First Thing Today | December 15, 2022

Good morning!

Quiet trade overnight... Corn, soybean and wheat futures traded within narrow ranges in quiet, two-sided price action overnight. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are 1 to 3 cents lower and wheat futures are 1 to 2 cents higher. Front-month crude oil futures are holding near unchanged while the U.S. dollar index is more than 500 points higher.

Weekly Export Sales Report out this morning... For the week ended Dec. 8, traders expect:

Record November NOPA crush figure expected... Members of the National Oilseed Processors Association (NOPA) are expected to report November soybean crush totaled 181.5 million bu., according to a Reuters survey. That would be down 1.6% from October but up 1.1% from last year and a new record for the month. Soyoil stocks are expected to total 1.619 billion pounds.

Exchange cuts Argentine wheat crop estimate... The Rosario Grain Exchange cut its 2022-23 Argentine wheat crop forecast another 300,000 MT to 11.5 MMT, far below the 19 MMT crop that was expected at the start of the growing season. “Wheat in the central region has suffered a devastating season, between the constant lack of water... and the frosts,” the exchange said, adding wheat yields fell to the lowest in a dozen years with harvest nearly two-thirds complete. The exchange maintained its 2022-23 soybean and corn crop forecasts at 48 MMT and 56 MMT, respectively.

Firm expects bigger EU crops in 2023... In its initial projections for 2023-24, Strategie Grains forecasts EU wheat production at 128.7 MMT, up 3.2 MMT (2.5%) from this year. For corn, the firm expects output will rise to 63.7 MMT, up 26% from a 15-year low of 50.5 MMT this year. Barley production is forecast to increase 1.2 MMT (2%) to 52.5 MMT. The production forecasts assume better weather conditions during the 2023-24 growing season, but “err on the side of caution because of higher production costs, notably for fertilizers, which could force some farmers to review their crop management.” Strategie Grains trimmed its 2022-23 EU wheat export forecast by 100,000 MT to 31.5 MMT.

House passes short-term funding bill to avert gov’t shutdown... The House on Wednesday passed a short-term funding bill through Dec. 22 to avert a government shutdown, kicking Friday’s funding deadline to next week to allow lawmakers more time to strike a deal on spending for the remainder of fiscal year 2023. The continuing resolution (CR) passed in a 224-201 vote. The measure now heads to the Senate, where it will require a unanimous agreement to provide for expedited consideration. Several senators said Wednesday they objected to the CR and were considering voicing that from the Senate floor, which would effectively cause a short shutdown.

China boosts cash support, holds rates steady... China’s central bank ramped up cash injections into the banking system on Thursday, while keeping an interest rate on the medium-term policy loans unchanged for the fourth straight month, to keep liquidity conditions ample. The People’s Bank of China (PBOC) said it was keeping the rate on 650 billion yuan ($93.53 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.75% from the previous operation. With 500 billion yuan worth of MLF loans expiring, the operation resulted in a net 150 billion yuan fresh fund injection into the banking system.

China’s industrial production, retail sales slump in November amid Covid pressures... China’s economy lost more steam in November as factory output slowed and retail sales extended declines, both missing forecasts and posting their worst readings in six months. Industrial output rose 2.2% in November from a year earlier, slowing significantly from the 5.0% growth seen in October. Retail sales fell 5.9% amid broad-based weakness in the services sector.

Firms raise China’s 2023 economic growth forecasts... J.P.Morgan raised its 2023 economic growth forecast for China by 30 basis points to 4.3% as the world’s second largest economy reopens from tight Covid restrictions. The firm lowered its 2022 China GDP forecast by 10 basis points to 2.8%. “The most important development in the past month is earlier reopening with a faster pace. Our analysis has taken into account a transitional pain period before the economy enters a strong recovery,” J.P.Morgan said. Rating company Fitch expects China’s economy to grow 4.1% in 2023, up from its forecast of 2.8% growth this year.

China’s Fufeng gets U.S. federal clearance for controversial North Dakota land purchase...  A U.S. inter-agency body charged with assessing national security risks involving foreign investments announced it will not block Chinese agribusiness giant Fufeng’s proposed $700 million corn milling project in North Dakota. After completing a 45-day review, the Committee on Foreign Investment in the United States (CFIUS) concluded that Fufeng USA’s purchase of 370 acres of land near Grand Forks from a private citizen is “not covered” under its jurisdiction.

Cash cattle negotiations at a standstill... Packers have been slow to establish bids in the negotiated cash cattle market this week, but they appear unwilling to pay any more than steady prices with week-ago. Feedlots, who are current, have little intent to move cattle at lower prices. It appears active cash cattle trade may not be seen until Friday – and the traded volume may be light for a second straight week.

Cash hog index inches higher for second straight day... The CME lean hog index is up 6 cents to $81.68 (as of Dec. 13), which follows a 15-cent gain on Wednesday. While they are modest, this is the first consecutive daily gains since Oct. 21 and Oct. 24, building hopes a seasonal low may be in place.

Overnight demand news... Japan purchased 154,942 MT of wheat in its weekly tender, including 65,870 MT U.S., 63,562 Canadian and 25,510 MT Australian. Tunisia purchased 125,000 MT of durum wheat from an unspecified origin.

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

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Livestock, Dairy, and Poultry Outlook: December 2022 — ERS
• 2:00 p.m. Sugar and Sweeteners Outlook: December 2022 — ERS
• 2:00 p.m. CE: Barley, Oats, Wheat — NASS