First Thing Today | December 22, 2021

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Good morning!

Corn tops $6 overnight... Soybean futures extended Tuesday’s strong rally overnight, while old-crop corn futures finally topped the $6 level after nearly two months of trying to get above that psychological mark. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are mostly 9 to 10 cents higher and wheat futures are 1 to 5 cents higher. Front-month crude oil futures are just above unchanged, while the U.S. dollar index is more than 150 points lower this morning.

Biden insists he and Manchin will ‘get something done’ on BBB... President Joe Biden’s statement yesterday came after centrist Sen. Joe Manchin (D-W.V.) announced Sunday he could not support the economic and climate bill that requires his support to pass in the Senate. Senate Democrats held a virtual meeting Tuesday evening and Senate Majority Leader Chuck Schumer (D-N.Y.) reiterated that there will be a vote on a revised version of BBB in January. Manchin was on the call. “This evening, Sen. Manchin had an honest conversation with his colleagues for whom he has a great deal of respect,” said Samantha Runyon, communications director for the West Virginia Democrat. Manchin is facing calls from a group close to him to reconsider his opposition to the BBB: coal miners. America's largest coal mining union put out a statement this week lauding the legislation's provisions and pushing Manchin to take a do-over. The union pointed to several items in the plan that it believes are crucial to its members and communities, including tax incentives to encourage manufacturers to build facilities in coalfields, employing thousands of coal miners who are out of work.

Booming U.S. economy increasingly looks like the main driver of global supply chain logjams... The force of the American expansion has manufacturers struggling to keep up and is pushing up prices around the world, the Wall Street Journal reports. That is inducing overseas companies to invest in the U.S., betting that growth is still accelerating and will outpace other major economies. The impact is evident in freight operations. Major U.S. ports are processing almost one-fifth more container volume this year than they did in 2019, while volumes at major European ports like Hamburg and Rotterdam are roughly flat or lag behind pre-pandemic levels. Businesses are pouring money into the U.S., looking to gain from a potential sustainable increase in demand. Some are bringing production closer to American consumers, as they seek to avoid supply shocks with steps that may reshape global supply chains. Biden will host a meeting at 9:30 a.m. CT at the White House with members of his Cabinet and the private sector to discuss global supply chain bottlenecks and the pandemic.

Lower GDP estimate for Britain... Britain’s Office for National Statistics (ONS) revised down its initial GDP estimate for the third quarter by 0.2 percentage points to 1.1%. This marks a sharp pullback from the second quarter, when UK’s GDP grew 5.4%. ONS says GDP is 1.5% below the end of 2019, as the country’s economic recovery from the pandemic lags behind that of America, the Euro zone and China.

NDRC official: China can keep economic growth stable... China has the ability to keep economic growth at a reasonable level in 2022 a senior official with state planner National Development and Reform Commission (NDRC) told Xinhua News. Beijing will step up government spending, strengthen support to manufacturers and small companies and ensure price stability. It will also work to stabilize industry supply chains, focus on solving chip shortage issues and step up monitoring of commodity prices. To aid economic growth, Beijing will continue to implement proactive fiscal policies, step up efforts to build an integral domestic market, while further shortening the “negative list” used to ban or limit foreign investment in some industries, such as telecoms or resources. China will also combine cross-cyclical and counter-cyclical measures to prevent wild economic volatility, the official said.

EPA reviewing dicamba use on soybeans and cotton... EPA is currently evaluating the use of dicamba and whether it can be sprayed on GMO cotton and soybean plants with resistance to the chemical. EPA said it has received around 3,500 reports in 2021 that more than 1 million acres of soybeans that were not dicamba-tolerant had been damaged from chemical drift of the herbicide. EPA noted the level of impacts and areas where the events took place are similar to last year even though there were tighter use restrictions on dicamba for the 2021 growing season. “EPA is reviewing whether over-the-top dicamba can be used in a manner that does not pose unreasonable risks to non-target crops and other plants, or to listed species and their designated critical habitats,” the agency said. “EPA is also evaluating all of its options for addressing future dicamba-related incidents.” EPA also said it believes there has been “widespread underreporting of dicamba-related incidents” in 2021. Relative to 2022, EPA said that if a state wants to further restrict or narrow over-the-top uses of dicamba, the agency will “work with them to support their goals.” And EPA also said based on the incident reports from the 2021 growing season, it is “unlikely” to approve any requests for additional uses of federally registered over-the-top dicamba products to meet special local needs. 

European gas prices record-high... Gas prices in Europe soared to a record on Tuesday after flows from a pipeline carrying Russian gas to Germany stopped. Some analysts have accused Russia of deliberately withholding supplies amid its conflict with Ukraine. The Russian government denied any such connection, calling it a “purely commercial situation.” The energy crunch in Europe, supply disruptions in Libya and little or no progress on the Iran talks all point to higher crude prices, analysts say.

NPCC issues report on pork prices... In a report released Tuesday on retail pork prices, economists with Iowa State University, North Carolina State University and the National Pork Producers Council (NPPC) found that pork prices, not industry profits, are rising. Prices are rising due to increased transportation costs, supply bottlenecks and delays and increased labor costs throughout the pork chain, the report said. Those factors were either causes of or exacerbated by the Covid-19 pandemic, Iowa State’s Dermot Hayes, N.S. State’s Barry Goodwin and NPPC’s Holly Cook said.

Cold Storage Report out this afternoon... The five-year averages during November are a 60.8-million-lb. drop in pork stocks and a 300,000-lb. reduction in beef stocks. USDA will release the data at 2 p.m. CT.

Cash cattle trade starts at lower prices... So far this week, light cash cattle trade has been seen around $135 in the Southern Plains, down around $2 from last week’s average. Packer interest in buying cattle is limited, and likely to stay that way through year-end. But cattle futures showed on Tuesday they can look past the holiday cash trade if outside markets are price-supportive.

Hog futures outpacing rising cash prices... The cash hog market continues to strengthen, with the CME lean hog index up another 9 cents. But February lean hog futures are rising at a more rapid pace. February hogs finished yesterday $9.045 above where the cash index is quoted today. That’s nearly double the normal seasonal gain in cash prices from now until mid-February when the contract will expire.

Overnight demand news... Exporters reported no tenders or sales.

Today’s reports

 

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