First Thing Today: Coordinated oil reserve release announced

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Good morning!

Corn and soy complex lower, wheat mixed to firmer overnight... As of 6:30 a.m. CT, soybeans are trading 8 to 9 cents lower, corn futures are 1 to 2 cents lower, SRW wheat futures are fractionally to a penny higher, HRW wheat is around 4 cents higher and spring wheat is narrowly mixed. Front-month crude oil futures are around 25 cents lower and the U.S. dollar index is near unchanged this morning.

U.S. announces SPR release in coordination with other countries... The White House announced this morning it would make 50 million barrels of oil available from the U.S. Strategic Petroleum Reserve (SPR) – 32 million barrels will be an exchange and 18 million barrels will be acceleration of sales previously approved. The release was made concert with other releases from strategic reserves by China, India, South Korea, Japan and Great Britain. Markets will now watch OPEC+ to see if it reduces announced production levels to counter the emergency releases of oil reserves.

Consultant’s bias shifts for Brazilian soybean crop... Crop Consultant Dr. Michael Cordonnier left his Brazilian soybean crop estimate at 144 MMT, but his bias changed to neutral from neutral to slightly higher the past several weeks due to a drier forecast for southern Brazil. Cordonnier also left his Brazilian corn crop estimate at 118 MMT and has a neutral bias. In Argentina, Cordonnier kept his production estimates at 50 MMT for soybeans and 53 MMT for corn, with a neutral bias for both crops.

SRW CCI rating now below five-year average for first time this fall... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop declined 3.3 points to 329.6, while the SRW crop fell 9.4 points to 357.8. The HRW crop is 10 points below the five-year average for this date. The SRW CCI rating is now four points below its five-year average – the first time below average this fall.

Crop Progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Nov. 21.

  • Corn: 95% harvested (92% on average)
  • Soybeans: 95% harvested (96%)
  • Cotton: 75% harvested (71%)
  • Winter wheat: 96% planted (97%), 86% emerged (87%), 44% “good” to “excellent” (46% last week)

Powell renomination puts heightened focus on Fed actions... Investors are betting on a quicker withdrawal of monetary stimulus and there are growing ideas the Federal Reserve will raise interest rates sooner than many reckoned just a few weeks ago. During his speech on Monday after being renominated for Fed chair by President Joe Biden, Jerome Powell said the Fed will focus on fighting inflation. Many market watchers believe the Fed and Powell got behind the curve on the inflation front, and now may need to play catch-up – possibly after some prodding of Powell by Biden.

CFAP 2 payouts rise again... Payments approved under the Coronavirus Food Assistance Program 2 (CFAP 2) rose to $19.06 billion as of Nov. 21, up from $18.82 billion the prior week. Original CFAP 2 payments are now at $14.24 billion with top-up payments for acreage-based commodities at $4.82 billion. Original CFAP 2 payments were at $13.99 billion the prior week. CFAP 1 payments were little changed at $11.78 billion, including $10.59 billion in original CFAP 1 payouts and $1.19 billion in top-up payments for cattle.

More Americans traveling for Thanksgiving.... U.S. gas prices averaged $3.40 per gallon on Monday, up $1.30 from last year, according to GasBuddy. Its survey found 32% of Americans plan to travel this Thanksgiving, with 13% of that number expecting to spend up to three hours in the car. Thanksgiving flight bookings this week through Thursday are up 70% over last year and just shy of 2019 levels, according to Adobe data. About 4.2 million people are expected to fly this weekend. Last Sunday, 2.2 million people passed through U.S. airport checkpoints, 95% of the total on that date in 2019. Transportation Security Administration Administrator David Pekoske said the U.S. will beat last Friday’s single-day pandemic passenger record this weekend.

Europe is using more coal, pushing carbon prices to a new high... Europe is growing increasingly reliant on coal to keep the lights on as the weather turns cold, sending the cost of polluting to a record. Carbon prices exceeded 70 euros for the first time ever as utilities turn to coal. Power plants in the U.K. are burning the most coal since the beginning of the month to deal with sub-zero temperatures forecast for major cities this week.

ECB ‘serious’ about ending quantitative easing... The European Central Bank (ECB) is “serious” about ending its emergency bond-buying program in March and may not need to expand regular asset purchases to cover the shortfall, according to Governing Council member Francois Villeroy de Galhau. Once the ECB has exited its emergency stimulus program it should gradually “adapt” its pre-crisis program “as a second step” and remain open in terms of pace and timing, he said. But Europe is again the center of the Covid pandemic, accounting for more than half of the world’s deaths this month, according to the World Health Organization. Austria went into lockdown yesterday, and other European countries could follow suit, including Germany.

Warren calls for probe of poultry industry due to high turkey prices... Sen. Elizabeth Warren (D-Mass.) asked the Justice Department to open an antitrust investigation into the poultry industry as turkey prices soar ahead of Thanksgiving. Warren blamed the price rises on anticompetitive practices by major poultry companies.

China clears Brazilian beef certified before BSE cases... China’s customs authorities said it will accept import applications for Brazilian beef that was granted a sanitary certificate prior to Sept. 4. Brazil suspended exports of beef to China on that date after detecting two cases of atypical bovine spongiform encephalopathy (BSE) but meat that was already at ports continued to be shipped, with most of it unable to clear customs on arrival in China.

Looking for early week cash cattle trade... Neither bids nor asking prices were established on Monday, meaning there’s a lot of ground to cover the next two days if packers and feedlots want to wrap up cash cattle trade ahead of Thanksgiving. After aggressively buying cattle the past three weeks, packers’ willingness to raise cash bids again may be limited, though market-ready supplies are tightening.

Hog market cash fundamentals weaken... The CME lean hog index is down another 57 cents today to $72.88. The pork cutout value fell $3.57 on Monday as the market failed to sustain morning price strength. Weak cash fundamentals likely limit any followthrough buying in hog futures and may trigger a fresh wave of selling.

Overnight demand news... South Korea purchased 48,500 MT of corn and 16,000 MT of soymeal – both expected to be sourced from South America.

Today’s reports


Latest News

First Thing Today | September 27, 2022

Corrective buying was seen in the grain and soy complex overnight as the U.S. dollar pulled back and crude oil firmed.

Extended decline in corn, bean CCI ratings continues

CCI ratings have dropped 11 consecutive weeks for corn and eight straight for soybeans.

After the Bell | September 26, 2022

Corn futures drop near four-week low, soybeans near three-week low as surging dollar, recession worries pressure commodities.

Corn, soybean export inspections sluggish

Weekly grain inspected for export through Sept. 22, proved dismal as corn and soybean inspections were reported below expectations, while wheat inspections were notably lower for the week but within the expected range.

Monday Morning Wake Up Call | September 26, 2022

Grain and soy futures traded lower overnight on global economic concerns although soybeans recovered slightly on the open. Cattle futures are mildly higher with lean hogs under pressure to start the week.

Ahead of the Open | September 26, 2022

Soybean futures drop to two-week lows, corn and wheat also lower on intensifying recession worries.