First Thing Today: Corn and soy complex trade higher overnight
Corn and soy complex firmer, varied wheat action overnight... As of 6:30 a.m. CT, soybeans are trading mostly 2 to 6 cents higher, with meal and soyoil also firmer. Corn futures are fractionally to a penny higher, winter wheat futures are 4 to 7 cents lower and spring wheat futures are fractionally to 5 cents higher. Front-month crude oil futures are around 25 cents higher and the U.S. dollar index is around 180 points higher this morning.
Democrats fail to get a vote on BIF... A second Democratic leadership attempt to pass the bipartisan infrastructure bill (BIF) went down in an embarrassing no-vote situation. Progressive Democrats were the reason as they kept insisting both the BIF and the Build Back Better(BBB)/reconciliation bills be voted on and that more information is needed for the social/climate change measure now totaling between $1.75 trillion and $1.85 trillion. Progressive leader Pramila Jayapal (D-Wash.) insisted Thursday’s debacle was not progressives’ fault. “I told anybody that would listen that we did not have the votes for a BIF vote tonight,” Jayapal said. “The president did not ask for a vote today. I just want to be very clear about that. The speaker did but the president did not. The president said he wants us to pass both bills, and that this coming week was going to be critical for that.” Bottom line: Congressional sources say Democrats will eventually approve both infrastructure-related measures.
House passes extension for expiring transportation funding... The House on Thursday passed an extension on transportation funding that was due to run out Sunday. Lawmakers now have until Dec. 3 before the funding lapses again, but Democratic leaders hope to have the larger BBB/reconciliation bill done by then.
Malaysia announces changes for palm oil... Malaysia has agreed to raise the threshold for its palm oil windfall profit levy next year and will set the tax rate at 3% nationwide, the finance minister said. The threshold price for companies in Peninsular Malaysia will be increased to 3,000 ringgit ($725) from 2,500 ringgit. The threshold for companies in Sabah and Sarawak, the largest palm oil producing states, will be increased to 3,500 ringgit from 3,000 ringgit. The government also plans to relax restrictions on the entry of migrant workers in the second half of 2022 in order to ease the labor crunch and boost output.
China’s coal futures post biggest weekly decline in five years... The most actively traded thermal coal futures contract on the Zhengzhou Commodity Exchange fell its daily limit on Friday and was down 27.6% this week. That’s the biggest weekly decline since September 2016. The contract has fallen more than half from its record high of 1,982 yuan on Oct 19, but is still up more than 80% this year. China’s state planner said there is still a lot of speculation in the market and room to adjust prices lower, noting its investigation showed coal production costs are “significantly lower than current spot coal prices.”
Euro zone inflation matches all-time high... Surging energy prices and supply bottlenecks drove up the euro zone’s inflation to 4.1% year-on-year, according to the consumer price index for October, up from 3.4% last month. Economists expected a reading of 3.7%. That reading is the highest since 2008 and equals the all-time-high for the time series launched in 1997. Both Germany’s and Spain’s data, published earlier this week, showed higher price rises than forecast. As we reported in “Evening Report” on Thursday, monetary policymakers at the European Central Bank (ECB) discussed “inflation, inflation, inflation” at their meeting on Thursday, according to Christine Lagarde, the central bank’s president. Inflation is already more than twice the ECB's target and is likely to accelerate further in the coming months, but like other central banks, the ECB expects price rises to subside swiftly.
Yellen: Inflation still transitory... Treasury Secretary Janet Yellen this morning said she still labels inflation as transitory and that energy prices will moderate in the coming months. But markets and some industry analysts aren’t on the same page as Yellen. There is an update on the Federal Reserve’s favored inflation gauge, the PCE deflator at 7:30 a.m. CT that markets will closely monitor.
Russia raises wheat export tax for Nov. 10-16... As we reported earlier this week, the wheat export tax of $67.00 per metric ton that went into effect Oct. 27 will be in place through Nov. 9. From Nov. 10-16, the sliding tax will increase to $69.90 per metric ton based on an indicative price of $299.99.
Cattle futures ignore cash fundamentals... Cattle futures faced heavy selling yesterday, despite rising boxed beef and cash cattle prices. That could signal the recent runup by futures is about out of steam. December live cattle are trading at nearly a $6 premium to the expiring October contract, which could curb near-term buyer interest unless the cash cattle and boxed beef markets show additional strength.
Cash hog index continues to fall, pork cutout firms... The CME lean hog index is down another 97 cents today to $80.70, the lowest level since the same price on Feb. 25, though prices were climbing sharply at that time. The pork cutout value firmed 53 cents on Thursday as all cut except butts and picnics rose. But the cutout has plunged $22.29 since the end of September. Until the cash and product markets stop their seasonal declines, the upside in hog futures will be limited to modest bouts of corrective buying, despite their big discounts to the cash index.
Overnight demand news... Exporters reported no sales or tenders.
Today’s reports
- 2:00 p.m. Fruit and Tree Nut Yearbook — ERS
- 2:00 p.m. Agricultural Prices — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders Report — CFTC
