First Thing Today | December 16, 2021

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Good morning!

Soybeans and corn firm, wheat mixed this morning... Soy complex futures strengthened overnight after initially trading lower. That helped support the corn market. Wheat futures tried to rebound from Wednesday’s sharp losses, but buyer interest proved limited. As of 6:30 a.m. CT, soybeans are trading 5 to 8 cents higher, soymeal is around $2 higher, soyoil is around 50 points higher, corn is fractionally to a penny higher in most contract, winter wheat futures are 2 to 4 cents lower and spring wheat is mostly 1 to 2 cents higher. Front-month crude oil futures are around 35 cents higher and the U.S. dollar index is more than 350 points lower this morning.

AgRural cuts Brazilian soybean, corn crop estimates due to drought... AgRural cut its Brazilian soybean crop forecast to 144.7 MMT from 145.4 MMT previously due to drought impacts in Parana. The firm says, “Despite the difficulties in planting, which is still ongoing, there has been no production cut in Rio Grande do Sul, due to the late calendar in the state.” AgRural cut its Brazilian corn crop estimate by 1.1 MMT to 114.4 MMT amid “heavy [production] losses in Rio Grande do Sul.”

Reuters poll: Brazilian soybean production to rise 5%... Brazil is expected to harvest a record 144.1 MMT soybean crop, according to a Reuters poll of analysts, representing a 5% increase from 2020-21.  The poll showed Brazilian farmers planted a record 40.35 million hectares to soybeans, up 3.7% from last year, as Brazilian farmers took advantage of early rains.

Weekly Export Sales Report out this morning… For the week ended Dec. 9, traders expect:

 

2021-22 (in MT)

Last week

Corn

1,200,000-2,000,000

1,132,460

Wheat

200,000-400,000

239,898

Soybeans

1,100,000-1,775,000

1,637,888

Soymeal

100,000-250,000

202,480

Soyoil

0-25,000

5,311

 

Strategie Grains raises EU wheat export forecast... Strategie Grains raised its forecast for EU wheat exports outside the bloc in 2021-22 by 1.1 MMT to 31.5 MMT, as the recent fall in prices made French wheat more competitive globally. The consultancy’s first initial projection for the 2022-23 marketing year calls for the EU to produce 127.6 MMT of wheat, down 1.7% from this year.

China’s ‘covid zero’ policy hits economy... China’s lockdown of many factories in the Yangtze River Delta last week in a prolonged battle with Covid-19 has underlined the economic costs of Beijing’s stringent pandemic-control measures. The sudden lockdown of districts in the cities of Shaoxing and Ningbo has left business owners scrambling to pacify clients over delayed deliveries and listed companies apologizing to shareholders for expected losses. Last year, China’s draconian lockdown measures helped restart the economy well ahead of other major nations. This year, stringent measures to control outbreaks come with economic costs.

China reiterates it will take measures to stabilize fertilizer market... China’s state planner again said it would guarantee domestic fertilizer supplies for spring planting. Without giving specifics, the National Development and Reform Commission also said it would take “timely, targeted” measures to ensure the stability of the fertilizer market.

BOE raises interest rates as inflation mounts... The Bank of England raised its main interest rate by 15 basis points to 0.25% on Thursday as inflation pressures mounted, becoming the first major central bank in the world to raise borrowing costs since the Covid pandemic hit last year. On Wednesday, the Fed announced it would double the tapering of its monthly asset purchases and likely accelerate the timeline for raising interest rates in response to surging prices.

Brazil cuts GDP forecasts... Brazil’s central bank trimmed this year’s economic growth forecast to 4.4% from 4.7% previously. For next year, the central bank expects the country’s GDP to rise only 1%, down from its prior forecast for 2.1% growth.

European supermarkets to stop selling Brazil beef over deforestation link... Six European supermarket chains will stop selling some or all beef products from Brazil in 2022 due to links with destruction of the Amazon rainforest. Some chains will stop selling all beef originating in Brazil, while others will stop sales of beef products such as corned beef or beef jerky. Many of the products affected are linked to the world's largest meatpacker, JBS SA. The action comes after an investigation revealed JBS SA purchased cattle that had been “cattle laundered” – when cattle raised on an illegally deforested plot of land are sold to a legitimate farm before sale to a slaughterhouse, to hide its origin. It would be unlikely the U.S. would capture any market share in Europe given the long-standing beef trade issues between the two sides over the use of growth hormones in U.S. beef production.

China reports new ASF case in Hebei... China reported African swine fever was found in two trucks in Hebei province transporting pigs from other provinces. This was the first official reporting of ASF since July, though there have been unreported cases.

Winds close some beef processing plants... At least three major beef plants in the Southern Plains closed their second shifts on Wednesday due to high winds. If there’s no damage, they will likely resume normal operations today. This was expected to be the last full kill of the year given holiday schedules the next two weeks. But now this week’s slaughter won’t reach expectations.

Cash hog index showing more signs of a seasonal low... The CME lean hog index is up 20 cents today, its eighth gain in the last 11 market days, providing further clues a seasonal low has been posted. February lean hog futures ended Wednesday $7.025 above today’s index quote. That’s slightly greater than the five-year average increase for the index of roughly $5 from mid-December to mid-February, when the contract will expire.

Overnight demand news... Japan purchased 228,783 MT of wheat from its weekly tender, including 129,201 MT from the U.S. and 99,582 MT from Canada. Iran purchased around 500,000 MT of milling wheat – likely sourced from Russia, Germany and/or the Baltic Sea region. The Philippines bought around 110,000 MT of feed wheat to be source from Australia, Europe or the Black Sea region. Results are still awaited on a separate tender from the Philippines to buy 120,000 MT of feed wheat.

Today’s reports

 

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