First Thing Today | January 20, 2022

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Good morning!

Soybeans extend gains, corn and winter wheat pull back overnight... Soybean futures built on Wednesday’s strong gains overnight, while the corn and winter wheat markets faced corrective selling. As of 6:30 a.m. CT, soybeans are trading 2 to 4 cents higher, corn is 2 to 3 cents lower, SRW wheat is 5 to 6 cents lower, HRW wheat is 1 to 3 cents lower and spring wheat is 2 to 6 cents higher. Front-month crude oil futures are marginally lower, while the U.S. dollar index is more than 100 points higher.

Biden comments on Russia intention re: Ukraine... President Joe Biden during his nearly two-hour presser on Wednesday initially said that a “minor incursion” by the Kremlin’s forces might not receive much aggressive pushback from the United States. He said he thinks Russian President Vladimir Putin doesn’t want a full-blown war but will “move in” on Ukraine after amassing 100,000 troops on its border. While he said the U.S. and its European allies are united on making sure Russia faces “severe economic consequences,” Biden acknowledged that NATO allies are divided about what to do if Russia takes action against Ukraine that falls short of an invasion. White House press secretary Jen Psaki released a statement clarifying Biden’s comments shortly after the press conference concluded. “President Biden has been clear with the Russian President: If any Russian military forces move across the Ukrainian border, that’s a renewed invasion, and it will be met with a swift, severe, and united response from the United States and our allies,” she wrote. “President Biden also knows from long experience that the Russians have an extensive playbook of aggression short of military action, including cyberattacks and paramilitary tactics. And he affirmed today that those acts of Russian aggression will be met with a decisive, reciprocal, and united response.”

A piecemeal BBB ahead... Biden acknowledged his $1.75 trillion Build Back Better (BBB) legislation would have to be broken up into pieces to pass Congress. He specifically said Sen. Joe Manchin (D-W.Va.) was in favor of $400 billion to $500 billion in climate programs and further suggested that he was reaching across the aisle to Republican senators about stand-alone bills. Still, Biden admitted that two parts of his agenda wouldn’t make the final legislation, including a permanent extension of the expanded child tax credit and providing free community college.

Yellen assesses U.S. economy... Treasury Secretary Janet Yellen said she is confident the Omicron variant of Covid won’t derail the U.S. economic recovery. Yellen credited high vaccination rates in the U.S. and emergency spending by cities and states made possible by the Biden administration’s American Rescue Plan for preventing a more serious impact from the variant. Separately, Biden said it’s the Federal Reserve’s job to rein in the fastest pace of inflation in decades and supported the central bank’s plans to scale back monetary stimulus.

U.S. soybeans gain market share in China... Of the 96.5 MMT of soybeans China imported in 2021, 32.3 MMT came from the U.S., while 58.2 MMT originated from Brazil. China’s soybean imports from the U.S. rose 25% last year, while Brazilian shipments declined 9.5% from 2020. In December, China imported 6.1 MMT of soybeans from the U.S. and 2.1 MMT from Brazil.

Export sales delayed... Due to the federal holiday for Martin Luther King Jr Day on Monday, export sales data for the week ended Jan. 13 will be released on Friday.

Record euro zone inflation in December... Consumer inflation in the euro zone climbed at an annual rate of 5% in December, up from 4.9% in November and the highest level on record. Energy prices surged 25.9% from year-ago amid soaring gas and electric bills for households. Excluding energy and food, the so-called core inflation jumped 2.7% from last year.

China cuts LPR rates... China further reduced bank lending costs Thursday in the latest move to boost its stuttering economy, providing some much-needed support to the country’s beleaguered real estate developers. The People’s Bank of China (PBOC) lowered its one-year loan prime rate (LPR) by 10 basis points to 3.7% from 3.8%. The five-year LPR was reduced by 5 basis points to 4.6%, the first cut since April 2020. PBOC reduced the one-year LPR, which guides how much interest commercial banks charge to corporate borrowers, for the first time in 20 months in December.

China imported oil from Iran in December, despite U.S. sanctions... China imported 260,312 MT of Iranian crude oil in December, the first imports from the country since December 2020, despite ongoing sanctions by the U.S. government. To avoid the sanctions, Iranian crude has been exported to China marked as oil from Oman, the United Arab Emirates and Malaysia.

Cash cattle trade at mostly steady prices... Cash sources reported light to moderate cash cattle trade so far this week at roughly steady prices compared with last week. Cattle futures strengthened Wednesday on relief recent cash weakness appears to have ended, but also amid hopes slaughter levels will soon return to “normal” after recent slowdowns due to Covid-related worker absences. Additional support for cattle futures on Wednesday came from a resurgence in inflationary trade.

Pork volatility continues... Primal hams surged $30.61 on Wednesday, which more than offset a $17.12 drop in primal butts and pushed the pork cutout value $8.26 higher. Amid the recent volatile movement in primal pork cuts, movement has been solid but not spectacular. Wholesale pork trade has taken a back seat to beef as retailers are restocking after the holidays.

Overnight demand news... Taiwan bought 49,395 MT of U.S. milling wheat. Japan purchased 72,351 MT of milling wheat in its weekly tender, including 50,747 MMT from the U.S. and 21,604 MT from Canada.

Today’s reports

 

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