First Thing Today | December 9, 2022
Good morning!
Mildly firmer tone overnight... Corn, soybeans and wheat traded mildly higher in light overnight action as traders awaited USDA’s December crop reports later this morning. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are mostly around a penny higher and wheat futures are 1 to 3 cents higher. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is about 175 points lower this morning.
USDA’s December crop reports out later this morning... USDA’s December Supply & Demand Report is expected to feature modest changes to U.S. and global ending stocks. USDA will update its cotton crop estimate, though traders don’t expect much change to that figure either. USDA will not update its U.S. corn and soybean crop estimates this month. For 2022-23 U.S. ending stocks, traders expect corn to rise 55 million bu. to 1.237 billion bu., soybeans to increase 18 million bu. to 238 million bu. and wheat to decline 2 million bu. to 576 million bushels.
Erdogan wants to strengthen Black Sea grain deal... Turkish President Tayyip Erdogan said on Friday he will speak to Russia’s Vladimir Putin on Sunday, and he will also talk to Ukraine’s Volodymyr Zelenskyy in order to strengthen the Black Sea grain deal. “We want to strengthen the grain corridor and transport grain to less developed countries,” Erdogan said.
French wheat crop highly rated heading into winter... France’s ag ministry says 97% of the country’s wheat crop is rated good/excellent as of Dec. 5. The winter barley and durum wheat crops are rated 97% and 98% good/excellent, respectively. Regular rainfall and warm temperatures during fall aided sowing and early crop growth in France.
Russian wheat export tax rises sharply... Russia’s wheat export tax for Dec. 14-20 will be 3,143.4 rubles ($50.28) per metric ton based on an indicative price of $313.40. That’s up from a rate of 2,806.8 rubles per metric ton the previous week and the highest rate since early September.
IMF, World Bank see a worsening global outlook... International Monetary Fund (IMF) Director Kristalina Georgieva said while China’s reopening from its strict zero-Covid policy will be positive, indicators show more downgrades to world growth are likely. World Bank President David Malpass remains “deeply concerned” about a global recession.
Average gas price under year-ago, diesel still well above last year... The U.S. average price for regular unleaded gasoline declined to $3.315 per gallon, according to AAA, below its average of $3.338 from last year and down about 35% from its peak of about $5 earlier in the year. The average price for diesel stands at $4.981, down sharply from its peak earlier this year but still up sharply from $3.608 at this time last year.
Chinese inflation falls in November as Covid lockdowns battered spending.... China’s factory-gate prices contracted for a second month in November as the producer price index fell 1.3% annually, unchanged from October’s decline. China’s consumer price index rose at its slowest pace in eight months, climbing 1.6% from a year earlier, which was less than the 2.1% annual rise in October. Food prices rose 3.7% in November, down from a 7.0% gain in October, as pork price gains moderated a little. Pork prices increased 34.4% from last year, though that was down from the 51.8% annual rise in October.
China cuts cotton demand outlook on slowing global growth... China’s ag ministry lowered its outlook for cotton consumption, as slowing global economic growth continues to hurt demand for textiles. China’s cotton consumption in 2022-23 is forecast at 7.5 MMT, down 200,000 MT from last month, the ministry said in its monthly update. The ministry kept its 2022-23 China cotton import forecast at 1.85 MMT. The ministry also made no changes to its 2022-23 soybean and corn import forecasts, which remained at 95.2 MMT and 18 MMT, respectively.
China to issue special treasury bonds to boost economy... China will issue 750 billion yuan ($107.93 billion) in three-year special treasury bonds on Dec. 12, the finance ministry said. These special treasury bonds will be targeted and issued to particular banks, with no impact to market liquidity, people familiar with the matter told Reuters.
China to allow overseas traders in soybean, soymeal futures... China’s securities regulator said on Friday it will permit international participation in trading of its soybean and soymeal futures contracts from Dec. 26. The contracts are traded on the Dalian Commodity Exchange.
China hog futures post worst week on record... China’s most active live hog futures ended the week down more than 9%, their largest weekly decline on record. Heavy slaughter and weak demand put further pressure on spot cash prices, which plunged 17%. The cash hog price plunge came after producers stepped up slaughter volumes in expectation of improving demand toward the end of the year, and after Beijing urged them to ensure stable supplies.
Cash cattle prices drift lower... After light trade at steady levels earlier in the week, some cattle moved at $2 lower prices in the northern dressed market on Thursday. Most feedlots continued to hold out for higher cash prices, though those hopes may be dashed for this week. With two holiday-shortened slaughter schedules coming at the end of this month, it appears packers will try to fill near-term needs with contracted supplies and cattle previously sold with time.
December hogs maintain slight discount to cash index, February premium shrinks... The CME lean hog index is down 31 cents to $82.47 (as of Dec. 7). December lean hog futures finished Thursday 47 cents below today’s cash quote. After three straight days of sharp losses, February hog futures finished yesterday just $2.23 above today’s cash quote.
Overnight demand news... Egypt purchased 260,000 MT of Russian wheat via private deals.
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
- 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. Grain: 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. Peanut Prices — NASS
