First Thing Today: Wheat paces followthrough buying overnight

Good morning!

Wheat leads followthrough buying overnight... Grain and soy complex futures built on Wednesday’s gains overnight. Wheat futures led gains, pushing above yesterday’s highs. Corn and soybean futures did not clear Tuesday’s highs overnight. As of 6:30 a.m. CT, wheat futures are trading 10 to 13 cents higher, corn is 1 to 2 cents higher and soybeans are mostly 4 to 5 cents higher. Front-month crude oil futures are around 65 cents lower and the U.S. dollar index is about 125 points lower this morning.

Weekly Export Sales Report out this morning… For the week ended Nov. 11, traders expect:

House Democratic leaders upbeat on passing BBB Act either today or more likely on Friday... Debate on the $1.75 trillion Build Back Better (BBB)/social spending measure begins today. CBO released its analysis of the Education and Labor Committee title for BBB Thursday night. Along with the Energy and Commerce and Ways and Means titles, those are the focus of the BBB package, especially for Democratic moderates, who want to see if the CBO estimates match up with preliminary White House revenue and spending projections. A key issue for BBB is completion of the “Byrd bath” and “privilege scrub” of the House bill. Senate parliamentarians are reviewing the proposed legislation to see if it complies with the Senate’s Byrd Rule, which controls consideration of reconciliation bills. Any needed changes will be incorporated into a managers’ amendment for BBB. House Democrats are hoping this amendment will be finished by around midday, according to reports. Comments: Recent voting timelines have not been met, and this could face similar snags, which is why sources would not be surprised if this moves into weekend.

Rattner lashes out at Biden administration on inflation... Steve Rattner, a former Obama economic adviser, lashed out at the Biden administration in a New York Times op-ed titled: “I Warned the Democrats About Inflation.” He wrote, “How could an administration loaded with savvy political and economic hands have gotten this critical issue so wrong? They can’t say they weren’t warned — notably by Larry Summers, a former Treasury secretary and my former boss in the Obama administration, and less notably by many others, including me. We worried that shoveling an unprecedented amount of spending into an economy already on the road to recovery would mean too much money chasing too few goods.” Read the entire op-ed here.

U.S. asks China, others to consider releasing oil reserves... The Biden administration has asked some of the world's largest oil consuming nations – including China, India, Japan and others – to consider releasing crude stockpiles in a coordinated effort to lower global energy prices and help curb surging inflation, Reuters reported, citing several people familiar with the matter. China's state reserve bureau said it was working on a release of crude oil reserves, although it declined to comment on the U.S. request. Japan and South Korea confirmed the U.S. request but say they can release oil reserves to lower prices, only to alleviate supply shortages. Talk of the coordinated release efforts caused front-month Nymex (WTI) oil futures to drop below $80.

Strategie Grains sees high wheat prices cutting demand... Consultancy Strategie Grains lowered its outlook for 2021-22 EU exports of soft wheat by 1.6 MMT to 30.4 MMT, as it says high prices will reduce demand and cause some processors to switch to corn. Along with a cut to projected feed wheat use in favor of corn within the EU, this led Strategie Grains to increase its forecast for 2021-22 EU soft wheat stocks by more than 2 MMT to just over 12 MMT. "The situation is on the point of tipping into heaviness, especially in France, and prices now have decreased potential going forward,” the consultancy said of wheat.

Chinese corn, sorghum imports up sharply... China imported 1.3 MMT of corn in October, 14.2% from last year. Through October, China imported 26.23 MMT of corn, a 236% surge from the same period last year. China’s sorghum imports totaled 830,000 MT in October, up 57.2% from last year, and its imports for the first 10 months of the year at 8.18 MMT jumped 103%. China brought in 480,000 MT of wheat last month, down 23.1% from last year, but its imports through October at 8.08 MMT rose 20.8% from year-ago levels.

Three amigos in Washington... Canadian Prime minister Justin Trudeau and Mexican President Andres Manuel Lopez Obrador join U.S. President Joe Biden at the White House today for three-way talks, informally known as the “Three Amigos” summit. Biden is expected to meet with both leaders separately before the summit begins. The meeting comes as both Mexico and Canada warily eye a provision for tax credits on American-made electric vehicles under consideration in Congress that both countries see as a protectionist move. Mexico on Saturday published new phytosanitary requirements for the importation of U.S. potatoes throughout the entire country.

Deere workers end strike... The United Auto Workers Union on Wednesday voted to end a strike lasting over a month, approving a third contract offer from Deere and Co. that boosts wages and includes bonuses. The contract was approved by a margin of 61% to 39%.

Chinese pork imports fall sharply from year-ago in October... China imported 200,000 MT of pork in October, which was down 4.8% September but 41.1% lower than last year. Through the first 10 months of this year, China imported 3.34 MMT of pork, a 7.7% drop from the same period last year.

Wholesale beef prices drop again... Since posting a short-term top Nov. 4, Choice boxed beef has dropped $11.75, including yesterday’s $3.66 decline. Select also fell $2.53 yesterday. But the sharp drop in beef prices attracted strong demand as packers moved 188 loads on the day. The pickup in movement the past two days suggests there’s plenty of demand under the market, though the real test is whether packers can raise bids and maintain the retailer buying.

CME lean hog index a little lower... The CME lean hog index is down a nickel today. While the index failed to build on the previous day’s mild advance, at least the wave of heavy pressure appears to have subsided. If there are additional signs the cash index is stabilizing, it would spur more thoughts of an early seasonal low.

Overnight demand news... Taiwan bought 48,000 MT of U.S. milling wheat. Japan purchased 121,805 MT of milling wheat in its weekly tender, including 89,715 MT from the U.S. and 32,090 MT from Japan. South Korea purchased 69,000 MT of corn expected to be sourced from South America or South Africa.

Today’s reports

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Sugar: World Markets and Trade — FAS
• 2:00 p.m. Milk Production — NASS
• 2:00 p.m. Turkey Hatchery — NASS