First Thing Today | January 6, 2022

Good morning!

Soybeans lead overnight price losses... Soybean futures are posting double-digit losses this morning but are off their overnight lows. Spillover pressure is weighing on corn and wheat. As of 6:30 a.m. CT, soybeans are trading mostly 13 to 16 cents lower, corn is 1 to 2 cents lower, winter wheat is 5 to 8 cents lower and spring wheat is mostly 11 to 12 cents lower. Front-month crude oil futures are almost $1 higher and the U.S. dollar index is near unchanged this morning.

AgRural slashes Brazilian soybean crop estimate... Brazil-based consultancy AgRural slashed its Brazilian soybean crop estimate by 11.3 MMT to 133.4 MMT due to heat and drought in southern Brazil. It now forecasts Brazil’s soybean yield will be the lowest since 2015-16. AgRural says Paraná has been hit hardest, with drought spreading from western areas of the state in December. The firm also cut its production forecasts for the Rio Grande do Sul, Santa Catarina and to a lesser extent Mato Grosso do Sul. AgRural says “In the rest of the country, the crop is developing well and high yields are expected in Mato Grosso, where the first areas are already being harvested.”

Global food prices highest in a decade in 2021... Global food prices inched down 0.9% in December, but the Food and Agriculture Organization of the United Nations (FAO) food price index still marked a 10-year high last year. The FAO food price index jumped 28.1% last year, as all sub-indices increased sharply from 2020. In 2021, the sub-indices jumped 27.2% for cereal grains, 65.8% for vegoils, 16.9% for dairy, 12.7% for meat and 37.5% for sugar.

Weekly Export Sales Report out this morning… For the week ended Dec. 30, traders expect:

RMA releases insurance option for farmers who ‘split-apply’ nitrogen... A crop insurance option in 11 states was released by USDA’s Risk Management Agency (RMA) for corn producers who “split-apply” nitrogen. The Post Application Coverage Endorsement (PACE) will be available in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin as supplemental coverage for Yield Protection (YP), Revenue Protection (RP) and Revenue Protection with Harvest Price Exclusion (RP-HPE) policies. First sales closing date is March 15. The supplemental coverage provides payments for projected yield lost when producers are unable to apply nitrogen post-emergence due to weather conditions when plants are in the V3-V10 stage.

Gas prices in Europe are more than five times as high as they were a year ago... The crisis has claimed dozens of corporate victims in the U.K., where 28 small and midsize energy suppliers failed last year, the Wall Street Journal reports. European energy companies are racing to secure billions of euros in funds, a sign of the financial strains caused by dramatic moves in natural gas and power prices this winter. The companies need extra cash to keep up with soaring costs. The EU is considering new measures, including joint purchases of gas to build up the bloc’s strategic reserves, to help alleviate future energy crises.

Uranium prices surged over political turmoil in Kazakhstan... Russia and its allies have sent in troops to help put down anti-government protests; the central Asian country is the world’s largest producer of the radioactive element. The Collective Security Treaty Organization (CSTO) a group made up of Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan, and Tajikistan has accepted a request from Kazakh President Kassym-Jomart Tokayev to deploy peacekeepers in the country as it experiences historic and violent unrest spurred by the government’s removal of fuel price caps. The Kazakh government has since resigned, and Tokayev has removed the powerful former leader Nursultan Nazarbayev as the head of the country’s Security Council.

Trump EPA administrator Wheeler to serve under Youngkin... Virginia Governor-elect Glenn Youngkin (R) has selected former Trump EPA Administrator Andrew Wheeler to be his secretary of natural resources. In his new role, Wheeler will address Virginia’s need for a “diverse energy portfolio in place to fuel our economic growth, continued preservation of our natural resources, and a comprehensive plan to tackle rising sea levels,” Youngkin said in a statement.

Argentina doesn’t have deal yet with IMF on debt refinancing... Argentina and the International Monetary Fund (IMF) have so far failed to reach an agreement to refinance the roughly $45 billion the country owes the organization due to an impasse over how to reduce the country’s budget deficit, Economy Minister Martín Guzmán said. Guzmán, who leads the Argentine team renegotiating the IMF loan signed by the government of former President Mauricio Macri in 2018, said the main condition for maintaining the recovery is managing the debt load the country has with the organization, with strong maturities in 2022, 2023 and 2024.

Cash cattle trade starts sooner than expected... Feedlots started moving cash cattle around $138 in the Southern Plains and $220 in the northern dressed market on Wednesday. Given additional pressure on live cattle futures yesterday, some feedlots decided to pull the trigger at prices that were $1-plus below last week instead of risking a further weakening of cash bids.

Cash hog index jumps again... The CME lean hog index is up another $1.12 today to $73.87, the highest level since Nov. 17. The strengthening cash index, along with bitterly cold temps across the Midwest, fueled strong gains in nearby lean hog futures yesterday. February lean hog futures ended yesterday $8.405 above today’s cash index quote.

Overnight demand news... Exporters reported no tenders or sales.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Dairy Products — NASS