Evening Report | December 27, 2022
Check our advice monitor on ProFarmer.com for updates to our marketing plan.
U.S. consumers boosted spending over holidays... U.S. consumers boosted retail sales by 7.6% between Nov. 1 and Dec. 24, according to a report from Mastercard covering a majority of the holiday season. The sales growth fell short of the rise seen last year of 8.5% over the same period. Online sales rose 10.6%, the report said, just below the 11% rise registered last year. Inflation, rising interest rates and recession worries were noted as factors that kept the retail sales boost from matching year-ago.
Smallest U.S. goods trade gap in two years... The U.S. trade gap on goods narrowed sharply to $83.3 billion in November 2022 from $98.8 billion in the prior month, an advance estimate showed. It was the smallest deficit since December 2020, as imports tumbled 7.6%, with purchases down for all categories: capital goods (-4.3%); consumer goods (-13.0%); industrial supplies (-6.0%); vehicles (-8.9%); and food, feeds and beverages (-5.5%). Meanwhile, exports fell 3.1%.
U.S. wholesale inventories growth rose in November... Wholesale inventories in the U.S. rose by 1.0% month-over-month to $933.6 billion in November of 2022, picking up from a revised 0.6% rise in the prior month, preliminary estimates showed. It was the 28th consecutive month of growth in inventories, as stocks rose for durable goods (1.3% vs. 0.8% in October) and non-durable goods (0.6% vs. 0.2%. On an annual basis, wholesale inventories grew by 21% in November.
U.S. housing market update... The S&P CoreLogic Case-Shiller National Home Price Index U.S. home prices stalled in October. The average price of single-family houses with mortgages guaranteed by Fannie Mae and Freddie Mac in the U.S. was unchanged from a month earlier after ticking up by 0.1% the prior month. Among the different census regions, a 0.9% drop in home prices in the Pacific and a 0.2% decrease in the Mountain regions offset a 0.2% gain in South Atlantic and a 1.4% jump in New England. On a yearly basis, house prices rose by 9.8%, the least since September of 2020 and easing from the upwardly revised 11.1% increase in the previous month. “Higher mortgage rates continued to put downward pressure on demand, weakening house price growth,” said Nataliya Polkovnichenko, Ph.D., Supervisory Economist, in FHFA’s Division of Research and Statistics.
The Pending Home Sales Index for November will be released tomorrow following its sharpest drop on record the previous month.
China revises 2021 GDP growth up to 8.4%... China revised higher its GDP growth rate for 2021 to 8.4% from 8.1% previously, the National Bureau of Statistics said. Final data from the bureau showed the services sector, accounting for 53% of China’s GDP, was revised up to 8.5% from 8.2%. Meanwhile, the secondary sector, which accounted for 39% of GDP, grew 8.7% in 2021. That compared with the bureau’s initial estimate of an 8.2% expansion.
For the first nine months of 2022, China’s GDP grew by 3%. The World Bank cut its forecast for China’s 2022 economic growth to 2.7%, well below the official target of around 5.5%.
Zurich official: Cyber-attacks set to become ‘uninsurable’... The chief executive of one of Europe’s biggest insurance companies has warned that cyber-attacks, rather than natural catastrophes, will become “uninsurable” as the disruption from hacks continues to grow. Insurance executives have been increasingly vocal in recent years about systemic risks, such as pandemics and climate change, that test the sector’s ability to provide coverage. For the second year in a row, natural catastrophe-related claims are expected to top $100 billion. But Mario Greco, chief executive at insurer Zurich, told the Financial Times cyber was the risk to watch. “What will become uninsurable is going to be cyber,” he said. “What if someone takes control of vital parts of our infrastructure, the consequences of that?”
HPAI detected in Michigan... The Michigan State University Veterinary Diagnostic Laboratory has detected the presence of highly pathogenic avian influenza (HPAI) in a backyard poultry flock from Sanilac County, Michigan. This is the first detection in Sanilac County.
Russian President Vladimir Putin banned the supply of Russian oil and oil products to countries that impose a price cap, allowing deliveries to those nations only based on a special permission for the Kremlin leader. The European Union and the U.K. earlier this month banned the import of seaborne Russian crude, while the Group of Seven nations put a ceiling on other sales by barring Western companies from insuring, financing or shipping Russian crude at above $60 a barrel.
Putin Tuesday signed a decree announcing the retaliatory measures which are scheduled to come into effect Feb. 1 and last through July 1, 2023.
Russia’s Finance Minister has admitted that the oil price cap could influence its export income and drive its budget deficit above the expected 2%. his is the first time a Russian official has acknowledged that the oil price cap could negatively impact the country’s economy.
Russia’s economy is expected to contract 3% in the current year — a sharp turnaround from its growth in 2021, with Central Bank governor Elvira Nabiullina citing “worsening trade conditions” as a key reason. Russia’s cash flows are expected to weaken considerably in 2023 as oil and gas sales to Europe plunge. Ukraine’s Ministry of Economy expects that the EU embargo on Russian oil and petroleum products should cut Russia’s profits by at least 50%.
Meanwhile, the Russian ruble has finally caved in, slumping past 70 per U.S. dollar to a more than seven-month low courtesy of plunging crude prices as well as fears that sanctions on Russian oil could hit the country’s export revenue, Reuters reports.
U.S. beef exports to East Asia at record pace. U.S. beef exports to East Asia in 2022 are again on record pace after a record year in 2021, according to USDA. Despite economic uncertainties due to the Covid-19 pandemic, continued global supply chain challenges, and a competitive global beef market, U.S. beef exports to East Asia, both in value and volume, were outstanding in the first half of 2022. USDA analysts say East Asia’s relatively robust middle class has supported the demand for high-quality beef, and a developed e-commerce retail sector has provided flexible avenues for suppliers to promote beef products during the pandemic. Link for details.
