First Thing Today | December 8, 2022

Good morning!

Modest followthrough buying overnight... Corn, soybean and wheat futures modestly built on Wednesday’s gains during overnight trade. As of 6:30 a.m. CT, corn futures are trading steady to a penny higher, soybeans are mostly 2 to 5 cents higher and wheat futures are 1 to 3 cents higher. Front-month crude oil futures are more than $1.50 higher and the U.S. dollar index is trading just above unchanged.

Mexico to rework GMO corn decree... Mexico has offered to extend a deadline to ban genetically modified (GMO) corn until 2025 and is working on a proposal to overhaul its plan, Economy Minister Raquel Buenrostro said on Wednesday. Buenrostro said President Andres Manuel Lopez Obrador had told the U.S. his country could delay the contentious GMO corn ban until 2025, a year later than previously expected. Mexico is crafting a proposal to modify and “make clearer” the presidential decree, adding that U.S. and Mexican officials could meet Dec. 16 to discuss the new proposals.

Weekly Export Sales Report out this morning... For the week ended Dec. 1, traders expect:

Brazil keeps soybean crop forecast unchanged, trims corn estimate... Brazil is expected to produce a record soybean crop of 153.5 MMT in 2022-23, according to the third estimate from Conab, virtually unchanged from last month. Conab cut its Brazilian corn crop estimate by 570,000 MT from last month to a still-record 125.8 MMT. Conab raised its 2022-23 Brazilian soybean export forecast to 96.6 MMT, up 140,000 MT from last month. It kept the 2022-23 corn export forecast at 45 MMT.

Russia won’t eliminate grain export duties... Russia will not eliminate grain export duties, Agriculture Minister Dmitry Patrushev said on Wednesday. “We will not eliminate the duties. This is a mechanism that makes it possible to untie the domestic grain price from the external one,” Patrushev said. Russia introduced the grain duty mechanism on June 2, 2021. It provides for floating export duties on wheat, corn and barley, with the generated revenue going back to agricultural producers in the form of subsidies. The size of the duties is calculated weekly using price indicators based on the prices of export contracts registered on the Moscow Exchange. In July, Russia switched to calculating the duty in rubles.

Putin warns war in Ukraine would be ‘long process’... Russian President Vladimir Putin said his invasion had already yielded “significant” results and he would not mobilize more troops. Speaking at a televised meeting, he also acknowledged the risk of a nuclear war was growing but insisted Russia would only ever use nuclear weapons in response to an attack. A spokesman for America’s State Department said, “any loose talk of nuclear weapons is absolutely irresponsible.”

U.S. starts FY 2023 with a small ag trade surplus... The U.S. exported $17.5 billion of ag goods in October against imports of $17.1 billion for a trade surplus of $424 million during the first month of fiscal year (FY) 2023. Ag exports declined modestly from $17.7 billion in October 2021, but imports rose significantly from the year-ago figure of $14.8 billion.

Bank of Canada signals end of tightening campaign... The Bank of Canada raised its main interest rate by a half-percentage point and signaled it is at or near the end of its rapid-fire tightening campaign because of slowing growth and early signs of easing price pressures. The central bank on Wednesday increased its target for the overnight rate to 4.25% from 3.75%, the highest level in nearly 15 years.

Still no release of ERP Phase 2... USDA still has not released Phase 2 of Emergency Relief Program (ERP). Farmers and some farm-state lawmakers apparently were unable to convince USDA officials to make the coming announcement less onerous relative to tax information needed.

Beef, pork exports rise in October... The U.S. exported 301.1 million lbs. of beef during October — a record for the month. Beef shipments increased 25.3 million lbs. from September and 26.6 million lbs. from October 2021. Through the first 10 months of 2022, the U.S. shipped 2.993 billion lbs. of beef, up 5.1% from the same period last year, driven by a 26% increase in exports to China. U.S. pork exports totaled 539.7 million lbs. in October, up 26.7 million lbs. from September and 487,000 lbs. above last year. Through the first 10 months of this year, U.S. pork shipments totaled 5.198 billion lbs., down 12.1% from the same period last year as exports to China plunged 54%.

Slow developing cash cattle trade... Cash cattle trade has yet to turn active, with only a few animals changing hands around steady prices in the Southern Plains thus far. Feedlots in the northern market passed on steady bids yesterday in hopes packers will raise prices later this week. December live cattle futures finished Wednesday at a $4.495 discount to last week’s average cash cattle price, reflecting traders’ negative attitudes.

Cash hog index still searching for a seasonal low... After a 15-cent gain on Wednesday, the CME lean hog index is down 16 cents today (as of Dec. 6), signaling a seasonal low is not yet in place. December lean hog futures finished yesterday at a modest discount to the cash index, signaling traders aren’t yet convinced a seasonal low is in place.

Overnight demand news... South Korea purchased 69,000 MT of South American corn. Japan purchased 154,957 MT of wheat in its weekly tender, including 62,902 MT U.S., 64,620 MT Canadian and 27,435 MT Australian. Philippines tendered to buy 110,000 MT of feed wheat and 135,000 MT of soymeal – both optional origin.

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

• 7:30 a.m. Weekly Export Sales — FAS