First Thing Today | December 6, 2022
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Soybeans and corn firmer, wheat mixed overnight... Soybean futures posted double-digit gains overnight while corn traded slightly higher and the wheat market was mixed. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents higher, soybeans are mostly 11 to 15 cents higher and wheat futures are a penny lower to 2 cents higher. Front-month crude oil futures are around $1 lower and the U.S. dollar index is more than 300 points lower.
Consultant lowers Argentine crop estimates... A lack of rain and high temperatures are increasing crop stress across Argentina. As a result, South American crop consultant Dr. Michael Cordonnier cut 1 MMT each from his Argentine soybean and corn crop forecasts. He estimates both crops at 48 MMT with a neutral to lower bias. Cordonnier kept his Brazilian crop estimates at 151 MMT for soybeans and 125.5 MMT for corn.
Aussie weather bureau: La Niña to continue for now... Atmospheric and oceanic indicators reflect a mature La Niña, according to the Australian Bureau of Meteorology and models suggest a return to ENSO-neutral conditions in January or February 2023. For Australia, La Niña typically increases the chance of above-average rainfall in northern and eastern areas of the country.
New soy crush plant planned for Grand Forks... Epitome Energy plans to build a $400 million soybean crushing plant in Grand Forks, North Dakota, the company announced Monday. The plant will process up to 42 million bu. of soybeans per year into crude degummed soybean oil, meal and hulls. Soybean oil will likely go into the renewable diesel industry, while the meal will go into the livestock industry.
Siegel attacks Powell’s inflation approach... Wharton professor Jeremy Siegel roasted Fed Chair Jerome Powell for failing to see signs of falling inflation. “Very honestly, I don’t know what planet he lives on,” Siegel said on CNBC, pointing to falling home prices and other indicators. “To be blunt, here’s a Fed that caused the inflation by expanding liquidity greater than any other time in history, is basically talking as if, to the worker ‘we’re not going to let you catch up to the inflation that I caused,’” Siegel said. “That’s a slap in the face to the American worker, in my opinion… Is that good public policy?”
Inflation near a peak but more ECB rate hikes needed... The European Central Bank (ECB) will have to raise interest rates several more times to tame price pressures, even if headline inflation is now close to its peak, ECB chief economist Philip Lane said. “We do expect that more rate increases will be necessary, but a lot has been done already,” Lane told Milano Finanza. “I would be reasonably confident in saying that it is likely we are close to peak inflation.” Having raised rates by a combined 200 basis points (bps) since July to fight off record high inflation, ECB has signaled a slowdown in the pace of monetary tightening this month after back-to-back 75 bps point moves.
Pollution tariffs... The U.S. and European Union are weighing new tariffs on Chinese steel and aluminum as part of a bid to fight carbon emissions. The move would mark a novel approach, Bloomberg reports, as the U.S. and EU would seek to use tariffs — usually employed in trade disputes — to further their climate agenda. The new framework is mainly aimed at China, the world’s biggest carbon emitter and producer of steel and aluminum, as well as other large polluting nations, sources say. Bloomberg says the plan “would likely deepen divisions between Beijing and Washington.”
Manchin’s permitting reform getting a final look during lame-duck defense talks... Top Democrats are trying to include a version of permitting legislation backed by Sen. Joe Manchin (D-W.Va.) into the must-pass annual defense bill. It stems from a deal Manchin made with Senate Majority Leader Chuck Schumer (D-N.Y.) to support the Inflation Reduction Act. Democrats, under pressure from environmental justice advocates, decided against passing the permitting policies in September. Meanwhile, the White House says it supports an effort to attach previously stalled legislation to fast-track energy projects backed by onto the defense bill. “The president believes we should pass the defensive authorization bill, and that the permitting bill should be included in that legislation, so that is something that we support from here,” White House Press Secretary Karine Jean-Pierre saud Monday.
Newsom, accusing oil industry of price gouging, unveils California plan to cap refinery profits... California Democratic Gov. Gavin Newsom unveiled an outline of his plan to place a cap on oil refinery profits in the state, a proposal he’s asking lawmakers to approve in hopes of reducing future spikes in gasoline prices. According to a draft of Newsom’s plan, he is asking the state legislature to enact a yet-to-be-determined profit cap based on a monthly calculation of the average profit per barrel that an oil refiner earns for wholesale gasoline. The governor’s proposal allows for penalties for violations of the profits cap and new regulatory review and oversight, giving the Energy Commission expanded authority to investigate supply and price issues.
No real charge in “Buy America” requirements for EV charging stations... Implementation of major legislation is always a difficult process. And that is the case with installing billions of dollars’ worth of electric vehicle (EV) charging stations. The requirement could hurt efforts to deploy a new national network of electric vehicle charging stations as state transportation officials and companies in the charging industry are pushing the Biden administration to delay a January deadline for chargers to be made in the U.S., citing a need to ramp up domestic production first.
Payments under USDA disaster, Covid aid edged higher... Payments under the Emergency Relief Program (ERP) increased to $7.20 billion as of Dec. 4, up from $7.18 billion the prior week. The payment total includes $6.15 billion for non-specialty crops ($6.14 billion prior) and $1.05 billion for specialty crops ($1.04 billion). Payments under the Coronavirus Food Assistance Program (CFAP) efforts also edged higher, with total CFAP 2 payments now at $19.16 billion ($19.15 billion prior) and CFAP 1 payments at $11.83 billion ($11.82 billion). Totals within each program for original payments and top-up payments were little changed.
Heavy pressure on wholesale beef prices continues... Choice boxed beef prices plunged $6.62, while Select fell $3.45 on Monday. Packers are actively lowering wholesale beef prices to keep product moving through the pipeline amid heavy production. While cutting margins are in the red, there’s expected to be enough packer demand to keep cash cattle prices on an upward trajectory.
Modest drop in cash hog index... The CME lean hog index is down 8 cents to $82.79 (as of Dec. 2). After dropping 35 cents on Monday, December lean hog futures finished 71.5 cents below today’s cash index quote. February lean hog futures finished Monday $7.735 above the cash index, signaling traders anticipate the cash index will soon bottom and then start to strengthen seasonally.
Overnight demand news... South Korea purchased 50,000 MT of U.S. milling wheat, 65,000 MT of Australian feed wheat and 65,000 MT of corn expected to be sourced from South America. Taiwan tendered to buy up to 65,000 MT of corn to be sourced from the U.S., Brazil, Argentina or South Africa. Japan is seeking 154,957 MT of wheat in its weekly tender.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
- No reports scheduled.
