First Thing Today | December 9, 2021

Good morning!

Weaker prices ahead of USDA’s December reports... Two-sided trade was seen in the grain and soy markets overnight, but futures are weaker and near session lows this morning. As of 6:30 a.m. CT, corn futures are fractionally lower, soybeans are mostly 6 cents lower, winter wheat futures are 10 to 12 cents lower and spring wheat is 1 to 5 cents lower. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is around 265 points higher.

December crop reports out later this morning... USDA won’t update its corn and soybean crop estimates in the Crop Production Report at 11 a.m. CT, only cotton. That will put most of the focus on the Supply & Demand Report, specifically the domestic demand projections for the 2021-22 marketing year, though only minor fine tuning is expected. Based on a Reuters survey, traders expect USDA to project 2021-22 U.S. ending stocks at 1.487 billion bu. for corn, 352 million bu. for soybeans and 589 million bu. for wheat. As with the domestic balance sheets, USDA is expected to just fine tune its global ending stocks forecasts this month.

Weekly Export Sales Report also out this morning… For the week ended Dec. 2, traders expect:

Brazil raises soybean, corn crop forecasts... Brazil’s official supply forecasting agency Conab now expects the country to produce a record soybean crop of 142.8 MMT, up 780,000 MT from its November forecast. It expects Brazilian exports to rise to 90.7 MMT, up 4.9 MMT from the current marketing year. Conab raised its Brazilian corn crop forecast by 469,000 MT to a record 117.2 MMT. It expects the country to ship 36.7 MMT of corn in 2022.

U.S. agriculture opens FY 2022 with record exports... U.S. ag exports hit $17.6 billion in October, registering a new record to open fiscal year (FY) 2022. That also marked a rise of more than $5 billion from the September mark. U.S. ag imports reached $14.8 billion in October, the second highest level on record. Since March, ag imports have been $14 billion or more seven of those eight months, with September just missing that level at $13.97 billion. The October data resulted in a trade surplus of $2.8 billion, reversing a trend of four months of trade deficits for the sector. Agriculture often registers its highest exports during the initial months of each FY while imports tend to reach their highest levels in the March-June period. USDA currently forecasts U.S. ag exports will be $175.5 billion in FY 2022 against imports of $165 billion for a surplus of $10.5 billion. Both the export and import levels would be new records for the sector if realized. FY 2021 finished with exports at $172.2 billion with imports of $163.3 billion for a surplus of $8.9 billion.

Senate to hold cloture vote on raising debt limit... Senate Minority Leader Mitch McConnell (R-Ky.) will get the 10 Republicans he needs to help end debate on this debt-limit process bill. Democrats will supply the rest of the votes needed. Treasury Secretary Janet Yellen has told Congress it must act by Dec. 15. The list of 10 GOP senators on the record who’ll vote for cloture: McConnell, Minority Whip John Thune of South Dakota; John Cornyn of Texas; Roger Wicker of Mississippi; Shelley Moore Capito of West Virginia; Roy Blunt of Missouri; Susan Collins of Maine; Rob Portman of Ohio; and Thom Tillis and Richard Burr of North Carolina.

Biden’s carbon-neutral push... The Biden administration plans to make the U.S. government carbon neutral by 2050, according to a new executive order signed Wednesday. Under the order, the government will slash its carbon emissions by 65% by the end of the decade. The U.S. will “lead by example in order to achieve a carbon pollution-free electricity sector by 2035 and net-zero emissions economy-wide by no later than 2050,” the White House said. “Through a whole-of-government approach, we will demonstrate how innovation and environmental stewardship can protect our planet.” It directs that government buildings use 100% carbon-pollution-free electricity by 2030; that the U.S. fleet of cars and trucks become all-electric by 2035; and that federal contracts for goods and services be carbon-free by 2050. Government buildings should be carbon-free by 2045, including a 50% emissions cut by 2032, Biden said.

China’s factory prices ease slightly, consumer inflation increases... China’s producer price index rose 12.9% versus year-ago in November. While still highly elevated, factory-gate prices eased from a 13.5% year-over-year jump the previous month amid the government’s crackdown on commodity prices and the easing power crunch. China’s consumer price index increased 2.3%, up from 1.5% in October and the highest rate since August 2020. Food prices rose for the first time in six months, jumping to 1.6% over year-ago from down 2.4% in October.

Fitch Ratings downgrades Evergrande after it defaulted... Evergrande, the embattled Chinese property developer, has defaulted on its debt, according to Fitch Ratings. The credit ratings agency on Thursday downgraded the company and its subsidiaries to “restricted default,” meaning that the firm has failed to meet its financial obligations. Fitch also said Kaisa, another troubled Chinese property firm, was in restricted default after it failed to repay a $400 million bond due on Tuesday.

Beijing Olympic boycott grows... The United Kingdom and Canada have decided not to send top officials to the 2022 Beijing Winter Olympics, joining a growing number of countries that are taking diplomatic action to protest China’s human rights abuses. In recent days, the U.S., Australia and Lithuania have all announced their diplomatic boycotts of the Winter Games. China warned any countries boycotting the Winter Olympics would “pay the price” for the diplomatic action.

Wholesale beef prices continue to tumble... Choice boxed beef prices fell $3.92 and Select was $2.59 lower on Wednesday. Though packers moved a solid 161 loads of product on the day, they are having to cut prices to encourage retailers to buy. That’s an indication wholesale beef prices are likely to fall further as the market searches for a bottom.

Hams fuel huge jump in pork cutout... The pork cutout value strengthened $9.35 on Wednesday, fueled by $29.58 surge in hams, though bellies, loins and butts were also sharply higher. Perhaps more impressive was that packers moved 412.90 loads of product at the sharply higher prices. The cash hog and pork product markets are signaling lows may be in place, but hog futures have been hit with active selling pressure the past three days.

Overnight demand news... South Korea purchased 60,000 MT of optional origin feed wheat and passed on a tender to buy 69,000 MT of corn. In a separate tender, South Korea purchased 50,000 to 60,000 MT of corn expected to be sourced from Ukraine.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 11:00 a.m. WASDE — ERS
• 11:00 a.m. Cotton Ginnings — NASS
• 11:00 a.m. Crop Production — NASS
• 11:15 a.m. Cotton: World Markets and Trade — FAS
• 11:15 a.m. Grains: World Markets and Trade — FAS
• 11:15 a.m. Oilseeds: World Markets and Trade — FAS
• 11:15 a.m. World Agricultural Production — FAS
• 2:00 p.m. America’s Diverse Family Farms: 2021 Edition — ERS
• 2:00 p.m. CE: Barley, Oats, Wheat — NASS