First Thing Today: Soybeans unable to find sustained followthrough buying overnight
Soybeans mildly pull back, corn and wheat mostly higher overnight... Soybean futures were unable to find sustained followthrough buying overnight after Tuesday’s strong price rebound. Corn futures extended their gains but failed to clear yesterday’s highs. Wheat futures were mostly firmer overnight, though buyer interest in HRW contracts is easing this morning. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 1 to 2 cents lower, SRW wheat is around a penny higher, HRW wheat is fractionally to a penny lower and HRS futures are mostly 3 to 4 cents higher. Front-month crude oil futures are around 75 cents lower and the U.S. dollar index is about 325 points higher.
China’s factory inflation surges to 26-year high... China’s producer price index (PPI) surged 13.5% from a year earlier in October, matching the highest factory-gate inflation since 1995, as energy prices soared last month. China’s consumer price index (CPI) rose 1.5% versus year-ago in October, the highest figure since September 2020. Economists worry consumer inflation will build more rapidly as factories pass through their rocketing prices, even as factory-gate pressures are expected to ease as energy prices pull back. The mounting price pressures complicate decisions for the People's Bank of China (PBOC), which may be wary of injecting monetary stimulus too quickly amid concerns about fanning inflation, even as economic growth slows.
China’s October new bank loans plunge, but not as much as feared... New bank lending in China fell sharply in October from the previous month, but not quite as badly as forecast. PBOC showed banks extended new loans of 826.2 billion yuan ($129.27 billion) in October, down sharply from 1.66 trillion in September but better than the 800 billion yuan expected in a Reuters poll of analysts. The new loans were higher than 689.8 billion yuan a year earlier.
Goldman warns on China growth... “Our forecast of 4.8% growth in China next year is below consensus. The key driver of this muted outlook is a negative swing in the property sector growth impulse from an average of +1½pp in the last five pre-pandemic years to just above -1pp in 2022 and beyond. This reflects the negative impact of deleveraging on construction, consumption, government spending, real estate services and construction materials activity,” the company said. It says about one-quarter of the economy may be affected by a property slowdown. Also, China’s residential investment share of GDP is among the highest in international historical experience.
Xi: China willing to work with U.S. to manage differences... Chinese President Xi Jinping says Beijing is willing to “enhance exchanges and cooperation across the board” with the U.S. ahead of a virtual meeting with President Joe Biden planned for as soon as next week. Xi's statements signal a possible easing of tensions between the two countries, which have often been at odds.
L.A.-area docks’ logjam begins to clear up... Starting Nov. 15, ocean carrier companies that brought idling containers in will be charged $100 on the first day past deadline, $200 on the next, and so on — an escalating fine that could quickly mount for the thousands of containers on the docks. Plans for the fine seem to be making a difference. The number of containers subject to the fine is down 26% at Long Beach, and the number of containers with a dwell time of more than nine days is down 14% at L.A. [Los Angeles] — a difference of more than 10,000 boxes on the docks. The ocean carriers have also responded with plans to send sweeper ships to remove the empty containers — approximately 30% of the total boxes piled up — that are clogging up the docks. Clearing out those empties would help address one of the major bottlenecks that truck drivers say are making it impossible to clear out cargo.
White House to boost infrastructure networks and ‘creative solutions’ to supply-chain disruptions... The White House on Tuesday announced “a set of concrete steps to accelerate investment in our ports, waterways, and freight networks.” It also announced the U.S. Department of Transportation will allow port authorities across the country to redirect project cost savings toward tackling supply-chain challenges. It will also work to alleviate congestion at the Port of Savannah by funding the Georgia Port Authority pop-up container yards project. With this policy change, the Georgia Port Authority will be able to reallocate more than $8 million to convert existing inland facilities into five pop-up container yards in both Georgia and North Carolina. Under the plan, the Port of Savannah will transfer containers via rail and truck further inland so that they can be closer to their final destination, which will make available valuable real estate closer to the port. The effort will free up more dock space and speed goods flow in and out of the Port of Savannah, which leads the nation in containerized agricultural exports, the White House said.
USDA raises cattle price forecast, lowers hog price... USDA raised its 2021 average cash steer price forecast by a quarter from last month to $121.31, which would be up $12.80 from last year. For 2022, USDA increased its cash price forecast by $1 to an average of $130. USDA expects continued strong demand to more than offset its increases to beef production from last month. For hogs, USDA lowered its cash price forecast by $2 for this year to $67.45 and $1 next year to $60, as recent price weakness is expected to carry into 2022. The average cash hog price is still projected to surge $24.27 from last year but fall $7.45 in 2022.
Predictably slow start to cash cattle negotiations... After packers increased bids twice last week, feedlots are seeking higher prices for this week’s supplies. But most packers have yet to establish bids after buying a lot of cattle last week. So far, only a limited number of cattle have traded at roughly steady prices.
Pork cutout, cash hog index on the decline again... The pork cutout value dropped $2.31 on Tuesday and is down $7.89 since a brief uptick last Tuesday and Wednesday. The CME lean hog index is down 6 cents today, ending a modest recovery the past two days. Given weak cash fundamentals, buyer interest in December hog futures will be limited, despite the contract’s discount to the cash index.
Overnight demand news... South Korea purchased 137,000 MT of corn – believed to be South American or South African origin. Japan tendered to buy 80,000 MT of feed wheat and 100,000 MT of feed barley.
- 9:30 a.m. Weekly Ethanol Production — EIA
- 11:00 a.m. Feed Grains Database — ERS
- 11:00 a.m. Meat Price Spreads — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS
- 2:00 p.m. Broiler Hatchery — NASS