Soybeans Continue Rally as Traders Focus on Dry, Hot Brazilian Weather

( )

CDC halves recommended isolation time for people with asymptomatic infections to 5 days
 


In Today’s Digital Newspaper


Market Focus:
• Santa Claus equity rally continues
• December is typically one of best months for stocks
• Mastercard: U.S. retail sales rose 8.5% year-over-year
FT: Companies raised record $12.1 trillion in financing in 2021, up by 17% from YA 

• Weather one of the major inflationary forces of 2021
• Winter surge in Covid-19 cases expected to dent global economic growth in early 2022
• Transport industry bracing for another roller coaster year of supply-chain disruptions
• Japan factory output shoots higher as auto production resumes
• Exxon Mobil: Baytown refinery operating at reduced rates
• Industry analyst Jim Wyckoff has cautionary note for market bulls  

Soybeans extend rally
• Consultant broadly cuts South American crop estimates
• Dry weather impact winter wheat in central Ukraine
• Strong post-Christmas beef trade
• CME lean hog index softens again

Policy Focus:
• CFAP 2 payouts again edge higher  
• President Biden signs $768 billion defense-spending bill into law 

Afghanistan:
• Taliban admin. working to boost exports to save Afghan economy from collapse  

China Update:
• China complains to U.N. about satellites operated by Elon Musk’s Starlink program
• China poised to approve domestic GMO corn varieties, but commercial planting unclear
• Walmart drawing ire from Chinese social-media users over Xinjiang
• Defense ministers of Japan and China to set up a joint defense hotline by end of 2022
• China Evergrande said construction work has resumed
• U.S. says its diplomatic boycott of the Beijing Winter Olympics stands 

Energy & Climate Change:
• EPA sets dates for workshop on biofuel greenhouse gas modeling 


Livestock, Food & Beverage Industry Update:
• USDA formally adds Dominican Republic to list of countries with ASF 


Coronavirus Update:
• CDC halves recommended isolation time for people with asymptomatic infections to 5 days
• Record number of Covid-19 infections recorded Monday
• Biden acknowledges shortage of tests, but vows to remedy situation
• Dr. Fauci: Covid vaccine requirement should be considered for domestic air travel
• Botox and Covid shots don’t mix 

Politics & Elections:
• Man who told Biden ‘Let’s go Brandon' goes on Bannon's podcast, touts Trump
• Republicans increasingly optimistic about a “red wave” in midterm elections
• Three biggest election challenges for each party
• Emergence of Republican Hispanic voters setting off alarm bells among Dems
• Gallup poll: Biden approval rating at 43%; Chief Justice Roberts has highest approval 

Congress:
• Sen. Warren: Financial services industry is large contributor to climate change 


Other Items of Note:
• Russia 'not bluffing' on NATO rollback, warns of ‘large-scale conflict in Europe’
• North Korea’s ruling party started a major policy meeting to lay out priorities
• Not an empty cinema seat in India


MARKET FOCUS


Equities today: Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward modestly higher openings. Asian equities end with gains after initial pressure linked to ongoing Omicron worries. The Nikkei gained 392.70 points, 1.37%, at 29,069.16. The Hang Seng Index rose 56.80 points, 0.24%, at 23,280.56. European equities are mostly higher, building on gains scored in U.S. markets Monday. The Stoxx 600 was up 0.6%, with regional markets up 0.6% to 0.9%; the FTSE, however, gave up early gains and was recently nearly steady.

     U.S. equities yesterday: The Santa Claus rally continues on Wall Street, with the Dow up 351.82 points, 0.98%, at 36,302.38. The Nasdaq gained 217.89 points, 1.39%, at 15,871.26. The S&P 500 finished at a new record, rising 65.40 points, 1.38%, at 4,791.19.
 

     December is typically one of the best months for stocks. That's in part because of strength in the final five days of the year. The good times usually extend to the first two trading days of the following year, too, according to LPL Financial's Ryan Detrick. "Why are these seven days so strong? Whether optimism over a coming new year, holiday spending, traders on vacation, institutions squaring up their books — or the holiday spirit — the bottom line is that bulls tend to believe in Santa," Detrick said in a recent note to clients. The seven-day "Santa Claus rally" has materialized all but six times since the mid-1990s. And on those occasions, the following year was usually tough. So far, so good in 2021, though.

     Mastercard found that U.S. retail sales rose 8.5% year-over-year as Americans returned to stores and displayed growing comfort buying presents from their couches.

     Stocks

On tap today:

     • U.S. economic data due for release includes the weekly Johnson Redbook and chain store sales reports, the monthly house price index, the S&P Case-Shiller home price indexes, and the Richmond Fed business survey.

Companies raised a record $12.1 trillion in financing in 2021, up by 17% from the previous year, according to Financial Times calculations based on Refinitv data. The huge bond-buying program of the Federal Reserve and other central banks pushed the cost of borrowing to record lows, stimulating the rush for new loans and other types of fundraising. In America alone, companies raised over $5 trillion.

Weather has been one of the major inflationary forces of 2021, wreaking havoc on markets for raw materials, including natural gas, lumber and grains, according to a Wall Street Journal article (link).

     As for 2022, La Niña conditions have emerged in the Pacific. That typically brings drier and warmer-than-average weather in Argentina, the south of Brazil and the southern United States. Meanwhile, flash flooding, surprise frosts and other droughts that featured in 2021 could extend into or repeat next year.

     Spring wheat

Winter surge in Covid-19 cases is expected to dent global economic growth in the early part of 2022, as businesses struggle with absenteeism and consumers stay home to avoid getting sick. Several economists have recently cut forecasts for the U.S. following early signs that a sharp rise in cases has already disrupted parts of the economy. Economists expect Covid-19 cases driven by the Omicron variant will push economic activity from the first quarter into the second, with a smaller impact than from prior waves of the pandemic.

Transport industry is bracing for another roller coaster year of supply-chain disruptions. As the Omicron variant spreads and governments tighten restrictions, logistics firms around the world, from global giants to small businesses, are struggling to retain enough staff. According to the International Road Transport Union, around one-fifth of all professional truck driving jobs are unfilled.

Japan factory output shoots higher as auto production resumes. Factory output in Japan during November rose 7.2%, more than expected, largely on a surge of 43.1% in automobile production compared with October. The November rise was the fastest since 2013 when comparable data is available. Easing supply chain issues were noted as a factor, but issues with computer chips are expected to continue and that could temper the outlook ahead. Toyota Motor Corp. said it would halt production at five factories in January due to supply issues and Covid.

Market perspectives:

     • Outside markets: The U.S. dollar index is slightly weaker as both the euro and British pound have firmed against the greenback. The yield on the 10-year U.S. Treasury note is slightly higher to trade around 1.48% with a flat tone to global government bond yields. Gold and silver futures are seeing buying interest ahead of U.S. economic data, with gold around $1,818 per troy ounce and silver around $23.23 per troy ounce.

     • Crude oil futures are seeing solid advances ahead of U.S. trading, with U.S. crude around $76.70 per barrel and Brent around $79.25 per barrel. Futures were firmer in Asian action, with U.S. crude up 27 cents at $75.84 per barrel while Brent gained 27 cents at $78.87 per barrel.

     • West Texas Intermediate futures closed 2.4% higher on Monday, trading above $75 a barrel for the first time in a month amid a light volume session.

        Oil high

    • Exxon Mobil says Baytown refinery operating at reduced rates. Exxon Mobil Monday said its refinery in Baytown, Texas, that was hit by fire Dec. 23 is operating at reduced rates with the unit involved in the fire still shut. The company said it was continuing to empty the unit so it can determine the potential impact on production. The facility has a chemical plant, olefins plant and the fourth largest U.S. refinery with a capacity of 560,500 barrels per day. A filing with the Texas Commission on Environmental Quality indicated the fire was at the Hydro Desulfurization Unite 1.

     • Industry analyst Jim Wyckoff cautions: “Corn and soybean bulls have good technical power, while wheat lags. The speculative shorts (sellers) in the grain futures have now likely been mostly squeezed out of their positions over the past couple weeks of price gains. New speculative longs (buyers) have now entered the markets, especially in corn and soybeans. Grain market bulls now need to beware the rest of this week: The bigger fund traders may try to press the new and weaker long traders out of the market by taking profits on their better-established long positions, amid the thin holiday trading conditions this week.”

     • NWS weather: Spring like temperatures persist in the South and East; elevated fire weather risk for parts of the Southern Plains; bitterly cold wind chills in the northern Rocking and High Plains today... ...Wintry weather to cause treacherous travel conditions from the Midwest to the interior Northeast today; Slight Risks for severe storms and Excessive Rainfall posted in parts of the Deep South Wednesday... ...Heavy snow for parts of the Sierra Nevada and Central/Southern Rockies.

        NWS_122821
        Wx_122821

Items in Pro Farmer's First Thing Today include:

     • Soybeans extend rally
     • Consultant broadly cuts South American crop estimates
     • Dry weather impact winter wheat in central Ukraine
     • Strong post-Christmas beef trade
     • CME lean hog index softens again


POLICY FOCUS


— CFAP 2 payouts again edge higher. Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) now total $19.06 billion as of Dec. 26, up slightly from $19.04 billion the prior week. Original CFAP 2 payments are at $14.24 billion while the top-up payments stand at $4.82 billion, both essentially unchanged from the prior week. Acreage-based payments are at $11.12 billion, with $3.45 billion for livestock, $2.93 billion for sales commodities, $1.21 billion for dairy, $278.22 billion for contract producers and $68.17 million for eggs/broilers.

     Payments under CFAP 1 are at $11.74 billion, including $10.56 billion for original CFAP 1 payments and $1.19 billion in top-up payments, basically steady with the prior week. Those include $6.23 billion for livestock, $2.66 billion for non-specialty crops, $1.81 billion for dairy, and $924.28 million for specialty crops.

— President Joe Biden signed a $768 billion defense-spending bill into law. It had passed Congress with bipartisan support earlier this month after Republicans managed to add $24 billion to the amount Biden originally requested. The money will be distributed broadly across America’s military machine and includes a 2.7% pay raise for armed-forces personnel.


AFGHANISTAN


— Taliban administration is working to boost exports to save the Afghan economy from collapse, with a government official saying international humanitarian aid alone won’t prevent the country from slipping deeper into poverty


CHINA UPDATE


— Space traffic: China complained to the United Nations that its space station has twice had to dodge out of the way of satellites operated by Elon Musk’s Starlink program. The incidents reportedly happened in July and October. Starlink has launched around 1,900 satellites, which are orbiting the Earth to provide broadband services.

— China poised to approve domestic GMO corn varieties, but commercial planting unclear. China is expected to approve three new corn GMO varieties that have been developed by domestic companies, the country’s agriculture ministry said, but it is not yet clear the varieties will be approved for commercialization at this time. The ministry said a comment period will be open until Jan. 17 on the three corn varieties and seven GMO cotton products. Approval of GMO crops for import remains one of the tension points between the U.S. and China as the country had committed to addressing its regulatory process on that front under the Phase 1agreement without any changes having been adopted as of yet.

— Walmart has been drawing ire from Chinese social-media users over its handling of business involving Xinjiang, the latest Western company to face public scrutiny over the issue. A new U.S. law virtually bans all imports from the northwestern Chinese region over forced-labor and human-rights concerns, allegations that China has rejected. Beginning last week, internet users purported to show that Walmart had stopped stocking products from Xinjiang in its China-based Walmart and Sam’s Club stores. Some said they had canceled their Sam’s Club memberships. A U.S.-based Walmart spokesperson declined to comment.

— Defense ministers of Japan and China have agreed to set up a joint defense hotline by the end of 2022, even as the two East Asian powers continue to be at odds over territorial disputes and military posturing. Tokyo is showing increasing concern over the situation surrounding Taiwan, the self-governed island that China claims as its own. Japan and China also have a long-standing dispute over an uninhabited Japanese-controlled island chain in the East China Sea — known as the Senkakus in Japan and Diaoyus in China. Over the last few years, Japan has bolstered its air and sea defenses in response to China’s displays of military aggression in the South China Sea and beyond.

— China Evergrande said construction work has resumed at most of its stalled residential projects and it has picked up the pace of delivering apartments promised to home buyers.

— U.S. said its diplomatic boycott of the Beijing Winter Olympics stands after China announced that officials from the American government had applied for visas. Any visa applications were for consular and security personnel, a spokesperson at the U.S. Embassy in Beijing said in a statement, adding that it was a routine move to provide athletes, coaches and others with access to services enjoyed by Americans abroad.


ENERGY & CLIMATE CHANGE


— EPA sets dates for workshop on biofuel greenhouse gas modeling. EPA has announced a two-day virtual public meeting/workshop on biofuel greenhouse gas (GHG) modeling to “solicit information on the current scientific understanding of greenhouse gas modeling of land-based biofuels in the transportation sector. The sessions are set for Feb. 28 and March 1, with EPA aiming to gather information that “will be used to inform a range of current and future actions, including EPA's methodology for quantifying the greenhouse gas emissions under the Renewable Fuels Standard.” EPA’s Office of Transportation and Air Quality is holding the sessions in consultation with USDA and the Department of Energy. EPA said they want to use the sessions to start a public process for input on “how to incorporate the best available science into an update of our lifecycle analysis (LCA) of biofuels,” and to assess what “steps EPA should take next in this work area.” This figures to be a potentially important session as biofuel supporters have maintained that the current GHG modeling and LCA being used for corn-based ethanol is outdated. Link to read more about EPA’s coming sessions.


LIVESTOCK, FOOD & BEVERAGE INDUSTRY


— USDA formally adds Dominican Republic to list of countries with ASF. USDA has published a notice in the Federal Register (link) that the Animal and Plant Health Inspection Service (APHIS) has added the Dominican Republic to the list of regions considered to be affected with African Swine Fever (ASF). APHIS added the country to the list July 28 following notification that swine in the country tested positive for ASF. Pork and pork products from the Dominican Republic, including casings, are subject to APHIS import restrictions. There are no changes relative to the status of the Dominican Republic as the notice published today “serves as an official record and public notification of the APHIS action.”


CORONAVIRUS UPDATE


Summary: Global cases of Covid-19 are at 281,468,439 with 5,408,970 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 52,794,834 with 818,371 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 503,480,667 doses administered, 205,196,973 have been fully vaccinated, or 62.61% of the U.S. population.

      New York makes up almost 45% of new Covid-19 cases in the U.S.

— More than 1.4 million Covid-19 infections were recorded worldwide on Monday, a new daily record, largely due to the increased transmissibility of the Omicron variant. The seven-day rolling average of infections is also at its highest-ever level. The number of daily deaths has not seen a similar increase, remaining at a relatively consistent level since mid-October, though deaths tend to lag infection rates.

— Biden acknowledges shortage of tests, but vows to remedy situation. During a meeting with the National Governors Association on Monday, President Biden acknowledged that Covid-19 test availability hasn’t kept up with heavy demand, saying his administration is seeking to expand pop-up sites and the availability of at-home test kits. Biden said, “Seeing how tough it was for some folks to get a test this weekend shows that we have more work to do and we’re doing it.” Biden said his administration’s steps include using the Defense Production Act to boost at-home test manufacturing and making it easier to use the Google search engine to find a nearby testing location.

— A Covid vaccine requirement should "seriously" be considered for domestic air travel, Dr. Anthony Fauci told MSNBC's Morning Joe. "When you make vaccination a requirement, that's another incentive to get more people vaccinated," Fauci said.

     Response from the White House: When asked for comment, the administration referred to a statement President Biden made to ABC News last week. "It's been considered, but the recommendation I've gotten so far is it's not necessary, even with Omicron," he told anchor David Muir.

— CDC cuts isolation time recommended for people with asymptomatic coronavirus infections to five days. Federal health officials shortened the recommended time Americans infected with coronavirus should isolate from 10 days to five if they are asymptomatic — a decision they said was driven by a growing body of research about when people are most infectious. The Centers for Disease Control and Prevention also cut the quarantine time to five days for those exposed to coronavirus who are not boosted. In addition, they recommended such people wear masks around others for an additional five days. People who have received booster shots do not need to quarantine after an exposure, the agency said, but should wear a mask for 10 days. “These updates ensure people can safely continue their daily lives,” CDC director Rochelle Walensky said in a statement. “The omicron variant is spreading quickly and has the potential to impact all facets of our society. CDC’s updated recommendations for isolation and quarantine balance what we know about the spread of the virus and the protection provided by vaccination and booster doses.”

— Botox and Covid shots don’t mix. Many doctors advise that Botox clients put time between Covid-19 shots and the cosmetic injections. That’s causing some furrowed brows this holiday season.


POLITICS & ELECTIONS


— Man who told Biden 'Let's go Brandon' goes on Bannon's podcast, touts Trump. The Oregon man who called President Biden and first lady Jill Biden and said the anti-Biden phrase "Let's Go Brandon" pushed the baseless claim that the 2020 election was stolen from former President Trump while speaking on a podcast with Steve Bannon.

— Republicans increasingly optimistic about a “red wave” in midterm elections. The Hill reports (link) Republicans are increasingly optimistic about the possibility of a “red wave that could flip both chambers of Congress and end Democrats’ unified control in Washington.” Heading into the midterms, “Democrats find themselves on their back foot, defending their narrow House and Senate majorities — and President Biden — against a fusillade of attacks over stubbornly high coronavirus cases, inflation, the bloody Afghanistan withdrawal and more. Biden’s approval ratings have nosedived to the low 40s, portending a possible drumming at the ballot box next year – and they haven’t stopped falling.” The Hill says “many on both sides of the aisle” believe the House is “likely to fall into Republican hands, given Democrats’ razor-thin five-seat majority there. However, despite a favorable map for Democrats” in the Senate, “the party’s 50-50 majority in that chamber could be toppled too.”

        Three biggest challenges for each party. In a piece for the Washington Post (link), Henry Olsen, a senior fellow at the Ethics and Public Policy Center, lists “three of the biggest challenges” each party will face in 2022. For Democrats, “the onus will be on President Biden to navigating these three issues: Tamping down inflation. ... Reestablishing a national global defense strategy in the face of Russian, Chinese and Iranian provocation. ... Managing the shift from pandemic to endemic.” Olsen says Republicans must “Stay sane. ... Make sure Republican-led states are well-governed. ... Remember that the GOP failed to take the White House just two years after enjoying a tsunami of success in the 2010 midterms.” Olsen writes, “How the two parties manage these issues in the new year will determine not only their standing at the end of 2022, but for years to come. Let’s hope they’re both up to the challenges.”

— Emergence of newly Republican Hispanic voters is setting off alarm bells within the Democratic Party. Nationwide, then-President Donald Trump’s share of the Latino vote grew by eight percentage points in 2020 compared with 2016, an analysis by Catalist, a Democratic voter-data firm, found earlier this year, according to the Wall Street Journal (link). New calculations by the firm find that the shift toward the GOP meant that then-candidate Joe Biden carried the group in 2020 by about 750,000 votes fewer than Hillary Clinton did in 2016 — a danger sign for Democrats, given that President Biden’s winning margin in five states was fewer than 100,000 votes. With Democrats defending narrow majorities in Washington, strategists in both parties are trying to determine why a larger share of Latino voters backed Trump and whether the shift is durable.

     Latino vote

— Gallup poll: Biden approval rating at 43% while Chief Justice Roberts has highest approval of federal leaders. A new Gallup poll of 811 adults (12/1-12/16) released Monday found Supreme Court Chief Justice John Roberts received the highest approval rating among leaders from across the three branches of federal government, and he was the only official to gain majority support from both Democrats and Republicans. With an approval rating of 60%, Roberts was just ahead of Federal Reserve Chairman Jerome Powell (53%) and Director of the National Institute of Allergy and Infectious Disease Anthony Fauci (52%). The lowest rated official was Senate Minority Leader Mitch McConnell (R-Ky.), at just 34% approval. President Biden ranked near the bottom with 43% support.”


CONGRESS  


Sen. Elizabeth Warren accused the financial services industry of being a large contributor to climate change and urged U.S. regulators to hold it to account. Warren (D-Mass.) referred to a report by the Sierra Club and the Center for American Progress, which shows that eight of the largest U.S. banks — and 10 of its largest asset managers — combined to finance about 2 billion tons of carbon dioxide emissions. That’s about 1% less than what Russia produced. U.S. regulators “need to crack down,” Warren said in a tweet yesterday.


OTHER ITEMS OF NOTE     


— Russia 'not bluffing' on NATO rollback, warns of ‘large-scale conflict in Europe’. Russia will not drop a demand that NATO “be rolled back” to its 1997 boundaries, according to a senior Russian envoy, a requirement backed by the threat of “a large-scale conflict in Europe” arising out of Ukraine. “We are not bluffing,” Russian Deputy Foreign Minister Sergei Ryabkov said Monday, per state-run TASS. “These are our real proposals. The West’s awareness of this needs to be facilitated, and we are going to make every effort to achieve it.”

— North Korea’s ruling party started a major policy meeting to lay out priorities for the coming year and how to respond to the Biden administration’s invitation to return to nuclear disarmament talks stalled for about two years. Leader Kim Jong Un attended the opening session of a Workers’ Party Central Committee meeting yesterday, the official Korean Central News Agency said.

— Not an empty cinema seat in India. The number of cinema tickets purchased by Indians in 2017 was 1.98 billion, despite their country having only eight screens per million people. The U.S., by contrast, had only 1.24 billion admissions despite having 124 screens per million.


 

Latest News

Friday Wrap Up | May 20, 2022

Davis Michaelsen and Editor Brian Grete discuss this week's market action...

After the Bell | May 20, 2022

Wheat futures extend steep selloff on heavy liquidation to end lower on week; soybeans surge to four-week high.

Another bearish placements figure

USDA's estimated April placements down 0.9% from last year, whereas traders expected a 4.6% decline, on average.

Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

House Passes Gas Bill | May 20, 2022

Malaysia maintains palm oil export tax, France's wheat crop ratings soften and Biden Administration lends flexibility to refiners on RFS requirements...