Good morning!
Price pressure to open December... Soybean futures led price declines overnight as the market pulled back from strong gains earlier this week. Corn and wheat faced mild selling pressure overnight. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 9 to 12 cents lower and wheat futures are 5 to 7 cents lower. Front-month crude oil futures are more than $1 higher and the U.S. dollar index is nearly 600 points lower this morning.
EPA to propose boost in biofuel blending volumes... EPA this week will propose increases in the amount of ethanol and other biofuels oil refiners must blend into fuel, Reuters reported late Wednesday, citing two sources familiar with the situation. EPA’s proposal reportedly calls for overall blending mandates of 20.82 billion gallons in 2023, 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025, with volumes of conventional corn-based ethanol at 15 billion gallons in 2023 and 15.25 billion gallons each in 2024 and 2025. Bloomberg also reported the level will be 15 billion gallons in 2023 but says it will be 14.91 billion gallons in 2024. Advanced biofuel blending volume mandates in the proposal will be set at 5.82 billion gallons in 2023, 6.62 billion gallons in 2024 and 7.43 billion gallons in 2025, the sources told Reuters. EPA will also seek for the first time to make the use of biofuels to charge electric vehicles (EVs) as part of the renewable fuel program, giving EV car makers the ability to generate tradable credits, the sources said. The EV proposal will add up to 1.4 billion new credits by 2025, the sources added. So-called D3 credit volumes will grow from 720 million in 2023 to 2.13 billion by 2025, with overwhelming majority of the growth coming from credits generated by EVs, or e-RINs.
China set to loosen Covid restrictions... China is set to announce in coming days an easing of its Covid-19 quarantine protocols and a reduction in mass testing. China will allow some people who test positive for Covid-19 to quarantine at home, among supplementary measures to be announced in coming days, two sources with knowledge of the matter told Reuters. Not all positive cases will be allowed to quarantine at home unconditionally, one of the sources told Reuters, adding that pregnant women, the elderly and people with underlying illnesses will qualify to isolate at home. Close contacts of the cases will also be allowed to isolate at home if their home environment meets certain conditions, the sources said. Authorities will also step up antigen tests for the new coronavirus and reduce the frequency of mass testing and regular nucleic acid tests, the two sources said.
UN official: Deal close on resuming Russia ammonia exports via Ukraine... A deal is “quite close” to resume Russian ammonia exports via a pipeline to a Black Sea port in Ukraine, United Nations aid chief Martin Griffiths told a Reuters NEXT event on Wednesday, stressing that it was “almost more important” than ensuring grain exports. “The operation of that ammonia pipeline from Russia through Ukraine... is well understood, it’s not difficult, it can be started within a week or two. I think we’ll get there,” said Griffiths.
Legislation to avert rail strike moves to Senate... After the House easily cleared a bill averting a crippling nationwide U.S. freight rail strike, the measure heads to the Senate. Quick Senate action on the bill will depend on obtaining unanimous consent to waive days of standard procedural delays on floor votes, with several senators already signaling that may not occur. Labor Secretary Marty Walsh and Transportation Secretary Pete Buttigieg will meet with Senate Democrats at lunch today to discuss the legislation. The bill would impose a labor agreement by rail companies, labor leaders and the Biden administration months ago but rejected by workers in four of 12 unions. The House separately passed a related bill that would revise the original deal to add seven days of paid sick leave to the contract, one of the chief sticking points between unions and companies. But only three Republicans voted for the sick leave measure, which signals hurdles in getting enough GOP support in the Senate to pass. The Senate could choose to go along with the change or ignore it without affecting the original legislation.
Lula proposes pact to curb Brazilian soy linked to Cerrado deforestation... Brazilian President-elect Luiz Inacio Lula da Silva’s transition team has held meetings with the soy industry to discuss a new pact to stop deforestation in the Cerrado savanna, modeled from an agreement for the Amazon. Brazil’s farm industry and global commodities traders have previously resisted attempts to forge such a Cerrado pact, although in recent years major firms have laid out goals to eliminate deforestation in their supply chains everywhere by 2025. Deforestation in the Cerrado increased 8% to a six-year high in 2021, according to government data.
Weekly Export Sales Report out this morning... For the week ended Nov. 24, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 475,000-1,000,000 | 1,850,271 |
Wheat | 300,000-625,000 | 511,769 |
Soybeans | 550,000-1,000,000 | 690,140 |
Soymeal | 150,000-500,000 | 516,444 |
Soyoil | 0-20,000 | (97) |
Sharp monthly increases expected in soy crush, corn-for-ethanol use... Traders expect USDA to report October soybean crush totaled 196.0 million bu., based on a Bloomberg survey. That would be up 28.4 million bu. (16.9%) from September though 0.5% below last year. Corn-for-ethanol use is expected to rise 50.2 million bu. (13.1%) from September to 433.3 million bu., though that would be down 7.4% from October 2021.
Russian grain exports could reach 54 MMT... State-controlled trader United Grain Company (UGC) expects Russia to export 53 MMT to 54 MMT of grain in 2022-23, its deputy head Ksenia Bolomatova told an agriculture conference on Thursday. The country’s ag ministry forecasts the country will export around 50 MMT of grain this year.
Expected USDA release of ERP Phase 2 pulled back.... USDA pulled back its rollout of Phase 2 of the Emergency Relief Program (ERP), largely due to a lot of negative producer and farm-state lawmaker feedback on USDA’s apparent approach. Says one source: “It violates the initial regulation that says it would run according to phase I. It requires producers to give over tax returns… private concerns. It operates as a whole farm program though it was never intended to.”
WSJ: EU asks members to set Russia price cap at $60 a barrel... The EU has asked the bloc’s 27 member states to approve a price cap on Russian oil of $60 a barrel, people familiar with the matter told the Wall Street Journal. All 27 member states need to approve the level of the price cap. Members have largely coalesced around a cap of $60 a barrel to such a degree the commission believes it can get a deal at this level, the people said. Also, the Group of Seven (G7) still needs to approve the price for it to go into effect, and the group might not immediately agree with the EU decision.
Light cash cattle trade at steady prices... Light cash cattle trade started on Wednesday at steady $155 prices in the Southern Plains. Most feedlots in the region, along with those in the northern market passed on the steady bids in hopes of higher prices from packers. But with fresh contract supplies for December now available, packers may slow play trade in the negotiated market.
Direct cash hog price firms... The national direct cash hog price firmed $2.15 on Wednesday with gains across all regions. While the CME lean hog index continues to weaken, the strength in the direct price could signal a seasonal low is drawing closer. December lean hog futures posted strong gains yesterday but remain around $1 below the cash index.
Overnight demand news... South Korea purchased 133,000 MT of corn expected to be sourced from South America or South Africa. Algeria purchased between 450,000 and 500,000 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
- 7:30 a.m. Weekly Export Sales — FAS
- 10:00 a.m. Highlights From the December 2022 Farm Income Forecast — ERS
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS