First Thing Today | November 27, 2023
Good morning!
Modest corrective buying in grains overnight... Corn, soybeans and wheat firmed amid mild corrective buying during overnight trade. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny higher, soybeans are mostly 7 to 8 cents higher, SRW wheat is mostly 2 to 3 cents higher, HRW wheat is 4 to 5 cents higher and HRS wheat is 1 to 3 cents higher. Front-month crude oil futures are about $1.00 lower and the U.S. dollar index is more than 125 points lower.
Rains forecast for Brazil but more needed... Brazil will see daily rains during the next two weeks, though much of the rain will struggle to counter evaporation rates, according to World Weather Inc. Still, rains should be enough to support crops in some areas. Additional rainfall will be needed for sustained crop development. Weather in Argentina is expected to be mostly favorable during the next two weeks.
Brazil soybean planting still delayed... Brazil’s soybean planting stood at 74% done as of last Thursday, according to AgRural, behind 87% on that date last year and the slowest since 2015-16. Excessive moisture continues to slow planting progress in the far southern state of Rio Grande do Sul. Recent rains have improved conditions in top producer Mato Grosso following prolonged dryness, though more will be needed for favorable crop development.
The week ahead in Washington... Congress returns this week and lawmakers have a host of work they have punted on, including fiscal year 2024 funding, a new farm bill and Ukraine aid. The economic focus will be Thursday’s personal consumption expenditure price index, the Fed’s preferred inflation gauge, for October. Other key economic data will be the second estimate of third quarter GDP, along with the Fed’s Beige Book highlighting economic activity in the 12 districts, both of which are scheduled for Wednesday. The highlight for agriculture will be USDA’s updated farm income forecasts on Thursday.
Biden to announce supply chain improvements... The measures will include invoking the Defense Production Act to invest $35 million in essential materials for sterile injectable medicines. Additionally, a new report will be released, examining the United States’ reliance on high-risk foreign suppliers in the pharmaceutical supply chain. A key component of this effort is the establishment of a new cabinet-level body called the White House Council on Supply Chain Resilience, which President Joe Biden will inaugurate today.
China’s industrial profits growth slows... Profits at China’s industrial firms rose for a third month in October, albeit at a slower pace, suggesting more policy support from Beijing is needed to help shore up the economy. Industrial profits firmed 2.7% annually in October, down from 11.9% growth the previous month and 17.2% in August. For the first 10 months of 2023, profits slid 7.8% from the same period a year earlier, narrowing from a 9% decline in the first nine months.
China’s progress on renewables undermined by coal expansion... Rapid growth in China’s renewable energy sector to meet climate goals is being undermined by continued coal capacity expansion and a fast rise in energy consumption, a report said. China’s energy bureau said last week total installed solar power capacity hit 536 gigawatts (GW) in October, up 47% from a year earlier, with wind capacity also rising 15.6%. If this year’s rate of renewables expansion is maintained, China is on track to bring emissions to a peak and start reducing them in coming years, the Centre for Research on Energy and Clean Air (CREA) and the Heinrich Böll Foundation (HBF) said in their annual progress report on China’s climate actions. However, the country must redouble efforts on energy efficiency and transform its growth model to tackle rising energy consumption, which is still running ahead of “1.5 degree scenarios,” the report said.
WHO: China’s respiratory illness surge not as high as pre-pandemic... The spike in respiratory illnesses that China is currently suffering is not as high as before the Covid-19 pandemic, a World Health Organization (WHO) official said, reiterating that no new or unusual pathogens had been found in the recent cases. Maria Van Kerkhove, acting director of the WHO’s department of epidemic and pandemic preparedness and prevention, said the increase appeared to be driven by a rise in the number of children contracting pathogens they had avoided during two years of Covid restrictions. China’s National Health Commission spokesperson Mi Feng said on Sunday the surge in acute respiratory illnesses was linked to the simultaneous circulation of several kinds of pathogens, most prominently influenza. The spike became a global focus last week when WHO asked China for more information, citing a report on clusters of undiagnosed pneumonia in children by the Program for Monitoring Emerging Diseases.
Chinese hog futures plunge to record-low... China’s most active hog futures closed down 5.69% on Monday at a record low, after farmers ramped up selling of pigs following months of weak prices. Farmers accelerated herd liquidation in recent weeks, as cash hog prices dropped another 4% last week. January hog futures have plunged more than 9% so far this month.
Cattle market searching for a low... Live cattle futures faced heavy liquidation pressure last Friday after disappointing cash cattle trade earlier in the week. Bears have a firm grip on futures price action and packers have the upper hand in the cash market coming out of Thanksgiving, despite tight supplies.
Cash hogs continue seasonal decline... The CME lean hog index is down another 30 cents to $73.60 (as of Nov. 22), extending its seasonal decline. The index is now $12.57 below last year at this time. December lean hog futures finished Friday $6.025 below today’s cash quote, suggesting traders anticipate persistent deterioration in cash prices into at least mid-December.
Weekend demand news... Pakistan tendered to buy 110,000 MT of optional origin wheat. Bangladesh tendered to buy 50,000 MT of optional origin 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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Peanut Stocks and Processing — NASS
- 3:00 p.m. Crop Progress — NASS
