First Thing Today: Grain, livestock markets expected to face pressure from global risk-off trade after Thanksgiving

Good morning!

Black Friday: Heavy risk-off trade after Thanksgiving... Concerns about a new, heavily mutated variant of Covid-19 identified in South Africa have produced high anxiety among traders and investors. Global stock markets and oil prices plunged overnight, while bonds surged (yields dropped) amid heavy risk-off trade. Low trading volumes globally due to the U.S. Thanksgiving holiday on Thursday exacerbated volatility. Grain and livestock markets didn’t trade overnight, but spillover pressure from the broad-based selloff is expected to weigh on futures when they open at 8:30 a.m. CT.  Ag markets will trade an abbreviated session today, with grains closing at 12:05 p.m. CT and livestock at 12:15 p.m. CT.

New Covid-19 variant: more questions than answers... Scientific experts have not yet made conclusions about the mutation, known for now as B.1.1.529, and there are less than 100 confirmed cases. But early indications are the new variant is significantly different from others, and the worst-case scenario is that it’s more deadly, contagious, and vaccine-resistant than what the world has already faced. The B.1.1.529 strain is “the most worrying that we’ve seen,” according to Dr. Susan Hopkins, the chief medical advisor to the U.K. Health and Security Agency. According to a South African scientist, 90% of the cases in the Gauteng region around Johannesburg are due to the new strain. Hong Kong and Israel officials said they had already identified cases of the new variant in travelers that had been to South Africa.

Weekly Export Sales Report details for the week ended Nov. 18… Click here for weekly export sales/commitments charts and here for report details.

Vilsack: BBB act will ‘help control inflation’... In an appearance on CNN Wednesday morning, USDA Secretary Tom Vilsack said, “The reality is we have got an economy that is growing. And obviously as a result of that we’re going to see some increase in prices. ... We’re going to do everything we can to continue to try to help folks with these costs. That’s why the president did what he did earlier this week with reference to gas prices. We’re going to see an impact on that to help family budgets.” Vilsack added, “The long-term strategy is getting the Build Back Better (BBB) bill passed, which we know will help to control inflation...and help families with a lot of difficult costs they’re incurring.” However, some private economists have predicted more inflation should BBB be approved.

Inflation is now higher in U.S. than in any other advanced economy... Looking at prices today compared with those 24 months ago shows U.S. consumer prices are up by about 7.5%, more than two percentage points higher than anywhere else in the G7 group of rich countries. Reasons for inflation: Over the course of 2020 and 2021, the U.S. fiscal deficit is on track to average about 14% of GDP, according to projections from the Congressional Budget Office, which is higher than in any other G7 country; the U.S. Fed’s balance sheet doubled over the past two years as a share of GDP; and U.S. consumer spending on durable goods in the second quarter was roughly a third higher than in the final quarter of 2019, far above its previous trend and easily outpacing the increases in other big economies. Also, port throughput in the U.S. was 14% higher in the second quarter of 2021 than in 2019.

OPEC+ considering pause on planned increases... The global oil cartel is weighing whether to pause the 400,000-barrel-per-day production increase it resolved to undertake each month through next year following the announcement earlier this week of a coordinated release of crude by the U.S., China, South Korea, India, Japan and the United Kingdom, the Wall Street Journal reported. Saudi Arabia worries that additional supplies from the reserves threaten to reduce prices, as does Russia, although the United Arab Emirates and Kuwait are reportedly not supportive of the pause.

Firm expects record Brazilian soybean, corn crops... Agroconsult estimates Brazil’s soybean crop at a record 144.3 MMT as the growing season is off to a strong start amid generally favorable weather and the firm projects planted acreage will expand 4.2%. The Brazil-based consultancy estimates the country’s total corn production at a record 124 MMT. Given expectations for record production, Agroconsult forecasts the country’s exports to be the most ever at 92.2 MMT for soybeans and 45.2 MMT for corn in 2021-22.

Exchange forecasts record Argentine wheat crop... The Buenos Aires Grain Exchange raised its 2021-22 Argentine wheat crop estimate by 500,000 MT to 20.3 MMT, citing better-than-expected yields. About one-third of the crop has been harvested. The exchange says 39.3% of the country’s soybean crop and 30% of expected corn area have been seeded. Recent rains in Santa Fe, eastern Cordoba, northern La Pampa, western Entre Rios and northwest Buenos Aires have been favorable for corn and soybean planting.

EU raises 2021-22 wheat export forecast... The European Commission increased its forecast of European Union wheat exports for 2021-22 by 2 MMT to 32 MMT. The increase reflected “the dynamics of the soft wheat market since the beginning of 2021-22 marketing year,” the commission said. The commission cut its wheat ending stocks forecast by 1.2 MMT to 12.7 MMT.

Cash cattle prices surge... Packers paid as much as $140 for cash cattle in the Southern Plains on Wednesday, while dressed trade in the northern market came in around $217 – up $5 to $7 from last week. Despite the cash strength, cattle futures could face profit-taking to close out the week amid heavy pressure from outside markets.

China’s sow herd declined in October but well above year-ago... China’s sow herd fell 2.5% in October from the previous month but was up 6.6% year-over-year, according to the country’s ag ministry.

Vietnam’s AFS outbreak ‘evolving in a complicated manner’... An African swine fever (ASF) outbreak is spreading widely in Vietnam, forcing the culling of three times the number of hogs culled last year, according to the Vietnam government. The outbreak has this year spread to 2,275 areas, in 57 out of the country's 63 cities and provinces, the government said, adding that the authorities have so far this year culled 230,000 hogs.

Germany finds another ASF case... A case of ASF has been found in a wild boar in the eastern German state of Mecklenburg-Vorpommern, close to a case discovered on a farm in the state earlier this month. The region is near Brandenburg and Saxony states where more than 2,700 ASF cases have been reported in wild animals. Germany said on Thursday it was continuing talks with China about “regionalization,” which stops pork imports only from regions of a country where swine fever has been found instead of a blanket ban on sales from the whole country. Germany has been relatively successful containing the disease but continuing discoveries in wild animals means China and other big pork buyers may not lift their import bans on German pork.

Holiday demand news... Turkey purchased 385,000 MT of milling wheat from unspecified origins. Egypt purchased 30,000 MT of soyoil from unspecified origins. Jordan passed on a tender to buy 120,000 MT of milling wheat.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Peanut Prices — NASS
• 2:00 p.m. Peanut Stocks and Processing — NASS