First Thing Today | December 22, 2022

Good morning!

Light trade overnight... Corn, soybean and wheat futures held in tight ranges in a lightly traded overnight session. As of 6:30 a.m. CT, corn futures are trading steady to a penny higher, soybeans are 1 to 2 cents lower, winter wheat futures are 6 to 8 cents higher and spring wheat is 3 to 4 cents higher. Front-month crude oil futures are around $1.25 higher an the U.S. dollar index is near unchanged.

Senate nears agreement on omnibus spending measure... Senate Majority Leader Chuck Schumer (D-N.Y.) said Republicans and Democrats are on the brink of an agreement that would allow the Senate to finish work on the $1.66 trillion omnibus spending bill. He scheduled a nomination vote for 7 a.m. CT in a bid to put the finishing touches on the potential deal.

Potential glitch to omnibus passage... Sen. Mike Lee (R-Utah) has an amendment that would extend the Biden administration’s use of Title 42 authority at the border. Title 42 restricts asylum claims for migrants seeking safe haven in the United States. The Trump and Biden administrations have used this authority to quickly expel millions of migrants since the start of the Covid-19 pandemic, but it is about to expire unless the Supreme Court rules otherwise. Lee’s amendment was going to be considered at a 51-vote threshold, and there’s a good chance it would pass. The parliamentarian has ruled the amendment can be considered under a 51-vote threshold, which dramatically raises the stakes on the proposal. Sources say the issues will eventually be rectified.

Weekly Export Sales Report out this morning... For the week ended Dec. 15, traders expect:

Cargo insurance for shipments via the Ukraine grain export corridor to remain steady in 2023... A cargo insurance facility providing coverage for shipments via Ukraine’s grain export corridor will continue next year with no rate increases, an underwriter with Lloyd’s of London insurer Ascot said. “The ‘AsOne’ Black Sea facility will continue unabated with no planned increases to rating”, Chris McGill, Ascot’s head of cargo, told Reuters. “This is against a supply-driven, rate-hardening environment in the marine war market.”

Industry’s switch to cleaner fuels complicating ocean logistics and raising shipping costs... Carriers are spending billions of dollars on low- and no-carbon ships, the Wall Street Journal reports, with no clear idea how quickly they can recoup expenses or which alternate fuel will prevail. A.P. Møller-Maersk is awaiting 19 ships that run on methanol while Mediterranean Shipping and Germany’s Hapag-Lloyd are ordering ships powered by liquefied natural gas. Other ship owners are looking into ammonia. The International Maritime Organization says the shipping industry must cut carbon emissions in half by 2050. Its members are considering a levy that would subsidize a global build-out of alternative fueling stations and the European Union is raising taxes on ship operators that use high carbon-emitting fuels. Some developing countries are warning that more expensive carbon-neutral fuels will make commodities exports more expensive.

Zelenskyy tells Congress aid to Ukraine ‘not charity’... President Volodymyr Zelenskyy told the U.S. Congress Wednesday night aid to Ukraine was an “investment in global security” and “not charity” as he pressed for more assistance for his country’s war effort. The U.S. announced $1.85 billion in additional military assistance for Ukraine, including a transfer of the Patriot Air Defense System. The Kremlin said U.S. supplies of a Patriot missile system to Ukraine would not contribute to settling the conflict or prevent Russia from achieving its goals.

No evidence Russia to blame for Nord Stream pipeline explosion... Western inelligence officials have found no conclusive evidence to blame Russia for the Nord Stream pipeline bombing. Who bombed the undersea gas pipeline in late September remains one of the biggest mysteries of the Ukraine war. And though world leaders were quick to point fingers at Moscow, a growing number of countries investigating the attack now doubt the Kremlin was responsible for the brazen act of sabotage.

U.S. home sales notched longest streak of declines in 23 years last month... Data released Wednesday showed existing home sales dropped for a 10th consecutive month in November. November’s annualized sales pace dipped 7.7% from October, and 35.4% compared to the previous year, the National Association of Realtors (NAR) said. “The residential real estate market was frozen in November, resembling the sales activity seen during the Covid-19 economic lockdowns in 2020,” NAR chief economist Lawrence Yun said. “The principal factor was the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes.” Earlier this year, mortgages climbed above 7%, and are currently hovering around 6.52%.

Two additional HPAI cases boost total birds affected to 57.8 million... USDA’s Animal and Plant Health Inspection Service (APHIS) announced two additional cases of highly pathogenic avian influenza (HPAI) in commercial operations — a commercial turkey meat bird flock in Hanson County, South Dakota (31,800 birds) and a commercial table egg layer flock in Weld County, Colorado (260,000 birds), bringing the total affected birds to 57.82 million, including 303 commercial and 404 backyard flocks. Despite the infections and flock destruction, Emily Metz of the American Egg Board said table egg supplies have been more stable this year compared with prior HPAI outbreaks.

Record egg prices... Egg prices are hitting records, driven by an avian-influenza outbreak that has killed tens of millions of poultry across nearly all 50 states. Wholesale prices of Midwest large eggs hit a record $5.36 a dozen in December, according to research firm Urner Barry. Retail egg prices have increased more than any other supermarket item so far this year. USDA will release its updated food price outlook later this morning, including the projection for egg prices.

Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of November. The five-year average is a 3.5-million-lb. increase in beef stocks and a 52.7-million-lb. decline in pork stocks during the month.

Slow developing cash cattle trade despite weather... Packers and feedlots have been in no hurry to speed up this week’s cash cattle negotiations despite extremely cold temps and the blizzard-like conditions forecast for the remainder of the week. If packers don’t get many cattle bought it could increase their demand next week, though they will likely try to stretch supplies until after the holidays.

Cash hog index drops... The CME lean hog index is down 29 cents to $80.57 (as of Dec. 20), extending its seasonal price decline. Despite a drop of nearly $42 from this year’s high in early August, the index is still $7.55 above year-ago, though a seasonal low had already been forged by now in 2021.

Overnight demand news... Japan purchased 144,441 MT of milling wheat in its weekly tender, including 83,881 MT from the U.S. and 60,560 MT from Canada. Iraq purchased 150,000 MT of milling wheat, including 100,000 MT from Australia and 50,000 MT from the United State. Taiwan purchased 56,000 MT of U.S. milling wheat.

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
• 8:00 a.m. Food Price Outlook — ERS
• 11:00 a.m. Cotton Ginnings — NASS
• 2:00 p.m. Cold Storage — NASS
• 2:00 p.m. Livestock Slaughter — NASS
• 2:00 p.m. Poultry Slaughter — NASS