First Thing Today | November 29, 2023
Good morning!
Quiet overnight trade... Corn, soybeans and wheat held in relatively tight ranges during a quietly traded overnight session. As of 6:30 a.m. CT, corn futures are trading narrowly mixed, soybeans are mostly 1 to 2 cents higher, SRW wheat is 4 to 5 cents higher, HRW wheat is 8 to 9 cents higher and HRS wheat is 3 to 4 cents higher. Front-month crude oil futures are around $1.50 higher and the U.S. dollar index is modestly firmer this morning.
OECD: Global economic growth will slow next year but no hard landing... The global economy will experience a slight slowdown next year, but the risk of a hard landing has diminished despite high debt levels and uncertainty over interest rates, the Organization for Economic Cooperation and Development (OECD) said. OECD forecasts global economic growth will slow to 2.7% in 2024 from 2.9% this year, before rising to 3.0% in 2025. OECD predicted U.S. growth would slow from 2.4% this year to 1.5% in 2024, though both were up 0.2 points from its previous forecast. OECD’s forecast is for China’s growth to slow from 5.2% this year to 4.7% in 2024 – both slightly higher than expected in September – before slowing to 4.2% in 2025. In the euro zone, growth is expected to accelerate from 0.6% this year to 0.9% in 2024 and 1.1% in 2025, as Germany – the region’s largest economy – emerges from a recession this year.
Morocco extends wheat import subsidies... Morocco will offer subsidies to import up to 2.5 MMT of soft wheat between Jan. 1 and April 30, 2024, state grains agency ONICL said. Morocco launched an import program for 2023-24 covering up to 2.5 MMT for July to September, followed by a second round for October to December allowing up to 2 MMT. Shipments so far have lagged volumes available under the subsidy program.
India approves five-year extension of free food program... India will spend 11.8 trillion rupees ($141.63 billion) to fund the extension of its free food grains program for the next five years, the country’s information minister said. Indian Prime Minister Narendra Modi on Nov. 4 announced his government would extend the welfare scheme, which was due to end in December, by five years. The announcement comes ahead of general elections early next year and was approved by the cabinet on Wednesday.
Euro zone economic sentiment inches up... The economic sentiment indicator in the euro zone edged up to 93.8 in November, a slight increase from the revised 93.5 reading the previous month. While this latest reading indicates a gradual uptick in economic sentiment within the bloc, it still suggests that both businesses and consumers remain somewhat pessimistic, largely due to the impact of high borrowing costs and persistent inflationary pressures. Consumer inflation expectations eased to 9.3, down 2 points from the previous month, while producer price expectations dropped 1.2 points to 2.3.
ERP for 2022 ‘suspended’... USDA’s Emergency Relief Program (ERP) for 2022 has been “suspended.” Offices will take applications, but processing of payments are on hold, according to a source.
China pressuring Russia on Siberian pipeline project... China is exerting pressure on Russia to negotiate more favorable terms for the Power of Siberia 2 pipeline project, according to the South China Morning Post. The pressure is described as at a “presidential level.” Russia is looking to diversify its natural gas exports as it faces a decline in sales to the European Union (EU) market. The project is seen as a way for Russia to partially compensate for this loss by exporting natural gas to China. The pipeline, if completed, would divert 1.8 trillion cubic feet of natural gas per year that previously supplied Europe to north China, offering a significant boost to Beijing’s energy security.
Minerva CEO: South America will account for half of global beef exports in five years... South American will account for 50% of global beef exports in five years, up from 40% presently, according to beef packer Minerva’s Chief Executive Fernando Queiroz. Minerva, which bought plants from competitor Marfrig to boost its presence in South American countries this year, believes processing grass-fed cattle is a competitive advantage for firms that operate in the continent. South America also boasts lower labor costs compared to countries like the United States, Queiroz said. “We have the best global platform to mitigate risks,” Queiroz said, referring to the current low availability of cattle in the U.S. that is affecting rival companies there.
Big increase in HPAI cases this month... Nearly 5.8 million birds have been affected by highly pathogenic avian influenza (HPAI) this month, a substantial increase from 1.37 million in October. The states most heavily impacted by the recent outbreak in the last 30 days include Minnesota, Iowa, Ohio, and Oregon. In Iowa, infections this year are occurring at a rate three times higher than those detected in October, November, and December of the previous year, according to the Iowa Capital Dispatch. China’s customs administration had imposed restrictions on poultry shipments from numerous American states during the previous outbreak. These restrictions remained in place even after the cases subsided. However, China recently lifted restrictions on poultry imports from specific states, including Kentucky, Oklahoma, Delaware, North Carolina, Maine, Maryland and Texas, according to a USDA report earlier this month. Nonetheless, bans on shipments from 31 other states were still in effect as of Nov. 15.
USDA extends NSIS trial for pork industry by 90 days... USDA announced the Time-Limited Trial (TLT) for New Swine Inspection System (NSIS) plants will be extended for an additional 90 days, providing certainty for our pork industry and ensuring participating plants can continue operating at increased line speeds. FSIS will send letters to the six swine establishments with requirements they will need to continue to meet to operate a TLT during the 90-day period, including keeping in place measures outlined in their worker safety agreements. The agency will follow up with additional communication to the public once the details of the study, including its duration, are determined. The National Pork Producers Council (NPPC) applauded the announcement. NPPC President Scott Hays said, “Without the extension, pork producers would incur additional losses of nearly $10/head in Q1 and Q2 2024.”
Expanded limits for live cattle and feeders... Tuesday’s limit-up performance in January feeder cattle triggered expanded price limits of $12.25 for today’s session. The daily trading limit for live cattle futures will be expanded to $10.00 today. Active followthrough buying in those markets would suggest Monday’s trade was capitulation to the downside that put in lows.
Cash hogs continue to weaken, pork reverses lower... The CME lean hog index is down another 67 cents to $71.66 (as of Nov. 27), extending the seasonal price decline. The pork cutout value fell $3.95 on Tuesday, as primal bellies dropped more than $16.00, erasing most of the gains from the previous day.
Overnight demand news... South Korea purchased 65,000 MT of corn to be sourced from the U.S., South America or South Africa and canceled a tender to buy 50,000 MT of non-GMO soybeans.
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
- 2:00 p.m. Broiler Hatchery — NASS
