First Thing Today | December 30, 2021

Good morning!

Soybeans and corn weaker overnight... Soybeans and corn are trading lower and near session lows this morning, while wheat futures are mostly weaker. As of 6:30 a.m. CT, soybeans are 13 to 15 cents lower, corn is 3 to 5 cents lower, SRW wheat futures are steady to 4 cents lower, HRW futures are narrowly mixed and spring wheat is steady to 3 cents lower. Front-month crude oil futures are around 40 cents lower and the U.S. dollar index is about 75 points higher this morning.

Weekly Export Sales Report out this morning… For the week ended Dec. 23, traders expect:

Biden, Putin to speak today about crisis at Ukrainian border... President Joe Biden will speak with Russian President Vladimir Putin today at the Kremlin’s request, amid tensions over Russia’s military buildup along its border with Ukraine and worries of an invasion. A spokesperson for the White House said that “de-escalation…will be required” for progress. On Jan. 10, representatives from the two countries will meet in Geneva for more talks.

Koffler: Russia will strike Ukraine soon; Putin is playing with Biden and NATO... Analysis by Rebekah Koffler, a former Defense Intelligence Agency officer and currently a strategic intelligence analyst with The Lindsey Group says: “Do not be distracted by Russia’s announcement on Sunday of a troop withdrawal from the Ukrainian border. It may appear that Moscow is signaling, ahead of the just announced U.S./Russia talks early next year, that it favors a diplomatic approach to resolving the current standoff with the U.S. and NATO over Ukraine. But in all likelihood, it is just a ruse. There’s a more than 50% chance that Putin will attack Ukraine in the coming weeks, regardless of the outcome of another round talks between Moscow and Washington planned for Jan. 10-13.”

Putin: Nord Stream 2 loaded with gas & ready to stabilize Europe energy prices... Putin declared the Nord Stream 2 pipeline to Germany is fully ready and prepared to start pumping gas exports, amid a continued hold-up in regulatory approval on the German side. Hailing the completion of the $11 billion natural gas pipeline which the U.S. had long worked to block until Biden gave approval, Putin told a government meeting which was attended by Gazprom head Alexei Miller, “I’d like to congratulate Gazprom and your partners in Nord Stream 2 on the completion of work and the creation of this additional large trunk-route and that it is ready for work,” according to Reuters. The U.S. Senate will vote next month on whether to sanction the builder of Nord Stream 2. Democrats are opposed to sanctions.

Russia wheat export tax continues to rise... Russia’s wheat export tax for Jan. 12-18 will be $98.20 per metric ton, based on an indicative price of $340.40 per metric ton, up from the current $94.90 a MT rate. The wheat export tax has surged more than 250% from the beginning of June when Russia first started using the sliding scale. As we previously reported, the country also plans to implement a stronger wheat export tax formula with a higher multiplier if prices rise to $375 per metric ton (MT); the multiplier would increase again if prices reach $400 per MT. Russia also plans to set its wheat export quota at 8 MMT from Feb. 15 to June 30, 2022, to ensure domestic supplies and limit price increases.

China to auction wheat reserves... China will auction 500,000 MT of state-owned wheat reserves on Jan. 5. The auction is only open to flour millers and cannot be resold. Beijing sold 891,938 MT of wheat from state reserves in October, which was open to both milling plants and feed and livestock firms.

USDA issues ‘public health alert’ for undetermined quantity of foods from China... USDA’s Food Safety and Inspection Service (FSIS) issued a public health alert for an “undetermined amount of imported meat and poultry products from China,” but no recall has been issued as FSIS has not been able to identify and contact the importers. “The total amount of ineligible product is undetermined because the investigation is ongoing,” FSIS said. The products do not identify an eligible establishment number on the packaging and were not presented for import reinspection. “These products are ineligible to import into the U.S., making them unfit for human consumption,” FSIS said. There have been no confirmed reports of any adverse reaction to consuming the products.

China raises import quotas for gasoline and diesel in 2022, lowers crude oil allotment... China has issued its first refined fuel import quotas for 2022, with gasoline and diesel volumes up sharply from this year, and naphtha, a petrochemicals feedstock, largely steady, according to industry sources and a document seen by Reuters on Thursday. The naphtha quota is set at 10.09 MMT, including 5.75 MMT issued to state-run companies and another 4.34 MMT allotted to independent petrochemical producers, up slightly from 9.94 MMT this year. Import quotas for gasoline rose to 700,000 MT versus 200,000 MT this year, and diesel was set at 750,000 MT versus 200,000 MT allotted in 2021. China’s first batch of 2022 crude oil import quotas to mostly independent refiners totals 109.03 MMT, down from 122.59 MMT for the first batch this year.

China issues first ‘green’ loans... China has issued the first 85.5 billion yuan ($13.4 billion) batch of low-cost loans to financial institutions to promote green projects and corporate efforts to cut carbon emissions, the People’s Bank of China (PBOC) announced. The carbon emission reduction facility (CERF) is part of China's broader goal of bringing carbon emissions to a peak before 2030 and achieving carbon neutrality by 2060, as well as to shelter the economy from the economic fallout of the pandemic. Under the CERF, PBOC will provide financial institutions with funds equal to 60% of a loan’s principal at a one-year lending rate at 1.75%. That would be at a discount to the seven-day reverse repo rate of 2.2%. The bank has also officially rolled out low-cost loans to support companies’ efforts to use clean coal.

Cash cattle trade starts at higher prices... Cash cattle traded at $2 to $3 higher prices compared with last week in the northern market. Trade in the southern market remained quiet, though the firmer northern trade should entice other packers to raise bids. Besides the cash market strength, wholesale beef prices also firmed on Wednesday, with Choice up $1.05 and Select $1.00 higher. Packers moved a solid 135 loads at the higher prices, providing more signs of improved retailer demand.

Loins weigh on pork cutout... Loin prices plunged $16.00 on Wednesday, which offset gains in ribs, hams and bellies to pull the pork cutout $2.60 lower. Despite the lower price, packers moved only 236.44 loads of product on the day. Pork movement has slowed the past two days, signaling limited retailer buyer interest after Christmas.

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

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Agricultural Prices — NASS
• 2:00 p.m. Peanut Prices — NASS