First Thing Today | December 15, 2023
Good morning!
Quiet overnight grain trade... Corn, soybeans and wheat traded on both sides of unchanged in a quiet overnight session. As of 6:30 a.m. CT, corn futures are trading steady to fractionally higher, soybeans are a penny lower to 2 cents higher, winter wheat futures are trading fractionally on either side of unchanged and spring wheat is mostly 4 to 6 cents higher. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is around 125 points higher.
Record Nov. NOPA crush expected... Analysts expect the National Oilseed Processors Association to report its members crushed 186.0 million bu. of soybeans in November. If realized, that would be down 2% from the all-time record in October, but up 3.8% from year-ago and a record for the month. It would also be the third largest NOPA crush figure on record for any month. Soyoil stocks are forecast at 1.138 billion lbs., which would be up 3.5% from October that was the smallest stockpile since December 2014.
Ukraine keeps grain export outlook unchanged despite higher production estimate... Ukraine is sticking to its combined grain and oilseeds exportable surplus forecast of 50 MMT despite a higher crop outlook, the first deputy ag minister said. The ministry last week raised its 2023 grain and oilseeds harvest forecast to 81.3 MMT from 79.1 MMT previously. As of Dec. 16, Ukraine had exported 15.3 MMT of grain in 2023-24, down from almost 20 MMT on that date last year. Ukraine’s 2023-24 grain exports included 6.5 MMT of wheat, 7.7 MMT of corn and 933,000 MT of barley.
Romania’s Constanta port exports record grain volume in first 11 months of 2023... Romania’s Black Sea port of Constanta smashed its grain export record this year thanks to a surge in shipments from Ukraine. Ukrainian grain accounted for roughly 40% of the total – 13 MMT – up from 8.6 MMT in all of 2022. The port’s previous all-time high exports were 25 MMT.
House Ag discord over failure to address new farm bill... There is a disagreement in the House regarding comments made by House Ag Committee Ranking Member David Scott (D-Ga.) who expressed his disappointment in the chamber’s failure to address a new farm bill in December, as House Speaker Mike Johnson (R-La.) had previously promised when he assumed his role. Scott’s comments quickly provoked a response from Republicans on the panel, who pointed out on social media he had previously issued a statement welcoming the extension of the 2018 Farm Bill. This extension was seen to allow lawmakers more time to develop the new bill without being constrained by the approaching deadlines at the end of 2023, when certain provisions of the 2018 Farm Bill were set to expire. Some say this raises questions about the progress and timing of the legislative effort and that Democrats may want to wait until after 2024 elections to complete a farm bill on the belief they may retake control of the House.
China’s corn breeders ready to double GMO planting in 2024... Chinese corn breeders are preparing for the planting of more than double the amount of GMO corn next year, three industry sources told Reuters, with Beijing expected to tightly control the situation. GMO corn reportedly will be allowed on around 10 million mu, or about 670,000 hectares (1.66 million acres), in eight provinces next year, including the northeastern province of Liaoning for the first time. Beijing permitted planting of GMO corn on about 4 million mu (270,000 hectares) this year in what it described as trials but has not yet issued any public guidance for 2024.
China keeps rates unchanged, pumps record liquidity into banking system... The People’s Bank of China (PBOC) kept the rate on 1.45 trillion yuan ($203.97 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50%. With 650 billion yuan of MLF loans set to expire this month, the operation resulted in a net 800 billion yuan of fresh fund injection into the banking system, the biggest medium-term liquidity injection ever, amid weak domestic demand.
China’s industrial production, retail sales improve in November but also some downbeat news... China’s industrial production advanced 6.6% from year-ago in November, following a 4.6% gain in the previous month. That was the fastest pace of growth in industrial production since February 2022. China’s retail sales expanded 10.1% from year-ago in November, accelerating from a 7.6% increase in the previous month. That was the 11th consecutive month of annual growth in retail sales and the fastest expansion since May. While this news was encouraging, there was also downbeat news, as investment and consumer spending in November increased less than expected while new home sales fell at a faster pace.
China to run budget gap of 3% of GDP in 2024... Chinese leaders agreed at an annual meeting on the economy this week to run a budget deficit of 3% of gross domestic product in 2024, three sources with knowledge of the matter told Reuters, while other fiscal support may be covered by off-budget debt. While the deficit figure is lower than this year’s revised 3.8% target, suggesting Beijing wants to maintain fiscal discipline and is not considering a big aid package next year, the option to issue off-budget sovereign debt gives it flexibility to step up stimulus to maintain stable economic growth. Two of the sources told Reuters special sovereign bonds could be issued to pay for extra expenditures as needed. One of them said they could amount to 1 trillion yuan ($140.16 billion).
Euro zone PMI contracts further in December... HCOB’s preliminary Composite purchasing managers index (PMI), compiled by S&P Global, fell to 47.0 this month from November’s 47.6. This marked the seventh consecutive monthly reduction in business activity across the bloc, with manufacturing output falling for a ninth straight month and services activity contracting at the third-steepest pace since the early 2021 lockdowns.
Cattle futures working on solid weekly gains... Live cattle futures strengthened on Thursday, marking three of the past four days with corrective gains. As of yesterday’s close, the February contract was up $2.20 for the week. If the contract finishes today above last Friday’s closing level, it would be the first weekly gain in a month, though bulls would still have work to do to break the sharp downtrend from the September high.
Uptick in cash hog index short-lived... After a 43-cent gain in the CME lean hog index on Thursday, today’s quote (as of Dec. 13) is down 38 cents to $67.75. February lean hog futures, which assumed lead-month status after the December contract expired on Thursday, ended yesterday at a $2.725 premium to today’s cash quote. If traders build that premium it would convey increased confidence a seasonal low in the cash market will come soon.
Overnight demand news... South Korea purchased 68,000 MT of corn and 60,000 MT of feed wheat – both optional origin. Algeria purchased 30,000 MT of Argentine corn and 35,000 MT of optional origin soymeal. Bangladesh canceled a tender to buy 50,000 MT of 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
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 2:00 p.m. CE: Barley, Oats, Wheat — NASS
- 2:00 p.m. Cost of Pollination — NASS
- 2:00 p.m. North American Potatoes — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Potato Stocks — NASS
- 2:30 p.m. Commitments of Traders — CFTC
