First Thing Today | January 13, 2022

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Good morning!

Beans lead overnight price drop... Soybean futures pulled back from Wednesday’s gains overnight, while corn and wheat faced followthrough selling. As of 6:30 a.m. CT, soybeans are trading 11 to 14 cents lower, corn is 2 to 3 cents lower, winter wheat is 4 to 6 cents lower and spring wheat futures are fractionally to a penny lower in most contracts. Front-month crude oil futures are modestly lower, while the U.S. dollar index is down more than 100 points in an extension of Wednesday’s sharp losses.

Exchange slashes Argentine crop estimates amid heat, drought... Argentina is expected to produce 40 MMT of soybeans this year, according to the Rosario Grain Exchange, down 5 MMT from its previous estimate. The exchange slashed its corn crop estimate by 8 MMT to 48 MMT. “Almost 30 days have gone by without significant millimeters (rain) to help: corn continues to suffer two heat strokes that have followed each other with barely a week of respite in between,” the grains exchange said. On soybeans, the exchange noted: “December’s water stress has slowed down growth, causing flower abortion, leaf burning, seedling death in the most affected areas and the abandonment of (planting) fields is beginning to be abandoned.” On Wednesday, USDA cut its Argentine soybean and corn crop forecasts to 46.5 MMT and 54 MMT, respectively. Crop Consultant Dr. Michael Cordonnier forecasts Argentine production at 43 MMT for soybeans and 51 MMT for corn.

China finds Omicron in another port city, further threatening supply chains... Dalian joins Tianjin as the second crucial port city with confirmed Omicron cases. Their ports are among the twenty largest in the world and serve as major production hubs for foreign companies. Shipping firms are also making a switch to avoid delays at Ningbo, another major port south of Shanghai, which suspended some trucking services after an outbreak of Covid-19. The influx of ships into Shanghai has delayed sailing schedules for container ships by about a week, said freight forwarders. Those delays may then ripple outward to already back-logged gateways in U.S. and Europe.

Omicron is threatening operations at America’s busiest container-port complex... Infection rates are rising rapidly among dockworkers at the neighboring ports of Los Angeles and Long Beach, the Wall Street Journal reports, just as marine terminals are trying to ramp back up after worker absences during the holidays. About 800 dockworkers were out sick for Covid-related reasons at the start of this week, according to the Pacific Maritime Association, which secures labor for terminals. That represents about 10% of the roughly 8,000–person daily workforce crucial to the movement of boxes in Southern California. Terminal operators say with staffing levels that low they will struggle to chip away at the backlog of about 100 container ships waiting to unload at the ports, which has remained at near record levels since Christmas.

Weekly Export Sales Report out this morning… For the week ended Jan. 6, traders expect:


2021-22 (in MT)


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2022-23 (in MT)


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NATO: ‘real risk’ of Russian conflict... NATO’s secretary-general, Jens Stoltenberg, warned of a “real risk for new armed conflict in Europe” after a fruitless round of talks with Russia over its threat to Ukraine. Russia’s unrealistic demands include a pledge that NATO not be expanded; NATO said it would be willing to discuss arms control and missile deployments. Russia’s deputy foreign minister said it would not allow proposals to be cherry-picked. In statements following the talks, Russian officials suggested Moscow could resort to military action if political efforts fail. That warning came a day after the Russian military conducted live-fire exercises along the border with Ukraine. The U.S. has finalized sanctions options in the event Russia invades Ukraine, senior administration officials said yesterday. A third set of talks with Russia is happening today in Vienna.

Biden administration-imposed sanctions following a spate of North Korean missile tests... The sanctions were placed on six North Koreans, one Russian and a Russian firm alleged to be responsible for supplying goods for the U.N.-prohibited weapons program. U.S. officials said they remain committed to pursuing diplomacy with North Korea, an approach that has proven unsuccessful so far.

Ukraine raises grain export forecast... Ukraine’s ag ministry now forecasts the country will export 65.2 MMT of grain in 2021-22, up 800,000 MT from its prior outlook. That would be up nearly 46% from last year’s grain shipments. Through Jan. 10, the country’s grain exports were more than 23% ahead of last year’s pace after a record grain harvest.

Firm cuts EU wheat export forecast... Strategie Grains cut its forecast for European Union soft wheat exports in 2021-22 due to strong competition from the Black Sea region and Argentina. The consultancy now expects the bloc to ship 31.2 MMT of wheat this marketing year, down 300,000 MT from its previous forecast. For 2022-23, the firm raised its wheat crop forecast to 127.7 MMT, up 100,000 MT from last month. But it expects the EU to export less wheat in 2022-23 due to an expected rebound in production in Russia and North America.

China aims to boost soybean production 40% by 2025... China said it would raise domestic soybean output sharply in the next four years in a drive to boost self-sufficiency. The country has set a goal to produce about 23 MMT of soybeans by end of 2025, up 40% from current output levels of 16.4 MMT, the ag ministry said. According to the five-year plan document, China will cultivate land specifically for growing soybeans, expand soybean-corn rotations and focus on raising yields. Beijing will also expand planting acreage and output of other oilseeds, including rapeseed and peanut, to meet increasing demand for cooking oils and feed protein. Beijing aims to produce 215 MMT of rice, 140 MMT of wheat, and 277.5 MMT of corn by 2025, up slightly from current levels.

India to import less palm oil, more soyoil... India’s edible oil imports in 2022 are expected to fall by 2% as the country boosts domestic production, the Malaysian Palm Oil Council (MPOC) said. Total imports of oils and fats are forecast at 13.8 MMT, down from 14.1 MMT in 2021. India's palm oil imports are seen declining to 8.1 MMT from 8.5 MMT last year. Soyoil imports are expected to rise to 3.2 MMT from 3.1 MMT in 2021, while sunflower oil imports should rise to 1.9 MMT from 1.8 MMT last year.

Budget deficit narrows... The U.S. government ran a $21 billion deficit during December, the smallest monthly gap in two years, as it took in more tax revenue while spending edged higher. The cumulative deficit in the first three months of fiscal year 2022 stood at $378 billion compared with $573 billion at the same point the prior year. Federal receipts have risen at a faster rate than outlays during the first quarter of the fiscal year, partly reflecting an increase in workers’ taxable wages and salaries.

Pork prices could fuel China consumer inflation later this year... China’s consumer inflation has been subdued, largely because of the outsized effect of falling pork prices. But that may soon change as the supply of hogs declines. Faster consumer inflation would constrain the ability of the People’s Bank of China to add more stimulus if needed later in the year to support the economy. After a sharp drop over the past year, pork prices will gradually enter a new cycle of increases in 2022, according to a report in the state-backed China Securities Journal. Along with the effect of previous rises in commodity prices being passed on to consumer goods, more expensive pork will likely push up China’s consumer price index in 2022, the report cited analysts as saying.

Packer beef margins climb... Packers have seen their beef production margins surge nearly 50% over the past week as boxed beef prices climbed and cash cattle prices weakened. As of Wednesday, estimated gross margins at nearly $324 per head, up from just shy of $2.18 the previous week. Choice boxed beef values firmed $13.00 over the past week, while the average cash cattle price dropped more than $1.

Pork margins are declining... estimated gross pork packer margins at $13.40 per head on Wednesday, down 55% from the previous week. The pork cutout value dropped nearly $1.50 over the past week, while the cash hog market continues to strengthen.  

Overnight demand news... Japan purchased 107,555 MT of wheat from its weekly tender, including 56,095 MT from the U.S. and 51,460 MT from Canada. South Korea tendered to buy up to 140,000 MT of optional origin corn.

Today’s reports


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