Sen. Sinema Leaving Democratic Party and Registering Independent

Producer Price Index Rises More Than Expected
 

Producer Price Index for final demand in the U.S. rose 0.3% month-over-month in November of 2022, the same as an upwardly revised 0.3% increase in October and above market forecasts of 0.2%. Cost of services went up 0.4%, led by securities brokerage, dealing, investment advice, and related services, which jumped 11.3%. Cost of goods edged up 0.1%, led by 38.1% surge in prices for fresh and dry vegetables. Compared to the same month in 2021, producer prices were up 7.4%, the smallest increase since May last year, but higher than expectations of 7.2%

Corn, soybeans and wheat traded mildly higher in light overnight action as traders awaited USDA’s December crop reports later this morning. As of 7:30 a.m. ET, corn futures were trading 1 to 2 cents higher, soybeans were mostly around a penny higher and wheat futures were 1 to 3 cents higher. Front-month crude oil futures were around 50 cents higher and the U.S. dollar index was about 175 points lower this morning.

Cash cattle prices drift lower. After light trade at steady levels earlier in the week, some cattle moved at $2 lower prices in the northern dressed market on Thursday. Most feedlots continued to hold out for higher cash prices, though those hopes may be dashed for this week. With two holiday-shortened slaughter schedules coming at the end of this month, it appears packers will try to fill near-term needs with contracted supplies and cattle previously sold with time.

December hogs maintain slight discount to cash index, February premium shrinks. The CME lean hog index is down 31 cents to $82.47 (as of Dec. 7). December lean hog futures finished Thursday 47 cents below today’s cash quote. After three straight days of sharp losses, February hog futures finished yesterday just $2.23 above today’s cash quote.

USDA’s December crop reports out later today. USDA’s December Supply & Demand Report is expected to feature modest changes to U.S. and global ending stocks. USDA will update its cotton crop estimate, though traders don’t expect much change to that figure either. USDA will not update its U.S. corn and soybean crop estimates this month. For 2022-23 U.S. ending stocks, traders expect corn to rise 55 million bu. to 1.237 billion bu., soybeans to increase 18 million bu. to 238 million bu. and wheat to decline 2 million bu. to 576 million bushels.

WNBA star Brittney Griner is back in the U.S. after she was released from Russian detention in a prisoner swap for convicted arms dealer Viktor Bout. Despite President Joe Biden's various attempts, the swap did not include another American that the U.S. State Department has declared wrongfully detained, Paul Whelan. "The choice was bringing Brittney Griner home right now, or bringing no one home right now," a senior administration official said. In a phone interview with CNN, Whelan said he was happy Griner was released but expressed disappointment in his continued detention.

Sinema leaving the Democratic Party and registering as an independent. Arizona Sen. Kyrsten Sinema is leaving the Democratic Party and registering as a political independent in Arizona. She announced the change during interviews with Politico, CNN and the Arizona Republic. "I've registered as an Arizona independent. I know some people might be a little bit surprised by this, but actually, I think it makes a lot of sense," Sinema said Thursday. "I've never fit neatly into any party box. I’ve never really tried. I don't want to," she added.

     Sinema's move away from the Democratic Party is unlikely to change the power balance in the next Senate. After the Democrats won the Georgia Senate runoff, they had a narrow 51-49 majority that includes two independents who caucus with them: Sens. Bernie Sanders of Vermont and Angus King of Maine. Sinema told Politico that she doesn’t plan to change her voting behavior or join the Republican caucus. She did not explicitly say she will continue to caucus with Democrats in the interview with CNN. “She did note … that she expects to keep her committee assignments — a signal that she doesn’t plan to upend the Senate composition, since Senate Majority Leader Chuck Schumer (D-N.Y.) controls committee rosters for Democrats,” CNN reports.

     She named several areas in which her position and priorities remain steadfast — for example, that "a woman's health care decision should be between her, her doctor and her family" and her work to "secure the southern border, ensure fair and humane treatment for migrants and permanently protect 'Dreamers.'

The U.S. average for regular unleaded gasoline has declined to $3.32 a gallon, below its average of $3.36 from last year and down about 35% from its peak of about $5 earlier in the year, when the war in Ukraine disrupted supplies and boosted prices for raw materials from copper to corn to diesel. The average price for diesel stands at $4.981, down sharply from its peak earlier this year but still up sharply from $3.608 at this time last year.

Inflation in China slowed sharply in November as widespread Covid-19 lockdowns battered spending. Consumer prices rose 1.6% from a year earlier, the National Statistics Bureau said Friday, the slowest pace since March. Producer prices — those charged by companies at the factory gate — fell 1.3% from a year earlier, a reflection of weak spending at home in China as well as fading demand for Chinese exports. This was the lowest figure since March, mainly due to a sharp slowdown in cost of food (3.7% vs 7.0% in October) as pork prices eased further after authorities released national reserves into the market. Meantime non-food inflation was unchanged (at 1.1%), with prices continuing to rise for transport & communication (2.9% vs 3.1%) health (0.5% vs 0.5%), clothing (0.5% vs 0.5%), and education, culture (1.3% vs 1.2%); while cost of housing fell further (-0.2% vs -0.2%). China has set a target of CPI at around 3% for 2022, the same as in 2021. Core consumer prices, excluding the volatile prices of food and energy, rose 0.6%, the same pace as in the prior two months. On a monthly basis, consumer prices declined by 0.2% in November, the first drop since August, in line with estimates, and after a 0.1% gain in October.

China hog futures post worst week on record. China’s most active live hog futures ended the week down more than 9%, their largest weekly decline on record. Heavy slaughter and weak demand put further pressure on spot cash prices, which plunged 17%. The cash hog price plunge came after producers stepped up slaughter volumes in expectation of improving demand toward the end of the year, and after Beijing urged them to ensure stable supplies.

China cuts cotton demand outlook on slowing global growth. China’s ag ministry lowered its outlook for cotton consumption, as slowing global economic growth continues to hurt demand for textiles. China’s cotton consumption in 2022-23 is forecast at 7.5 MMT, down 200,000 MT from last month, the ministry said in its monthly update. The ministry kept its 2022-23 China cotton import forecast at 1.85 MMT. The ministry also made no changes to its 2022-23 soybean and corn import forecasts, which remained at 95.2 MMT and 18 MMT, respectively.

China to issue special treasury bonds to boost economy. China will issue 750 billion yuan ($107.93 billion) in three-year special treasury bonds on Dec. 12, the finance ministry said. These special treasury bonds will be targeted and issued to particular banks, with no impact to market liquidity, people familiar with the matter told Reuters.

Founder of a key Apple supplier played a major role in China’s easing of its Covid-19 restrictions. In a letter a little over a month ago, Foxconn’s Terry Gou warned Chinese leaders that strict Covid controls would threaten the country’s position in global supply chains and called for more transparency on restrictions imposed on the company’s workers, according to people familiar with the matter. Gou’s letter, and the nationwide protests that erupted weeks later, bolstered the case of officials who said the country should reopen faster, the WSJ reports.

Saudi Arabia and China strike a strategic partnership. The agreement, made during the Chinese leader Xi Jinping’s visit to the Middle East, underscores the growing ties between Beijing and Riyadh. Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman, has been especially keen to diversify his country’s allies beyond the United States.

The IMF and World Bank see a worsening global outlook. The fund's Kristalina Georgieva said while China's reopening will be positive, indicators show more downgrades to world growth are likely. World Bank President David Malpass is "deeply concerned" about a global recession.

Ukraine says it has the right to strike Russia. Ukraine’s foreign minister called on the country’s allies not to fear a possible breakup of the Russian state as a consequence of the war, while defending Kyiv’s right to strike targets on Russian soil and vowing that Ukraine would never accept a peace settlement that leaves occupied lands, including Crimea, under Moscow’s control. Russian forces have contaminated up to 65,000 square miles of Ukrainian territory with mines, President Volodymyr Zelensky said, as the U.S. outlined support for tackling a threat it described as the biggest of its kind since World War II.

Erdogan wants to strengthen Black Sea grain deal. Turkish President Tayyip Erdogan said on Friday he will speak to Russia’s Vladimir Putin on Sunday, and he will also talk to Ukraine’s Volodymyr Zelenskyy in order to strengthen the Black Sea grain deal. “We want to strengthen the grain corridor and transport grain to less developed countries,” Erdogan said

Spending talks stall in Congress. Lawmakers have left Washington for a long weekend amid an impasse over the annual government spending bill for fiscal 2023, with just days to go before a Dec. 16 government shutdown deadline. Republicans and Democrats have yet to reach an agreement on a top-line figure for the appropriations package to fund government operations. That means another stopgap spending measure so lawmakers have more time to get a spending package completed.

NDAA, WRDA heads to Senate. When Congress returns next week, the Senate is expected to pick up the fiscal 2023 defense policy bill for consideration after the House passed it Thursday. The measure also carried the Water Resources Development Act (WRDA) of 2022 and the Don Young Coast Guard Authorization Act of 2022. The final WRDA 2022 makes permanent a 2020 change in the cost-share formula for inland waterway construction projects to 35% from the general Treasury fund and 65% from the Inland Waterway Trust Fund. The new WRDA removes a provision that would sunset the 65-35 cost-share back to 50-50 in 10 years. The bipartisan deal neither authorizes nor paves the way for the breach or removal of dams in the Columbia-Snake River System, which is the third largest grain export corridor in the world and is crucial to American agriculture’s global competitiveness, the National Grain & Feed Assn. noted.

Sometimes centrist Sen. Joe Manchin (D-W.Va.) lashed out Thursday at critics who have blocked his proposed permitting legislation, arguing Republicans are exerting payback for his support of this year’s climate and tax law. “It’s become personal — the Republicans are so mad at me because we passed the Inflation Reduction Act,” Manchin said during a talk at an energy efficiency conference at the National Press Club. “I thought they would get over it.”

Budget office vetting ethanol sales with E15. The Office of Information and Regulatory Affairs (OIRA) said in a notice online it is scrutinizing a draft Environmental Protection Agency policy change from at least eight Midwestern governors that would allow year-round sales of higher-ethanol E15 gasoline, signaling possible action within weeks. The move responds to a request from governors of Iowa, Illinois, Kansas, Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin, who asked EPA for a new rule removing a 1-psi Reid vapor pressure waiver for conventional E10 gasoline, a change that would put it on the same footing as E15 that contains 15% ethanol.

Flanked by union allies, Biden touts $36 billion pension bailout. President Biden announced a $36 billion bailout for the Central States Pension Fund, one of the nation’s biggest multi-employer plans, touting the help for union workers and retirees as he looks to mend ties with organized labor after a contentious rail deal. The event — where Biden was joined by International Brotherhood of Teamsters President Sean O’Brien and AFL-CIO President Liz Shuler, as well as Labor Secretary Marty Walsh — gave the president an opportunity to try to ease frictions with labor groups after he forced a contentious contract on freight-rail workers last week.

The number of oil tankers waiting in the Black Sea to pass through Istanbul's Bosphorus Strait on the way to the Mediterranean rose to 20, Tribeca shipping agency said, as Turkey held talks to resolve an insurance dispute behind the build-up.

Cotton AWP moves higher. The Adjusted World Price (AWP) for cotton moved up 75.17 cents per pound, effective today (Dec. 9), up from 73.03 cents per pound the prior week. USDA did not announce an import quota for upland cotton as the price requirement that the U.S. Far East price exceed the prevailing world market price for any consecutive four-week period was not met.

WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS  | SCOTUS on Prop 12 | New farm bill primer | China outlook |