First Thing Today | January 9, 2023
Good morning!
Quiet price action to start the week... Soybeans and wheat mildly favored the upside in quiet overnight trade, while corn traded on both sides of unchanged. As of 6:30 a.m. CT, corn futures are trading narrowly mixed, soybeans are 2 to 4 cents higher and wheat futures are 1 to 3 cents higher. Front-month crude oil futures are around $2.50 higher and the U.S. dollar index is more than 300 points lower.
Limited relief in Argentina, southern Brazil this week... Weather remained hot and dry across Argentina during the weekend. Light, scattered rains are expected during the middle of this week as a cool front cuts across the country, but the moisture will not be enough to seriously change the drought situation, according to World Weather Inc. Brazil’s west and south will get rain during the second half of this week and into the weekend, offering some improvement for crops.
Rioters invade Brazilian gov’t buildings... Supporters of former Brazilian President Jair Bolsonaro stormed Brazil’s Congress, the Supreme Court and presidential palace in the capital Sunday. Brazil’s Supreme Court removed the governor of Brasilia from office for 90 days over security failings that it said allowed thousands of backers of Bolsonaro to ransack government buildings in the capital. Supreme Court Justice Alexandre de Moraes also ordered social media platforms Facebook, Twitter and TikTok to block accounts of users spreading anti-democratic propaganda. Brazilian markets are expected to face heavy pressure when they open today.
China continues to open up its borders and economy... Many travelers began to fly in and out of mainland China on Sunday as Beijing removed almost all its border restrictions, bringing an end to pandemic measures that effectively sealed off the world’s most populous nation from the rest of the world for three years. China’s decision to restore a freer flow of movement across its borders ends one of the most tangible symbols of China’s Covid-era isolation, brings hope to economies that had come to rely on spending by Chinese tourists and allows foreign executives to visit the country, check on their operations and consider new investments.
Bulk carrier holding corn stranded in Suez canal... A ship got hung up in the Suez Canal this morning after it suffered an engine failure, the canal authority said. The carrier, Glory, loaded 65,970 MT of corn from a port in Ukraine on Dec. 25 and was bound for China, according to the Black Sea Grain Initiative Joint Coordination Center, which facilitates humanitarian maritime exports of grain, other foodstuffs and fertilizers from Ukraine. “The authority’s marine rescue team dealt professionally with a sudden technical failure of the machines of the bulk vessel GLORY,” the Suez Canal Authority said on Twitter, according to a translation. “Work is now underway to tow the idle ship.” The disruption should cause “only minor delays,” said shipping agency Leth.
The week ahead in Washington... After four days and 15 rounds of voting, Kevin McCarthy’s (R-Calif.) wait to become Speaker of the House of Representatives ended. A caucus of 20 hardline Republicans had initially blocked his path, but several key concessions, including allowing a single lawmaker to force a vote on ousting the speaker, was the key to unlocking the GOP chaos. McCarthy said the very first bill Congress will take up will be to “repeal the funding for 87,000 new IRS agents” and that one of the first hearings will be on the “crisis” on the southern border. USDA Secretary Tom Vilsack on Monday will address the American Farm Bureau Federation annual meeting in San Juan, Puerto Rico. On Tuesday, EPA is holding a virtual hearing on proposed RFS levels for 2023-2025. Inflation will be in the spotlight this week with U.S. consumer inflation data for December due out on Thursday. On Friday, USDA will release a barrage of reports, including the Annual Production Summary, the Supply & Demand Report, Winter Wheat Seedings and Quarterly Grain Stocks.
Indonesia, Malaysia agree to fight ‘discrimination’ against palm oil... Indonesia and Malaysia, the world’s biggest producers of palm oil, agreed on Monday to work together to fight “discrimination” against the commodity after a meeting between leaders from the countries. The comments by Indonesian President Joko Widodo followed a meeting with Malaysian Prime Minister Anwar Ibrahim. During their bilateral meeting, Anwar and Widodo signed eight memorandums of understandings covering shipping, export-import financing, green energy, the development of battery industry, which they said would deepen cross border trade and investment.
Deal close on U.S., Canada travel dispute... Canada and the U.S. are close to resolving a dispute over a program that would allow swift passage for travelers through airports and border crossings, according to officials. Canadian Prime Minister Justin Trudeau departs today for the North American leaders’ summit in Mexico, and the Nexus program will be a key item of discussion between Canadian and U.S. representatives, said officials. Negotiations could continue past the summit, the officials cautioned. But officials from Canada said they are seeing progress toward the framework of a deal. Nexus is a program that allows pre-screened travelers to pass through airport security lines and land border crossings with less waiting. Main contention is a U.S. request that American officers working at Nexus enrollment centers in Canada be granted the same legal protections as U.S. customs officers working in airports and at border crossings. Those protections allow a U.S. customs officer accused of an on-duty crime to be prosecuted in the U.S. instead of Canada, for example.
U.S. rejects oil offers in first attempt to replenish stockpiles... The Biden administration is delaying the replenishment of the nation’s emergency oil reserve after deciding the offers it received were either too expensive or didn’t meet the required specifications, according to reports. The Department of Energy rejected several offers it got for a potential purchase in February.
SPR, climate panel in House rules package... The House of Representatives today begins debating the rules package which will provide a modified open rule for a bill that would require a plan for increasing oil and gas production as part of a drawdown of resources in the Strategic Petroleum Reserve (SPR). It would also sunset the Select Committee on the Climate Crisis created by Democrats. Meanwhile, the Energy Department would be barred from drawing down and selling petroleum products from the SPR to any entity owned, controlled, or influenced by the Chinese Communist Party under another bill, which is set to be considered by the House this week. It would allow an exception if the petroleum wasn’t being exported to China.
Bullish cash cattle hopes... Cash cattle trade was disappointing last week, which caused live cattle futures to finish near their weekly lows on Friday. Traders will likely remain cautious buyers of futures early this week as they wait for cash cattle trade to develop, though they start the week with expectations of firmer cash prices.
Cash hog index continues to drop... The CME lean hog index is down 77 cents to $77.49 (as of Jan. 5), the lowest level since Jan. 19, 2022. Last year at this time, however, the cash index had bottomed and started a sharp rally to the seasonal high in August. This year, the cash index hasn’t shown signs of bottoming yet.
Weekend demand news... Turkey tendered to buy 565,000 MT of optional origin milling wheat. Taiwan tendered to buy up to 65,000 MT of corn to be sourced from the U.S., Brazil, Argentina or South Africa.
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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
