First Thing Today | November 28, 2023
Good morning!
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 a penny higher, soybeans are 5 to 9 cents higher, SRW wheat futures are mostly 2 cents higher, HRW futures are 3 to 4 cents higher and HRS futures are 3 to 6 cents higher. Front-month crude oil futures are around 75 cents higher and the U.S. dollar index is trading near unchanged.
Cordonnier keeps South American crop forecasts unchanged... There has been enough recent rainfall across central and northeastern Brazil for South American crop consultant Dr. Michael Cordonnier to keep his Brazilian crop estimates at 158 MMT for soybeans and 121 MMT for corn. However, he maintained his lower bias toward both crops, noting heavier and better coverage of rainfall will be needed. Cordonnier kept his Argentine estimates at 50 MMT for soybeans and 52 MMT for corn. He has a neutral-to-higher bias for the Argentine soybean crop and neutral-to-lower bias toward corn.
HRW CCI rating inches up, SRW slips... When USDA’s final weekly crop condition ratings of the fall are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 2.5 points to 323.3, while the SRW crop declined 2.5 points to 371.6. The final CCI rating ahead of dormancy was equal to the five-year average for HRW and 14.8 points above average for SRW. Click here for details.
Crop progress report highlights… Following are highlights from USDA’s crop progress and condition update as of Nov. 26.
- Corn: 96% harvested (95% average).
- Cotton: 83% harvested (79% average).
- Winter wheat: 91% emerged (89% average); 50% good/excellent (48% last week).
Russia proposes grain export ban if stocks fall below 10 MMT... Russia might impose a ban on grain exports if their stocks fall to 10 million tons, Izvestia daily reported, citing a government document. The government working group on non-tariff measures in foreign trade recommended the ag ministry monitor grain stocks on monthly basis, Izvestia reported. If the monitoring shows stocks decrease to a “critically low level” of 10 MMT the ministry should impose a temporary ban on exports. The ag ministry confirmed the Izvestia report, however, it pointed out Russia has ample grain reserves given large stocks remaining from last year and this year’s big harvest. The ag ministry reiterated it expects Russia’s grain exports to top 65 MMT during 2023-24.
Farm, biofuels coalition responds to Fifth Circuit RFS exemptions decision... A coalition representing farmers and ethanol producers has responded to the Fifth Circuit Court of Appeals’ decision to remand the rejection of six small refinery exemption requests to the Environmental Protection Agency (EPA). The coalition, which includes the Renewable Fuels Association, Growth Energy, American Coalition for Ethanol and National Farmers Union, expressed disappointment but stated their commitment to defending the Renewable Fuel Standard (RFS) and addressing the misuse of small refinery exemptions.
WTO agrees dispute panel to review EU import duties on Indonesian biodiesel... World Trade Organization’s (WTO) dispute settlement body has agreed to establish a panel to review countervailing duties imposed by the European Union (EU) on imports of biodiesel from Indonesia. Indonesian biodiesel products in the EU market are subject to countervailing duties of 8% to 18% until Dec. 10, 2024. WTO said U.S., United Kingdom, Norway, Russia, Thailand, Singapore, Japan, Canada, China, Argentina and Turkey had reserved their third-party rights to participate in the panel proceedings.
Saudis urging OPEC+ oil production cuts... Saudi Arabia is urging other members of the OPEC+ coalition to reduce their oil-output quotas to stabilize global oil markets, Bloomberg reports. The OPEC+ leader has been making a largely unilateral supply cutback of 1 million barrels a day since July. However, some members are resisting this call for further reductions. The OPEC+ policy meeting was delayed by four days due to a dispute over African quotas.
PBOC head pledges to support growth, urges reforms... People’s Bank of China (PBOC) governor said on Tuesday that monetary policy will remain accommodative to support the economy, but he urged structural reforms over time to reduce a reliance on infrastructure and property for growth. Pan Gongsheng said economic momentum in recent months suggested China would achieve its 2023 growth target of around 5% and he’s “confident that China will enjoy healthy and sustainable growth in 2024 and beyond.” Pan said he expected consumer inflation to pick up in the coming months as drops in food prices, especially pork, will not be sustained. He also pointed to green shoots in China’s purchasing managers index of business activity. But he also noted: “The traditional model of relying heavily on infrastructure and real estate might generate higher growth, but would also delay structural adjustment and undermine growth sustainability.” Beijing has been trying to reduce the economy’s reliance on property, channeling more resources into high-tech manufacturing and green industries, but has struggled to boost investor and consumer sentiment.
ERP Phase 2 payment again posts slight rise... Total payments under the Emergency Relief Program (ERP) moved up to $8.25 billion as of Nov. 26 on another slight increase in ERP Phase 2 payouts. Phase 2 figures rose to $804.32 million to 10,103 recipients from $794.08 million and 10,091 recipients previously. Phase 1 payments remained at $7.45 billion.
France reports HPAI on turkey farm... France detected an outbreak of highly pathogenic avian influenza (HPAI) on a turkey farm in the northwest of the country, the ag ministry said, as a seasonal wave of infections spreads across Europe. France’s first farm case this fall occurred near where an infected wild bird was found, the ministry said. France launched a vaccination campaign against HPAI in early October, but the program is being initially limited to ducks, which are the most vulnerable to the virus.
China to buy more pork to support prices... China will buy another 10,000 MT tons of pork for state reserves on Wednesday, the country’s reserve management center said. This will be the third batch of pork purchases by the government to support falling hog prices.
Feeder cattle plunge... Feeder cattle futures faced heavy selling pressure Monday, despite general strength in cash feeder cattle prices at the closely followed Oklahoma City auction. After Monday’s plunge, January feeders stood $17.58 below the CME feeder cattle index. While the market is heavily oversold and recent price action looks like capitulation, there could be more near-term selling pressure.
Cash hog decline accelerates... The CME lean hog index is down $1.27 to $72.33 (as of Nov. 24), marking the biggest daily decline since Sept. 1. After a modest 30-cent gain on Monday, December lean hogs finished $4.455 below today’s cash quote.
Overnight demand news... South Korea purchased 132,000 MT of corn to be sourced from the U.S. or South America and 95,000 MT of milling wheat to be sourced from the U.S. and Canada but passed on another tender for up to 69,000 MT of corn. Taiwan tendered to buy 109,325 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
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
