First Thing Today | December 17, 2021
Mild followthrough buying in soybeans, winter wheat overnight... As of 6:30 a.m. CT, soybean futures are mostly 2 to 3 cents higher, SRW wheat futures are 1 to 2 cents higher, HRW futures are 3 to 6 cents higher, while corn and spring wheat futures are steady to fractionally lower. Front-month crude oil futures are nearly $1.50 lower, while the U.S. dollar index is just above unchanged.
Senate vote on BBB punted to 2022... Weeks of negotiation between President Joe Biden and Sen. Joe Manchin (D-W.Va.) failed to bring the moderate Democrat over to the “yes” side on the Build Back Better (BBB) package. The other blow to getting BBB through this year came from Senate parliamentarian Elizabeth MacDonough, who determined the immigration plan in BBB did not pass muster under the Byrd Rule. The third version of immigration plans would have put “parole in place” authorities to allow some immigrants to apply for five-year work permits and get relief from deportation. MacDonough indicated the policy changes in the plan would outweigh their budgetary impact. CQ Roll Call said the guidance from MacDonough was the “proposed parole policy is not much different in its effect than the previous proposals we have considered.” Bottom line: The Senate will exit Washington until next year without getting BBB to the finish line, unable to clear Biden’s top priority. Democrats expect Senate Majority Leader Chuck Schumer (D-N.Y.) to try again in January. But structuring the bill to meet Manchin’s latest conditions — keeping the total cost to $1.75 trillion and extending Biden’s signature expanded child tax credit for a decade if at all — would leave only a few hundred billion dollars to be squeezed out for the rest of Biden’s agenda.
Bank of Japan to trim extra stimulus but keeps rates steady... The Bank of Japan (BOJ) announced today it would reduce its purchases of corporate bonds to pre-pandemic levels but kept its monetary policy largely unchanged. “Japan’s economy has picked, although it has remained in a severe situation due to the impact of Covid-19 at home and abroad,” the BOJ statement said. The bank also noted that risks from the pandemic and supply-chain issues remain.
Russia raises interest rates sharply... Russia's central bank raised its key interest rate by 100 basis points to 8.5%, the seventh rate hike this year, in an attempt to tame surging inflation. Russia’s interest rates are now the highest since 2017. Its inflation surged to 8.1% over year-ago as of Dec. 13.
Euro zone inflation record high in November... Euro zone consumer prices surged 4.9% in November, the highest rate on record, Eurostat confirmed on Friday, with more than half of the increase due to a spike in energy prices. Month-on-month, inflation was revised down to 0.4% from a previously reported 0.5%. Without volatile energy and food prices, the so-called core inflation rose 0.1% from October and 2.6% for the year. As we reported in “Evening Report” on Thursday, the European Central Bank agreed to end an emergency stimulus scheme next March but topped up another bond buying program and said it will take its time in raising interest rates to combat inflation, feeling prices will ease in 2022.
Grassley wants DOJ to probe fertilizer industry... Sen. Chuck Grassley (R-Iowa) asked the Justice Department (DOJ) to look into why fertilizer prices have increased so much this year. He wrote a letter to Attorney General Merrick Garland asking him to “examine the current structure of the domestic fertilizer industry and investigate potential market and price manipulation, collusion, restrictions on competition and/or other unfair and deceptive practices under U.S. antitrust law.” There has been “dramatic growth in the price of fertilizer” this year and Grassley detailed: Anhydrous ammonia prices are up 131%, urea up 110% and potash up 120%. Grassley cited the lack of companies in the marketplace. For potash, “only two companies control the supply for farmers,” he said. In the nitrogen arena, four companies control three-quarters of the market. What he did not say was regulations and other factors drove several U.S. companies out of the business in the 1980s.
Ukraine grain exports remain strong... Ukraine exported 29.2 MMT of grain as of Dec. 17, according to ag ministry data, up 22.2% from the same period last year. The total included 15.3 MMT of wheat, 5.1 MMT of barley and 8.4 MMT of corn. Ukraine’s ag ministry expects the country to export 62.4 MMT of grain in 2021-22, including 24.5 MMT of wheat, 30.9 MMT of corn and 5.2 MMT of barley. Based on those figures, Ukraine has exported nearly two-thirds of expected wheat shipments, nearly all of the anticipated barley sales and 27% of likely corn exports.
EPA: generation of RINs rose in November... About 1.26 billion ethanol (D6) blending credits (RINs) were generated in November, versus 1.20 billion in October. About 464 million biodiesel (D4) blending credits were generated last month, up from 431 million the month prior.
Still some cash cattle to clean up... Feedlots haven’t sold all of this week’s showlist, but they appear to be in no hurry to move animals at the $138 price from earlier this week. Cash sources continue to say marketings are current, giving feedlots some ability to hold back on sales this week. But with two holiday kill weeks ahead and USDA data showing record dressed steer weights for early December, packers won’t be in a rush to raise bids.
Traders build hog premiums to the cash index... February lean hog futures rallied $1.425 yesterday on support from outside markets and broad commodity strength. While the CME lean hog index is signaling a seasonal low is in place as it continues to rise, the cash gains are being outpaced by futures. That could lead to some corrective selling in futures to close the week if the outside market support eases.
Overnight demand news... Taiwan tendered to buy 110,000 MT of U.S. milling wheat.
- 8:00 a.m. Cost-of-Production Forecasts — ERS
- 10:00 a.m. Fruit and Tree Nut Data — ERS
- 10:00 a.m. Vegetables and Pulses Data— ERS
- 2:00 p.m. Coffee: World Markets and Trade — FAS
- 2:00 p.m. Dairy: World Markets and Trade — FAS
- 2:00 p.m. National Hop Report — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Potato Stocks — NASS
- 2:30 p.m. Commitments of Traders — CFTC