First Thing Today | January 5, 2023

Good morning!

Modest corrective buying overnight... Corn, soybeans and wheat firmed overnight amid mild corrective buying following sharp losses the first two trading sessions of the new year. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are steady to 2 cents higher and wheat futures are 5 to 8 cents higher. Front-month crude oil futures are around $1.50 higher and the U.S. dollar index is trading near unchanged this morning.

Export sales pushed back to Friday morning... Due to Monday’s government holiday, USDA’s export sales data for the week ended Dec. 29 will be delayed until Friday morning.

Turkey calls for ceasefire in Ukraine... Turkish President Tayyip Erdogan told Russian President Vladimir Putin in a phone call that peace efforts in the Russia/Ukraine war should be supported by a unilateral ceasefire and a “vision for a fair solution.” Erdogan reminded Putin of the positive outcomes of the grains corridor deal and said he also will speak to Ukraine’s Volodymyr Zelenskyy to discuss the Black Sea grain and fertilizer initiative. Erdogan also said he may meet Syrian President Bashar al-Assad as part of peace efforts after the highest-level talks in public between Ankara and the Damascus government since the Syrian war began in 2011.

IMF official: U.S. inflation has not turned the corner yet... Inflation in the United States has not “turned the corner yet” and it is too early for the Federal Reserve to declare victory in the fight on rising prices, a top International Monetary Fund (IMF) official said in an interview with the Financial Times (FT) on Thursday. Gita Gopinath, a deputy managing director of the Fund, urged the U.S. central bank to press ahead with rate rises this year. She said it was important for the Fed to “maintain restrictive monetary policy” until a “very definite, durable decline in inflation” was evident in wages and industries not related to food or energy. “If you see the indicators in the labor market and if you look at very sticky components of inflation like services inflation, I think it’s clear that we haven’t turned the corner yet on inflation,” she told FT. Minutes from the Dec. 13-14 Federal Open Market Committee meeting on Wednesday showed Fed officials remained focused on controlling inflation with higher interest rates but they believe the U.S. central bank should slow the pace of its aggressive interest rate increases to limit the risks to economic growth.

Argentine farmers sell soybeans before year-end... Argentine farmers have so far sold 80.1% of the 2021-22 soybean harvest, the country’s ag ministry said on Wednesday, slightly behind the 80.5% sold during the same period the previous year. Argentine producers sold 551,000 MT of soybeans in the week ended Dec. 28 before a temporary preferential exchange rate ended on Dec. 31. Farmers have sold 75.7% of the 2021-22 corn harvest and 49% of their 2022-23 wheat crop.

China starts sending Covid data to WHO again... The World Health Organization (WHO) received data from China on new Covid-19 hospitalizations after a reporting gap, with figures on Thursday showing a nearly 50% increase in the week to Jan. 1. The health agency received no data from China in the weeks after Beijing lifted its zero-Covid policy in early December, prompting some health experts to question whether it might be hiding information on the extent of its outbreak. China on Thursday insisted it had been transparent with the international community about its Covid data. WHO officials are meeting with Chinese scientists today as part of a wider briefing among member states on the global Covid-19 situation as concerns grow about the rapid spread of the virus in the world’s No. 2 economy.

China opening border with Hong Kong on Sunday... China will reopen the border with Hong Kong on Sunday for the first time in three years, as it accelerates the unwinding of stringent Covid rules. The opening will bring the resumption of quarantine-free travel between the financial hub and the mainland, although it would be done in a “gradual and orderly” way, China’s Hong Kong and Macau Affairs Office said in a notice. Hong Kong leader John Lee told reporters on Thursday a maximum of 60,000 people a day from either Hong Kong or China could cross the border from Jan. 8. China is set to reopen to the world on Sunday, welcoming international travelers and returning residents without the need to quarantine for the first time since 2020, even as infections surge. China stocks saw their best day in a month on Thursday, as investor hopes for a strong economic recovery in 2023 amid the relaxed Covid restrictions overshadowed worries over the spike in infections.

China’s December services PMI rises but still showing contraction... China’s Caixin/S&P Global services purchasing managers index (PMI) rose to 48.0 in December from 46.7 in November, but remained below the 50-point mark that indicates contraction in activity for a fourth straight month. Companies in the Caixin/S&P survey reported the falls in output and new work for the fourth straight month in December, and external demand fell into contraction from growth the previous month. However, surveyed firms were nonetheless bullish about recovery prospects for the next 12 months thanks to the lifting of Covid restrictions that could lead to increased consumption, with the confidence index rising to a 17-month high.

Euro zone producer prices ease in November but still elevated... Euro zone producer prices fell in November from the previous month but remained well above year-ago levels. Factory gate prices in the 19 countries that use the euro fell 0.9% from October but were still 27.1% above last year. The monthly drop was mainly due to a sharp pullback in energy prices, which fell 2.2% in November compared to October. But energy prices were still 55.7% higher than last year. Excluding energy, producer prices were still up 13.1% versus year-ago.

Biden confirms plan to make first U.S./Mexico border trip... President Joe Biden said Wednesday he plans to make his first visit as president to the U.S./Mexico border next week to observe the effects of record-breaking illegal immigration. The Wall Street Journal reported earlier Wednesday, citing “people familiar with the discussions,” that “the White House [was] strongly considering adding a visit” when Biden travels to Mexico City next Monday and Tuesday for meetings with the leaders of Canada and Mexico.

USDA’s Vilsack to announce new funding for expanding meat processing capacity... States receiving investments: California, Illinois, Iowa, Kansas, Kentucky, Maine, Montana, Nebraska, New York, Ohio, Oklahoma, South Carolina, Texas, Virginia, Washington and Wisconsin. USDA says the funding is to make “agricultural markets more accessible, fair, competitive, and resilient for American farmers and ranchers.”

Choice beef prices pull back but still record-high for January... Choice boxed beef prices fell $4.05 on Wednesday but were still nearly $16 above year-ago at this time and a record-high for the first week of January. Meanwhile, fed cattle prices are about $12 cheaper than the all-time high for early January set in 2015. That suggests there’s more upside in both live cattle futures and the cash market as market-ready supplies tighten.

Big pork movement again... The pork cutout value dropped 17 cents on Wednesday, but packers moved a strong 411.5 loads of product amid the lower prices. That’s the second straight day with strong movement, signaling there’s active retailer demand with the cutout in the mid-$80 range, which should help limit any sharp near-term pressure. The cutout value is virtually in line with year-ago, while the cash index is around $5 higher than last year at this time.

Overnight demand news... Exporters reported no tenders or sales.

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