First Thing Today | December 7, 2022
Good morning!
Soybeans, soymeal extend gains overnight... Soybean futures found followthrough buying overnight but traded within Tuesday’s range, while soymeal futures posted new contract highs. Wheat futures were supported by mild corrective buying, while corn posted light, two-sided trade overnight. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny lower, soybeans are 4 to 6 cents higher, winter wheat futures are 5 to 8 cents higher and spring wheat is steady to 2 cents higher. Front-month crude oil futures are trading just above unchanged while the U.S. dollar index is more than 200 points lower.
China announces sweeping changes to Covid policy... China announced on Wednesday the most sweeping changes to its zero-Covid policy since the pandemic began three years ago. China’s national health authority said asymptomatic Covid cases and people with mild symptoms can quarantine at home. China also dropped testing for people travelling within the country. Many of the 10 new measures announced by the National Health Commission reflected steps already taken in various cities and regions in recent days, following protests against Covid controls that were the biggest demonstration of public discontent since President Xi Jinping came to power in 2012.
China’s November soybean imports well under year-ago... China imported 7.35 MMT of soybeans in November, up 77.5% from October but 14.2% less than last year. Logistics issues with U.S. soybean shipments out of the Gulf and China’s strict Covid restrictions slowed arrivals. Through the first 11 months of 2022, China imported 80.53 MMT of soybeans, down 8.1% from the same period last year.
China’s trade suffers worst slump in more than 2 years... China’s exports contracted 8.7% in November from a year earlier – the worst performance since February 2020. China’s imports dropped 10.6% versus last year – the worst since May 2020. This resulted in a narrowing of the trade surplus to $69.84 billion, down from $85.15 billion in October and the lowest since April. China’s trade surplus with the U.S. narrowed to $24.33 billion, down from $34.19 billion in October.
EU agrees to law preventing import of goods linked to deforestation... The European Union agreed on Tuesday on a new law to prevent companies from selling into the European market coffee, beef, soy and other commodities linked to deforestation around the world. The law will require companies to produce a due diligence statement showing their supply chains are not contributing to the destruction of forests before they sell goods into the EU or they could face hefty fines.
Warnock defeats Walker in Georgia’s Senate runoff... Democratic incumbent Sen. Raphael Warnock beat GOP challenger Hershel Walker in Georgia’s Senate runoff race. It gives the Democrats majority numbers on all Senate panels, which will accelerate approval of judicial nominations. The Senate ratio for the next Congress is now 51 Democrats to 49 Republicans.
China to auction more state-owned wheat reserves... China will auction another 40,000 MT of state-owned wheat reserves on Dec. 14.
China’s meat imports increase but still below year-ago... China imported 670,000 MT of meat during November, up 6.4% from October but 1.0% less than last year. Through the first 11 months of this year, China imported 6.7 MMT of meat, down 23.2% from the same period last year.
USDA to publish cattle prices in bid to boost transparency... USDA will publish information on the contracts between meatpackers and cattle producers, including prices paid and amount purchased, in a pilot program aimed at making beef markets more transparent. The Cattle Contracts Library pilot program, which USDA will establish in a rule to be published today, is an effort to help producers figure out how much they should be getting for their cattle.
Pork checkoff rate adjustment... Effective Jan. 1, 2023, the Pork Checkoff rate will drop a nickel to 35 cents per $100 of value. This change is a result of a resolution passed by voting delegates at the 2022 Pork Industry Forum. Pork Checkoff payments are collected for all pigs sold with a change of ownership. This includes sales of weaned pigs, breeding age animals and at the final market destination. The Pork Checkoff is mandated by the Pork Promotion, Research, Consumer Information Act. The rate change was a recommendation of the Pork Industry Vision Task Force — a group of 19 leaders from the National Pork Board, NPPC and various state associations — to ensure the pork industry’s long-term success.
Cash cattle expectations weaken... Traders started the week anticipating firmer cash cattle prices. But Tuesday’s sharp selloff in live cattle futures could derail the bullish hopes. Followthrough selling would likely get hedged feedlots to move cattle at steady/weaker prices, though unhedged feeders may be reluctant to move cattle at lower values since they are current and market-ready supplies are tightening.
Cash hog index firms... The CME lean hog index ended an extended price drop with a 15-cent gain to $82.94 today (as of Dec. 5). While this could signal a seasonal low, we would want to see more than one modest daily price gain before making that call.
Overnight demand news... South Korea purchased 65,000 MT of corn expected to be sourced from South America or South Africa and 65,000 MT of optional origin non-GMO soybeans. South Korea also tendered to buy another 25,000 MT of optional origin non-GMO soybeans. Taiwan bought 42,750 MT of U.S. milling wheat and 65,000 MT of Brazilian corn. Japan is seeking 70,000 MT of feed wheat and 40,000 MT of feed barley.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 10:00 a.m. Livestock and Meat International Trade Data — ERS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Broiler Hatchery — NASS
