First Thing Today | December 21, 2022
Good morning!
Modest followthrough buying overnight... Corn, soybeans and wheat opened lower overnight but firmed through the session and are higher this morning. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are mostly 5 to 6 cents higher, SRW wheat futures are 3 to 4 cents higher, HRW is 7 to 8 cents higher and HRS wheat is 2 to 3 cents higher. Front-month crude oil futures are more than $1.50 higher and the U.S. dollar index is around 100 points higher.
Zelenskyy to visit Washington... Ukrainian President Volodymyr Zelenskyy will visit Washington on Wednesday, using his first trip outside his homeland since it was invaded 300 days ago to urge Congress for sustained military and economic assistance. He will address a joint session of Congress this evening after meeting earlier in the day with President Joe Biden and top Cabinet and national security officials. Biden and Zelenskyy will hold a press conference as well.
Senators could pass a $1.7 trillion government funding bill as soon as today... Members voted 70-25 on the first procedural vote to start debate on the measure. Both chambers must pass the measure and Biden must sign it into law by midnight Friday night to avoid a lapse in government spending. A House vote later this week may be even closer than the Senate vote. House Republican leaders informed GOP lawmakers they’re urging members to vote against the omnibus measure. If no Republicans support the measure, Democrats could only afford to lose two votes while maintaining a majority.
WSJ: High commodity prices feed U.S. Farm Belt boom... High prices for crops and livestock are fueling a boom in the U.S. Farm Belt, making farmers, ranchers and agricultural companies rare winners as the broader American economy softens, the Wall Street Journal (WSJ) reports. U.S. net farm income is expected to surge to $160.5 billion this year, boosted by increased prices for wheat, milk and other farm goods, according to a USDA forecast. If realized, farm income would reach the highest level since 1973 in inflation-adjusted dollars.
Russia to launch gas field pipeline to China... Russian President Vladimir Putin will take part in a video conference on Wednesday to mark the launch of the Kovykta gas field, which feeds into the Power of Siberia pipeline carrying Russian gas to China, the Kremlin said. The field is the largest in eastern Russia, and its launch is part of a major drive by Russia to ramp up gas supplies to China as the European Union cuts reliance on Russian energy in response to the war in Ukraine. Russia started selling natural gas to China at the end of 2019 via the Power of Siberia pipeline, which supplied about 10 billion cubic metres (bcm) of gas in 2021. In February, Putin reached an agreement to sell an additional 10 bcm of gas to China from Russia’s Far East through a new, smaller pipeline to China’s northeast. Russia also plans to construct another major pipeline, the Power of Siberia 2, via Mongolia with a view to selling an additional 50 bcm of gas per year.
Biden team expands dairy dispute with Canada via USMCA... The U.S. is requesting dispute-settlement consultations for a third time over Canada’s dairy quotas, saying it has found more areas of “deep concern” and that the nation’s measures are inconsistent with its obligations under the U.S.-Mexico-Canada Agreement (USMCA). Washington is expanding its challenge to include Canada’s use of a market-share approach for determining the quotas, the Office of the US Trade Representative said in a statement Tuesday. It said Ottawa’s method prohibits eligible applicants — including retailers and food-service operators — from accessing allocations. If there is no eventual solution, the U.S. can request another dispute settlement panel be established.
GAO to conduct infrastructure oversight... The Government Accountability Office (GAO) will get $5 million to conduct oversight for last year’s infrastructure law, including investigations and audits. It directs the Comptroller General to submit a spending plan for that oversight within 90 days, an explanatory statement from appropriators said. House GOP lawmakers are planning to escalate oversight of the law’s implementation in the next Congress.
USPS to electrify majority of fleet... The U.S. Postal Service will spend nearly $10 billion to purchase 66,000 electric vehicles for its mail delivery fleet by 2028, according to a statement Tuesday. The postal service said it will continue exploring the potential to make its entire fleet electric.
China to investigate ‘excessive’ hog price decline... China’s state planner said on Wednesday it called a meeting of hog industry experts to ensure stable prices after recent excessive declines. According to experts the slump was due to a “temporary” period of weak consumption, it said, adding that there is no oversupply.
Beef packers working to improve margins... Beef plants have slowed slaughters and raised wholesale beef prices to boost cutting margins so they can be more aggressive with cash bids after the holidays, when they will need more supplies. Estimated cattle slaughter the first two days this week was 22,000 head behind week-ago and 17,000 less than last year. Meanwhile, Choice boxed beef prices firmed another $1.22 on Tuesday and are up $22.40 since the Dec. 6 low.
Cash hog market searching for a low... The CME lean hog index has firmed four of the past six days but is only 2 cents higher than yesterday’s low, which was the lowest level since Jan. 27. Given the holiday-shortened slaughter schedules over the next couple of weeks, a seasonal low in the cash index isn’t likely until sometime in early 2023 – unless packers need more supplies than cash sources anticipate. But even then, they are likely to delay actively bidding for hogs until after the holidays.
Overnight demand news... Iraq purchased 150,000 MT of milling wheat expected to be sourced from Australia.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS
