Good morning!
Quiet overnight grain trade... Corn, soybeans and wheat didn’t stray far from unchanged in a lightly traded overnight session. As of 6:30 a.m. CT, corn futures are trading fractionally higher, soybeans are fractionally to 2 cents lower and wheat futures are mostly a penny higher. The U.S. dollar index is around 120 points higher and front-month crude oil futures are about 85 cents lower.
CR text will include direct farmer aid, disaster aid and year-round E15... Nothing is official until the text of the continuing resolution (CR) is released, which should occur today after several lengthy Monday negotiations. Besides $10 billion in farmer aid, the CR is expected to include $16 billion to $21 billion of disaster aid for crop losses due to natural disasters for 2023 and 2024 and provisions for year-round sales of E15. Of note: Senate Ag Chair Debbie Stabenow (D-Mich.) did not get her wish in moving conservation/climate funding into a one-year extension of the 2018 Farm Bill; that discussion will occur next year. Details regarding the $10 billion farmer aid package awaits final text. House Ag Chair Glenn “GT” Thompson (R-Pa.) indicated that $10 billion is the minimum he would accept. He mentioned GOP support for reallocating conservation program funds from the 2022 legislation into the farm bill baseline, but that Republicans are disputing the “guardrails” that require funds to support “climate-smart” projects. Thompson also noted concerns that some critics want to ensure President-elect Donald Trump would have access to funds to compensate farmers for potential retaliation stemming from new tariffs.
China’s crop import curbs are causing a shortage of soybeans... The Chinese government’s efforts to limit agricultural imports are causing a soybean shortage in southern areas of the country by leading to longer-than-usual wait times at customs, traders with knowledge of the matter told Bloomberg. Some soybean crushers in the oilseed processing hub of Dongguan in Guangdong province have had to suspend operations for the last three weeks as they can’t get enough supply, said the traders. Cargoes have been delayed at the border for more than 20 days, compared with about five days to be cleared under normal circumstances, they said. Officials are taking longer than usual to do quality inspections on imported beans. China has asked traders and processors to buy less foreign grains this year in an attempt to buoy prices and support local farmers amid a slowdown in domestic demand. At the moment, the soybean shortages appear to be mainly limited to Guangdong, the traders said, adding that cargoes were being cleared normally by customs in other parts of China.
Cordonnier adjusts Argentine crop forecasts... South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop forecast by 2 MMT to 55 MMT, as it appears farmers won’t switch as many hectares of corn to soybeans as anticipated. Cordonnier raised his Argentine corn crop estimate 1 MMT to 49 MMT due to expectations of more plantings. He has a neutral bias toward both crops but says weather in Argentina is starting to look “problematic.” Cordonnier left his Brazilian crop forecasts at 170 MMT for soybeans and 125 MMT for corn, with a neutral to higher bias toward both.
France forecasts jump in wheat acreage... French farmers are expected to plant 4.51 million hectares of winter wheat for harvest next year, according to the ag ministry, up 8.7% from last year. However, that would still be 0.8% lower than the five-year average. Fewer showers and mild temperatures last month allowed farmers to catch up on earlier rain delays that had threatened a similar setback to last year, when waterlogged conditions slashed plantings and contributed to the smallest wheat harvest since the 1980s.
China plans record budget deficit of 4% of GDP in 2025... Chinese leaders agreed last week to raise the budget deficit to a record 4% of GDP next year, while maintaining an economic growth target of around 5%, two sources with knowledge of the matter told Reuters. The new deficit plan compares with an initial target of 3% of GDP for this year and is in line with a “more proactive” fiscal policy outlined by leading officials after last week’s Central Economic Work Conference (CEWC), where the targets were agreed to but not officially announced. The additional one percentage point of GDP in spending amounts to about 1.3 trillion yuan ($179.4 billion). More stimulus will be funded through issuing off-budget special bonds, the sources said.
China wants Trump, U.S. to ‘make the right choice’ in relationship... China’s Foreign Minister Wang Yi said he hoped the incoming Trump administration would “make the right choice and work with China in a mutually-beneficial manner to remove disruptions and overcome obstacles.” Wang told delegates Beijing “firmly opposes the illegal and unreasonable suppression of China by the U.S. and, in particular, must respond firmly and forcefully to the U.S.’ brutal interference in China’s internal affairs, such as Taiwan.”
House Democrats oust ranking Ag panel leader Scott... House Democrats removed Rep. David Scott (D-Ga.) as their senior Agriculture Committee leader after he received just five votes in Monday’s influential steering panel vote. Rep. Angie Craig (D-Minn.) emerged as the frontrunner with 34 votes, while Rep. Jim Costa (D-Calif.) trailed with 22 votes. Craig now heads into today’s full caucus vote, seeking additional support, planning to rally House colleagues for the final vote. Craig indicated part of her pitch to the panel was that there are no other Ranking Members for Democrats from the Midwest. Meanwhile, Costa vowed to keep pushing and will try to supplant Craig in the full caucus. Lawmakers had anticipated Scott’s ouster amid growing skepticism of his leadership.
Iowa, Michigan report HPAI outbreaks in commercial poultry flocks... Iowa’s Department of Agriculture reported three more outbreaks of highly pathogenic avian influenza (HPAI) in commercial poultry, including a layer flock in Sioux Couty, a turkey flock in Worth County and a backyard mixed species flock in Monona County. Iowa has reported eight recent HPAI outbreaks. Michigan reported an HPAI outbreak in a commercial poultry flock in Ottawa County, the state’s first case in poultry since May.
Futures could end string of cash cattle strength... Cash cattle prices firmed $3.41 last week to an average of $194.31. The cash market has outperformed expectations over the past month, despite negative packer margins. But Monday’s sharp losses in futures featured bearish reversals, indicating a short-term top. If there’s active followthrough selling in futures, it would likely pull the cash market lower.
February hogs erase premium to cash index... Monday’s sharp losses in February lean hog futures erased the premium the new lead-month contract held to the cash index. The CME lean hog index is down 6 cents to $83.84 as of Dec. 13, which is 29 cents above where February hogs settled on Monday.
Overnight demand news... South Korea purchased 66,000 MT of optional origin corn. Japan is seeking 77,220 MT of milling wheat via its weekly tender. Jordan passed on a tender to buy up to 120,000 MT of optional origin milling wheat. Bangladesh tendered to buy 50,000 MT of optional origin non-basmati parboiled rice.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
- 11:00 a.m. Fruit and Tree Nuts Data — ERS
- 11:00 a.m. Vegetables and Pulses Data — ERS