Good morning!
Quiet, two-sided trade overnight... Corn, soybean and wheat futures traded both sides of unchanged in narrow overnight ranges. As of 6:30 a.m. CT, corn futures are steady to fractionally higher, soybeans are trading within a penny on either side of unchanged, SRW wheat futures are 1 to 2 cents lower in most contracts, HRW futures are narrowly mixed and HRS wheat is mostly 1 to 5 cents higher. Front-month crude oil futures are more than $2 higher and the U.S. dollar index is around 75 points higher.
Consultant lowers bias toward South American crops... Dry weather is becoming more concerning in areas of Argentina and southern Brazil and forecasts call for hotter and drier conditions in the driest areas this month. Crop Consultant Dr. Michael Cordonnier maintained his soybean and corn crop estimates this week, but he now has a lower bias toward production potential in both countries. Cordonnier estimates Brazilian production at 144 MMT for soybeans and 117 MMT for corn. In Argentina, he pegs production at 50 MMT for soybeans and 53 MMT for corn.
Key meeting between Biden, Putin today... A video call today between President Joe Biden and Russian President Vladimir Putin is described as one of the most difficult and consequential encounters between the two country’s leaders since the cold war. After positioning 90,000 troops (as well as tanks and artillery) near Ukraine’s borders, Russia has begun to signal what it aims to achieve. Last week, Putin made a threatening speech, warning the west not to cross Russia’s “red lines.” The Kremlin has said Putin will demand an agreement to “exclude any further NATO expansion eastward” to encompass Ukraine. Biden has said he cannot provide such a guarantee. Observers note it is the Kremlin’s actions since the 2014 pro-democracy uprising that toppled Russian-leaning president Viktor Yanukovich that have left a majority of Ukrainians now in favor of joining NATO. Russia’s annexation of Crimea and fomenting of a separatist conflict in east Ukraine convinced many previously agnostic citizens that they need the alliance’s protection. Putin insists Ukraine is a failed state being led astray by scheming foreigners. The west, he suggests, is playing a “dangerous geopolitical game” and is intent on using Ukraine as a “springboard against Russia.” Thus, Russian motives for an invasion have been made.
China’s soybean imports rise in November, but down from last year... China imported 8.57 MMT of soybeans in November, up 67.7% from October as more cargoes arrived from the U.S, though that was down 10.6% from last year. During the first 11 months of this year, China imported 87.65 MMT of soybeans, down 5.5% from the same period last year.
China’s export growth slows, but imports surge... China’s exports rose 22% from year-ago, to a record of $325.5 billion in November, easing sharply from a 27.1% jump in October. Imports surged 31.7% to a new high of $253.8 billion, up sharply from the 20.6% increase the previous month. That left China with a $71.7 billion trade surplus, down from $84.5 billion in October.
France forecasts slightly smaller wheat area for 2022 crop... France’s farm ministry projects the country’s winter soft wheat area for next year’s crop at 4.92 million hectares, down 0.8% from this year. For winter durum wheat, farmers were expected to sow about 279,000 hectares, down 1.8% from last year. The ministry pegged the winter barley area at 1.23 million hectares, up 2.5% from the prior year, and projected the winter rapeseed area would rise 12.2% to 1.10 million hectares.
China cuts relending rates for agriculture, small firms... China’s central bank will cut relending rates for the agriculture sector and small businesses by 25 basis points, effective today. After the reduction, the interest rates of three-month, six-month, and one-year reloans supporting the development of agriculture and small firms stood at 1.7%, 1.9% and 2%, respectively. The interest rates for rediscounts and financial stability-related reloans remained unchanged at 2% and 1.75%, respectively.
Evergrande debacle may be forcing China into a policy shift... The latest news on Evergrande suggests the property developer is very close to default, and shares of the super-indebted group say pretty clearly it is going to happen. Its shares fell 20% on Monday. The first signal was the People’s Bank of China cutting the required reserves ratio (RRR) by 50 basis points on Monday, the second cut this year. This will release credit into the economy. China watchers say the country is moving from regulatory tightening to supporting economic growth. They also say it’s just a matter of time before a currency devaluation of some sort. The Wall Street Journal’s editorial board has also caught notice, writing today: “Maybe China has to follow the usual economic rules after all. After many years pursuing an economic strategy dependent on a real-estate boom, Beijing is discovering it’s no easier to unwind those excesses in a state-dominated economy than it would be anywhere else.”
EPA publishes proposed rule to revert WOTUS definition mostly to pre-2015 rules... EPA today formally published the notice in the Federal Register that would replace the definition of Waters of the US (WOTUS) established in the Trump-era Navigable Waters Protection Rule (NWPR) with a definition that is mostly the one that was in place prior to the 2015 Obama version of WOTUS. EPA announced it would propose setting the WOTUS definition back to the pre-2015 version as it seeks to develop a new definition. EPA is expected to announce a series of 10 regional meetings to gather more input from the public and interested parties on what that new definition should be. The agency asked for groups to nominate a slate of participants for the regional roundtables with those nominations due Dec. 1. The agency expects to hold those meetings in early 2022. Comments on the proposed rule to reset the definition to mostly the pre-2015 version of WOTUS are due Feb. 7.
China’s meat imports weaken... China brought in 677,000 MT of meat last month, up 2% from October but down 12.6% from last year. Cheaper domestic pork prices amid a surge in production cut demand for overseas supplies. Through the first 11 months of this year, China imported 8.7 MMT of meat, down 2.5% from the same period last year.
Wholesale beef prices weaken... Choice boxed beef prices fell $1.83 on Monday and Select dropped 79 cents. While values for the cheaper primal cuts and grindings are holding up well, prices for the top-end and middle cuts are expected to continue to face resistance from grocers who are struggling to sell those products amid record retail prices that are limiting consumer demand. Industry sources expect further pressure on wholesale beef prices through year-end.
Good start for wholesale pork... The pork cutout value firmed $2.34 on Monday amid strong gains in all but bellies, which dropped 55 cents. Packers moved nearly 400 loads of product amid the higher prices, signaling strong retailer demand. The cash hog index is up 25 cents today and is also trying to put in a seasonal low. Until traders are convinced lows are in place in the cash and product markets, however, buyer interest in hog futures is likely to be limited given their premiums to the cash index.
Overnight demand news... Taiwan purchased 130,000 MT of corn, likely to be sourced from Argentina. Japan is seeking 260,312 MT of U.S. and Canadian wheat in its weekly tender. The Philippines tendered to buy up to 300,000 MT of wheat (combination of milling and feed-quality) and about 125,000 MT of feed barley.
Today’s reports
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