First Thing Today: Wheat surges, corn and soybeans quiet to open the week

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Good morning!

Wheat surges, corn and soybeans quiet to open the week... Winter wheat futures surged to new contract highs overnight, while spring wheat sharply rebounded from last week’s losses. The price surge in the wheat market provided limited spillover support for corn and soybeans. As of 6:30 a.m. CT, wheat futures are trading 17 to 23 cents higher, corn is 2 to 3 cents higher and soybeans are narrowly mixed. Front-month crude oil futures are anchored near unchanged, while the U.S. dollar index is marginally higher this morning.

Brazilian soybean, full-season corn planting nearing completion... As of last Thursday, Brazil’s soybean crop was 86% planted, according to AgRural, five points ahead of year-ago. Full-season corn planting advanced to 91% done, in line with last year’s pace. AgRural says last week’s rains brought some relief to soybeans and corn in Rio Grande do Sul, but some yield potential for cereal grains has already been lost due to recent dryness.

Quiet week in Washington, but questions remain on several topics... Both the House and Senate are on recess for Thanksgiving this week. The Build Back Better (BBB)/social spending measure, which the House passed Friday, now moves to the Senate, where it will be changed – perhaps significantly. In the Senate, the key vote will be centrist Joe Manchin (D-W.Va.). Fiscal year (FY) 2022 spending will be the topline agenda item for lawmakers as the Dec. 3 deadline will come at the end of the week when the chambers return from the Thanksgiving break. That ups the odds for another short-term continuing resolution, likely one that will push the stopgap government funding to later in December to allow lawmakers to come to terms on what is becoming more likely — a massive omnibus spending plan that will keep the government funded through September 30, 2022. The U.S. debt limit is another action point lawmakers will face with Treasury Secretary Janet Yellen now putting that deadline at Dec. 15. Some private analysts are indicating the deadline is potentially later in December or even into January.

Economic updates clustered early in the week... Key economic updates include another reading on third quarter GDP on Wednesday. The U.S. economy is seen having performed a little better than the initial estimate of 2.0% in the third quarter. Another key focus will be the Personal Income and Outlays figures on Wednesday, which will include the inflation reading via the Personal Consumption Expenditures Price Index (PCE) – the Fed’s preferred inflation gauge. That is expected to come in above 4% on an annualized basis for the core rate, which removes gasoline and food prices. The Fed on Wednesday will release minutes from its Nov. 2-3 Federal Open Market Committee (FOMC) meeting that will be watched for more insight on the Fed’s decision to start tapering its bond purchases that have been taking place at $120 billion per month. But the bigger focus could be on how the recap casts Fed views on inflationary pressures in the U.S. economy. On Tuesday, President Joe Biden will discuss the economy and inflation ahead of an expected decision naming his next Federal Reserve chair nominee – either current Chair Jerome Powell or Fed governor Lael Brainard.

China’s imports of U.S. soybeans down sharply in October... China imported 775,331 MT of U.S. soybeans in October, down 77% from last year. China brought in 3.3 MMT of Brazilian soybeans last month, down 22% from October 2020. As we previously reported, its total soybean imports at 5.1 MMT fell 41% from last year amid weak crush margins. China’s soybean arrivals in the fourth quarter, the prime U.S. shipping season, are expected to remain below year-ago levels as crush margins are negative.

Ukraine grain exports up 20% from last year... Ukraine has exported 23.8 MMT of grain since July 1, up 20.2% from the same period last year, including 14 MMT of wheat, 4.9 MMT of barley and 4.6 MMT of corn. Ukraine’s ag ministry expects the country to export 61.5 MMT of grain in 2021-22, including 24.5 MMT of wheat (quota is set at 25.3 MMT), 30.9 MMT of corn and 5.2 MMT of barley. In 2020-21, Ukraine exported 44.7 MMT of grain.

Russia’s grain exports continue to run below year-ago... Russia-based consultancy SovEcon estimates the country will export 3.9 MMT of grain this month, which would be up fractionally from last month but well below the 5 MMT shipped last year. It forecasts Russian wheat exports at 3.2 MMT this month, down from 4.3 MMT in November 2020 due to high export taxes.

Neutral Cattle on Feed Report... Last Friday’s Cattle on Feed Report showed the Nov. 1 feedlot inventory down 0.2% from year-ago, which matched the average pre-report estimate. October placements and marketings were close to what traders expected. As a result, there should be no market impact from the data and cattle traders will continue to focus on the cash market.

Cash hog decline accelerates... The CME lean hog index is down $1.81 today to $73.46, which is 29 cents below where December lean hog futures closed last Friday. While the front-month contract weakened with the cash market last week, deferred lean hog futures strengthened, suggesting traders may sense the cash index will put in an early seasonal low.

Weekend demand news... The Philippines bought around 40,000 MT of Australian feed wheat. South Korea tendered to buy between 48,500 MT and 58,500 MT of corn and between 8,000 MT and 16,000 MT of soymeal – both to be sourced from South America.

Today’s reports


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