First Thing Today | December 2, 2021

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Good morning!

Grain, soybean futures extend Wednesday’s corrective gains overnight... As of 6:30 a.m. CT, corn and soybean futures are 5 to 6 cents higher, winter wheat futures are 12 to 14 cents higher and spring wheat is mostly 8 to 10 cents higher. Front-month crude oil futures are around 40 cents higher, while the U.S. dollar index is around 150 points lower.

China buys U.S., Brazilian soybeans on the price drop... China booked three to four cargoes of U.S. soybeans from the Gulf for shipment in December and January on this week’s sharp price break, Reuters reports, citing export sources. China also bought some soybeans from Brazil this week. China has around 85% of its estimated December soybean purchases booked, along with about half of its January needs, one U.S. export trader told Reuters.

Weekly Export Sales Report out this morning… For the week ended Nov. 25, traders expect:

 

2021-22 (in MT)

Last week

Corn

600,000-1,250,000

1,429,161

Wheat

250,000-600,000

567,487

Soybeans

800,000-1,800,000

1,564,459

Soymeal

100,000-200,000

136,866

Soyoil

30,000-60,000

42,034

 

 

 

Deal reportedly close on stopgap spending language... Reports of a short-time shutdown of the government into the weekend or early next week continue. But some sources report a deal was “very close” and could be unveiled this morning. With the current stopgap spending measure lasting through Friday, some lawmakers usually try to use the situation to press their message issues. This time it regards a few Republicans who want a vote on a proposal barring vaccine mandates that President Joe Biden has ordered for some U.S. companies. GOP Sens. Mike Lee (Utah), Roger Marshall (Kan.) and other Republicans are asking for a vote. They’re willing to make a deal with Democrats to speed up consideration of the spending bill and avoid a shutdown, as long as they get a vote.

Rising commodity prices are main driver in higher farm income forecast for 2021... U.S. net farm income is forecast to reach $116.8 billion in 2021, up $22.0 billion (23.2%) from 2020 with the 2020 result up $15.7 billion (19.9%) from 2019, according to the Farm Sector Income Forecast from USDA’s Economic Research Service (ERS). Net cash farm income is forecast to increase and reach $133.0 billion in 2021, up $17.0 billion (14.7%) from 2020, ERS said. Net cash farm income includes cash receipts from farming as well as farm-related income (including gov’t payments) minus cash expenses. It does not include noncash items — including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings — reflected in the net farm income. Click here for more.

World food prices continue to climb... The food price index from the UN Food and Agriculture Organization (FAO) climbed another 1.2% in November and was 27.3% above year. This marked the fourth consecutive monthly rise in the index, pushing it to the highest level since June 2011. Among the sub-indices, prices for cereals (up 3.1%) and dairy (up 3.4%) rose most significantly, followed by sugar (up 1.4%), while meat (down 0.9%) and vegoils (down 0.3%) prices declined slightly from October.

China’s state planner to guarantee energy supplies to fertilizer manufacturers... China’s National Development and Reform Commission (NDRC) it would guarantee supplies of key energy feedstocks for fertilizer companies, urging coal and natural gas enterprises to fulfil contracts signed with producers of the crop nutrient. NDRC says it has established working groups with local governments to ensure the stability of fertilizer production and supply for spring planting.

Advisers recommend lower GDP target for China next year... Advisers to China's government will recommend Beijing set a 2022 economic growth target below the one for this year, giving policymakers more room to push structural reforms amid growing challenges to the outlook. Three advisers told Reuters they have drafted recommendations for annual economic growth targets in 2022 ranging from as low as 5% to 5.5%, ahead of the annual Central Economic Work Conference this month, down from the “above 6%” target set for this year. Economists expect Chinese policymakers will boost monetary and fiscal support next year to help the slowing economy, having focused on fending off real estate bubbles this year.

DOL proposes shift in setting H-2A wages... The Department of Labor (DOL) is proposing to use a combination of USDA’s Farm Labor Survey (FLS) and the Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) survey in determining hourly adverse effect wage rates (AEWR). The proposal would use the FLS to establish the AEWRs for vast majority of H-2A jobs represented by six occupations comprising the field and livestock worker (combined) wages. For all other occupations where the FLS does not report wage data, DOL is proposing to use the OEWS survey to establish the AEWRs. The notice published in the Federal Register Dec. 1 would meet the “statutory responsibility to certify that the employment of H-2A workers will not adversely affect the wages and working conditions of workers in the United States similarly employed.” DOL said it was proposing to no longer use the Employment Cost Index to adjust AEWRs that was part of the 2020 rule finalized by the Trump administration and challenged in court. Comments on the proposed changes are due by Jan. 31.

Most feedlots passing on steady cash prices... The corrective rebound in live cattle futures on Wednesday caused most feedlots to pass on packers’ steady $138 cash cattle bids in the Plains in hopes of firmer prices later this week. Most feedlots want at least $5 higher prices, though it seems unlikely packers will get that aggressive since they bought a lot of cattle in November and have fresh contract supplies available this month.

Cash hog index firms, but pork cutout continues to drop... The CME lean hog index is up 23 cents to $70.27 today. But the pork cutout value fell $4.33 Wednesday amid sharp losses in all cuts. More concerning was that movement slowed to 357.03 loads. While that’s still good movement, it was down from 440.14 loads on Tuesday. It appears packers are having to cut prices to keep the pipeline flowing.

Overnight demand news... Japan purchased 26,263 MT of Australian wheat from its weekly tender. Saudi Arabia tendered to buy 535,000 MT of wheat from various origins.

Today’s reports

 

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