First Thing Today | December 10, 2021

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Good morning!

Modest rebound in wheat overnight... Wheat futures faced followthrough selling at points overnight but are firmer and trading near session highs in a modest corrective rebound this morning. Corn mildly eased from its recent gains overnight, while soybeans held in their choppy range. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are 1 to 2 cents higher and wheat futures are mostly 2 to 6 cents higher. Front-month crude oil futures are around 75 cents higher and the U.S. dollar index is about 100 points higher this morning.

China aggressively buying feed grains... Chinese buyers have been making large purchases of French wheat and barley along with Ukrainian corn and barley over the past week. Trade sources told Reuters Chinese importers secured at least several hundred thousand metric tons of grain from the two countries, taking advantage of a pause in surging prices to cover some of their feed grain needs. Chinese buyers also reportedly made major purchases of Australian feed wheat that again represented at least several hundred thousand metric tons.

Inflation, consumer sentiment data out later this morning... The U.S. consumer price index for November is expected to increase 0.7% from one month earlier and 6.7% from one year earlier. Excluding food and energy, the CPI is forecast to rise 0.5% and 4.9%. If inflation data comes in higher than expected, it would cause traders to expect the Fed to speed up its tapering of bond purchases and eventual interest rate increases. The University of Michigan’s consumer sentiment index is expected to rise to a preliminary reading of 68 in December from a final reading of 67.4 in November.

EPA outlines hearing on RFS proposals... EPA has detailed its virtual hearing that will take place Jan. 3 (and Jan. 5 if needed) relative to the Renewable Fuel Standard (RFS) proposals for 2020, 2021 and 2022 released on Tuesday. In the Dec. 10 Federal Register notice, EPA said it will also accept comments on the remand of the 2016 rulemaking, the extension of attest engagement reporting deadlines for the 2019, 2020 and 2021 compliance years and on several regulatory changes to the RFS program. Those presenting will be limited to three minutes and EPA may ask questions about the testimony but will not respond to questions. Those wishing to present or attend need to register by Dec. 20.

Port congestion is easing, deliveries are accelerating, and shipping prices are coming back down... Supply-chain bottlenecks are easing, but glitches continue as driver and supply shortages remain. Also, the Wall Street Journal (WSJ) reports the line to unload cargo at Southern California’s port complex is moving further offshore. Maritime officials are spacing vessels waiting for berths at the logjammed ports of Los Angeles and Long Beach further apart, sending some boxships further out in the Pacific to guard against hazards from crowding too close in rough winter weather. Moving part of the queue out of sight hasn’t trimmed the overall backlog, WSJ notes. This week some 30 vessels were waiting within 40 miles of the port complex, with another 66 anchored further off or approaching at reduced speeds. The new system reduces crowding and is aimed at reducing pollution. Ships burn less fuel when they slow down and moving vessels offshore limits exposure to coastal neighborhoods that have complained about emissions from ships and trucks.

Report coming on surging fertilizer prices... At least one commodity group and one lawmaker have asked Texas A&M University economists to issue a report on the impact of rising fertilizer prices on the U.S. ag sector. The report may be used to urge Congress to come up with a related payment program to cushion the impact on some crops. Some sources say the government could mandate railroads prioritize shipment of fertilizer versus other products like coal. We talked with some of the economists involved and they said the report will be done “very soon.”

Executive order on zero-emission vehicles for gov’t faces hurdles... As we reported, President Joe Biden issued an executive order this week that aims to make the federal government carbon neutral by 2050 by purchasing only U.S.-made electric vehicles (EVs), starting with passenger cars in 2027. The order could have broad impacts as annual federal purchases amount to over $650 million, though it could be scaled back or reversed by a future administration. But there are headwinds to the effort as Bloomberg reports there are currently few options for agencies like the Department of Interior, which uses medium-duty trucks to haul equipment in remote areas where there are few charging stations. Data shows EVs accounted for just over 1% of purchases by the federal government in FY 2021

China must walk economic tightrope... Chinese leaders are trying to reverse a sharp growth slowdown without abandoning policies that triggered much of the weakness to begin with — a tricky task that could test Beijing’s ability to engineer a soft landing for the world’s No. 2 economy, the Wall Street Journal reports. In recent weeks, China has unveiled several policy-easing measures to prevent a downward spiral in the housing market and rekindle overall growth, which slowed significantly in the third quarter. The latest steps include making mortgages more easily obtainable and an unexpected cut this week in the amount of cash banks are required to hold, which could lower financing costs for businesses. Economists expect more in the weeks ahead. The dilemma: Officials are also committed to policies imposed during the past year, backed by leader Xi Jinping, to achieve longer-term goals such as reducing debt and purging speculative behavior, especially in the property sector.

China sets economic plan for 2022... China will focus on stabilizing its economy and keep growth within a reasonable range in 2022, the official Xinhua news agency reported on Friday following the country’s annual economic planning session. China will continue to implement a prudent monetary policy and implement a proactive fiscal policy, according to a statement issued after the annual Central Economic Work Conference, though targets for GDP, inflation and other key economic barometers were not specified. China will implement new tax and fee cuts and appropriately front-load infrastructure investment next year, the report said. “We must see that China's economic development is facing the triple pressure of shrinking demand, supply shock and weakening expectations,” Xinhua reported.

Russian wheat export tax rises again... The sliding tax on Russian wheat exports will rise to $91.00 per metric ton for Dec. 15-21, up from the current $84.90 rate. The wheat export tax has surged $62.90 (224%) from the initial level of $28.10 at the beginning of June when Russia’s government launched its formula-based duty.

Cash cattle trade steady/weaker... Cash cattle trade was relatively active around $140 in the Southern Plains on Thursday. While that would be steady to last week’s average, it took trade in the $142 to $143 range in some areas last week to get to that level. This week’s cash price looks like it will likely fall $1 to $2 from last week, which isn’t too much of a surprise given how aggressively packers have bought cattle recently and the upcoming holiday slaughter schedules.

Cash hog index firms, pork cutout drops... The cash hog index and the pork cutout value are struggling to both firm on the same day. The CME lean hog index is up 12 cents today, it’s fifth gain in the last seven days. But the pork cutout value fell $3.48 as hams gave back half of Wednesday’s surge, while bellies, picnics and butts also declined. Until the cash index and pork cutout value can show coordinated strength on a consistent basis, it’s difficult to say a seasonal low is in place.

Overnight demand news... Japan purchased 260,312 MT of wheat in its weekly tender, including 160,802 MT from the U.S. and 99,510 MT from Japan. South Korea purchased 60,000 MT of feed wheat, likely to be sourced from India. The Philippines passed on a tender to buy up to 300,000 MT of wheat and 125,000 MT of feed barley.

Today’s reports

 

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Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.