned production to pre-pandemic levels and have not invested in boosting output. “Oil production is lagging behind as the economy roars back to life after the shutdown.” President Joe Biden last week called on the Federal Trade Commission (FTC), the competition watchdog, to crack down on price gouging in the sector. Other Biden administration options reportedly under review include a ban on crude oil exports or reducing biofuel blends via the Renewable Fuel Standard, though some say the latter would backfire and wouldn’t fit with the carbon emission reduction movement. In a letter to the White House, Republican members of FTC said they wanted to examine the evidence of price gouging cited by the Biden administration “so that we might consider how to proceed” with the requested examination of the markets.

Biden includes Taiwan, excludes China from meeting invite... President Biden invited 110 countries, including Taiwan but not China, to a virtual summit on democracy in December. Taiwan’s inclusion is likely to anger Beijing. Earlier this month it warned America against recognizing the island’s sovereignty. The summit is seen as Biden’s attempt to take a stand against authoritarian governments. Traditional American allies, Egypt and Saudi Arabia, were similarly snubbed. China’s Ministry of Foreign Affairs spokesman Zhao Lijian called on Washington to “stop providing any podium for pro-Taiwan independence forces… Joining the pro-Taiwan independence forces to play with fire could only lead to burning oneself,” he said in Beijing on Wednesday.

Market will closely gauge PCE data this morning... The Bureau of Economic Analysis will issue its report on consumer spending in October at 9 a.m. CT — a report that includes the Federal Reserve's favorite measure of inflation, the personal consumption expenditure (PCE) deflator. Economists expect core PCE, excluding food and energy, to rise 0.4% month-over-month and 4.1% from last year.

Dollar Tree hikes prices 25%... The company said Tuesday it will raise prices from $1 to $1.25 on the majority of its products by the first quarter of 2022. Dollar Tree said in a quarterly earnings release that its decision to raise prices to $1.25 permanently was “not a reaction to short-term or transitory market conditions.” Selling items strictly for $1 hampered the company and forced it to stop selling some “customer favorites.” Raising prices will give Dollar Tree more flexibility to reintroduce those items, expand its selection and bring new products and sizes to its stores. Dollar Tree has sold products at $1 for 35 years and was the last of the major dollar store chains to actually be a dollar store.

General Mills raising prices on hundreds of items next year... General Mills notified retailers it is raising prices in mid-January on hundreds of items across dozens of brands. That includes Annie's, Progresso, Yoplait, Fruit Roll-Ups, Betty Crocker, Pillsbury, Cheerios, Cinnamon Toast Crunch, Lucky Charm's, Wheaties, Reese's Puffs, Trix and more, according to letters General Mills sent to at least one major regional wholesale supplier last week. For some items, prices will increase around 20%.

USDA expects record ethanol exports in FY 2022... Fiscal Year (FY) 2022 U.S. ethanol exports are forecast at a record $2.9 billion, according to USDA, up $500 million from the August outlook on higher unit values. Ethanol is now considered as an agricultural product under the World Trade Organization definition that USDA adopted over the course of 2021.

U.S. boosts Mexico's sugar export limit... The U.S. government on Tuesday increased Mexico's sugar export limit by 150,000 short tons, following a request by USDA, according to an official document from the Department of Commerce. The document said USDA “has identified a need for additional sugar supplies in the U.S. market.” The additional volume has to be exported no later than March 31, 2022.

DOJ files lawsuit to stop sugar merger... The U.S. Justice Department (DOJ) on Tuesday filed an antitrust lawsuit aimed at blocking U.S. Sugar Corp. from buying rival Imperial Sugar Co. from Louis Dreyfus Company. The deal was valued at about $315 million, according to the lawsuit. The DOJ complaint, filed in the U.S. District Court for the District of Delaware, alleges that the transaction would leave an overwhelming majority of refined sugar sales across the Southeast in the hands of only two producers. The National Confectioners Association, which represents candy companies that use sugar, announced it supports the DOJ lawsuit. The suit is the fourth major deal challenge in recent months from the department, which has been following through on a Biden-era enforcement pledge to take a harder line against industry consolidation.

Cash cattle trade higher again... Cash cattle trade started around $136 in the Southern Plains and $137 in the northern market on Tuesday, though sales volume was light. Given tighter showlist numbers this week, most feedlots passed on those initial higher bids in hopes packers would raise bids even more – similar to what has happened the past three weeks.

Hogs pause, waiting on cash fundamentals to bottom... December lean hog futures finished Tuesday $1 above where the cash index is quoted today. That will limit buyer interest in the front-month contract unless the cash market firms. Deferred lean hog futures have paused after last week’s rally, signaling traders also don’t want to extend their premiums to the cash market until the index starts to firm, though recent price action suggests they anticipate an early seasonal low.

Overnight demand news... In three separate tenders, South Korea purchased between 256,000 and 271,000 MT of corn – 68,000 MT was expected to be sourced from South America or South Africa, with the remainder unspecified origin. South Korea passed on a tender to buy 65,000 MT of feed wheat because prices were too high. The Philippines purchased around 100,000 MT of feed wheat – likely Australian origin.

Today’s reports

 

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