Good morning!
Grains quiet overnight... Corn, soybeans and wheat held in relatively tight trading ranges during a quiet overnight session. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny lower, soybeans are mostly a penny higher and wheat futures are narrowly mixed. The U.S. dollar index is modestly weaker and front-month crude oil futures are trading just above unchanged.
Weekly Export Sales Report out this morning... For the week ended Dec. 5, traders expect:
| 2024-25 expectations (in MT) | Last week (in MT) | |
| Corn | 1,100,000-1,900,000 | 1,732,394 |
| Wheat | 275,000-600,000 | 378,232 |
| Soybeans | 1,500,000-2,200,000 | 2,312,720 |
| Soymeal | 175,000-450,000 | 276,040 |
| Soyoil | 5,000-80,000 | 19,514 |
Brazil modestly adjusts soybean, corn crop forecasts... Conab raised its Brazilian soybean production estimate by 70,000 MT from last month to 166.21 MMT. Brazil’s corn crop forecast was lowered 180,000 MT to 119.63 MMT. Conab maintained its 2024-25 Brazilian export projections at 105.5 MMT for soybeans and 34 MMT for corn.
Brazil farmer lobby asks to lift soybean deforestation ban... Soybean farmer lobby Aprosoja-MT is seeking to end a two-decade-long agreement that forbids grain traders from buying soybeans from farms on deforested land in the Amazon rainforest, claiming the deal has created an uneven playing field. Aprosoja-MT noted it filed a complaint to antitrust watchdog CADE, adding that the moratorium generated 20 billion reais ($3.3 billion) in losses for the state of Mato Grosso. Trader lobby Abiove said the moratorium is “an instrument to defend Brazilian agriculture” and does not bring harm to the sector. Its lawyer Francisco Todorov told Reuters there is plenty of land to farm soy in the Amazon in regions deforested before 2008.
Exchange raises Argy wheat production forecast... The Rosario Grain Exchange raised its 2024-25 Argentine wheat production forecast by 500,000 MT to 19.3 MMT after recent favorable weather. The exchange maintained its production forecast for soybeans from 53 MMT to 53.5 MMT and for corn from 50 MMT to 51 MMT.
Farm bill extension, aid package face new challenges... Efforts to extend the 2018 Farm Bill and provide financial aid to farmers have hit a political snag. Outgoing Senate Ag Committee Chair Debbie Stabenow (D-Mich.) supports reallocating $14.5 billion in unspent Inflation Reduction Act (IRA) funds to the farm bill baseline, potentially unlocking $10 billion in budget authority, according to some reports citing the Congressional Budget Office. However, Politico reports House Speaker Mike Johnson (R-La.) has indicated that most House Republicans oppose this move. Simultaneously, discussions are underway to combine the financial aid package with a separate disaster aid proposal, adding complexity to the legislative process. Lawmakers are now exploring passing a clean, one-year 2018 Farm Bill extension and incorporating emergency economic aid for farmers in a separate disaster aid package.
Inside sources: Coming 45Z regs may be guidelines Trump administration will finalize... A Treasury spokesperson recently confirmed the department anticipates issuing guidance before the end of the Biden administration, enabling eligible producers to claim the 45Z credit for 2025. The credit is set to kick off on Jan. 1, 2025, regardless of when the guidance is released. But Treasury did not commit to a definitive timeline or clarify how thorough the eventual rule would be. The guidance is expected to provide basic information for renewable fuel producers to demonstrate eligibility and claim the tax credit. Continued delays in the 45Z guidance could affect farmers who supply low-carbon feedstocks to biofuel producers, as they may come too late for them to adjust their 2025 growing season plans without clear rules on qualifying climate-smart agriculture practices.
UCO investigation tied to RFS compliance still ongoing... EPA’s investigation into used cooking oil (UCO) imports is directly related to biofuel tax incentives and compliance with the Renewable Fuel Standard (RFS) program. In July 2023, EPA started audits and inspections of renewable fuel producers’ supply chains to verify the authenticity and legitimacy of UCO feedstocks used in biofuel production. The investigations are still ongoing and EPA is unable to discuss details of ongoing enforcement investigations. If fraudulent practices are discovered, it could impact the eligibility of certain biofuels for tax incentives and RFS credit. There are calls for more visibility into the UCO supply chain and clarity on how the EPA ensures imported UCO is not blended with palm oil, especially relative to several deforestation programs in Europe. Market sources say imported UCOs would still be price competitive even without tapping biofuel tax incentives.
China pledges fiscal, monetary policy stimulus... China will raise its fiscal deficit ratio and issue more government debt next year, while cutting interest rates and banks’ reserve ratio at the proper time to prop up economic growth, state media said, following an agenda-setting meeting of the country’s top leaders. China “will need to maintain economic growth and ensure overall stability of employment and prices” next year, state broadcaster China Central Television reported following the two-day Central Economic Work Conference in Beijing. The meeting did not provide details on when the monetary easing and fiscal stimulus will come.
China’s bond yields fall to record lows, discount to U.S. Treasuries reaches widest since 2002... The yield discount on China’s bonds versus U.S. Treasuries grew to the most in 22 years as Beijing signaled further interest-rate cuts to shore up the economy. The yield on China’s 10-year treasuries fell to 1.805%, while the 30-year yield dropped to 2.035% -- both record lows.
IEA raises 2025 oil demand forecast amid supply surplus outlook... The International Energy Agency (IEA) raises its 2025 world oil demand growth forecast to 1.1 million barrels per day (bpd), up from its previous estimate of 990,000 bpd. The increase is attributed largely to the impact of China’s recent stimulus measures and broader growth in Asian economies. Non-OPEC+ nations are expected to increase oil supply by 1.5 million bpd in 2025, driven by production gains in the U.S., Canada, Guyana, Brazil and Argentina. This supply growth outpaces demand increases, leading IEA to predict a modest acceleration in demand alongside a well-supplied market. IEA lowered its 2024 demand growth forecast to 840,000 bpd, down 80,000 bpd from its previous projection.
Another HPAI outbreak in western Iowa poultry flock... The Iowa Department of Agriculture and USDA announced an outbreak of highly pathogenic avian influenza (HPAI) in a Sac County commercial turkey flock. This is Iowa’s seventh detection of HPAI in poultry this year and the fourth in less than a week.
Cash cattle trade notably higher... Cash cattle traded mostly $1.00 to $2.00 higher in the live market and as much as $3.00 higher in the northern dressed market on Wednesday. The stronger-than-expected cash prices triggered active buying in futures, with nearby live cattle finishing more than $2.00 higher as traders try to keep up with the rising cash market.
Cash hog index rises... The CME lean hog index is up 29 cents to $83.61 as of Dec. 10. Traders will watch the cash index closely to see if this is a short-term pause or a seasonal bottom. February lean hog futures continue to trade at a slight premium to the index, suggesting traders sense cash prices will gradually firm by early next year.
Overnight demand news... Japan purchased 112,889 MT of milling wheat via its weekly tender, including 58,986 MT U.S., 30,333 MT Canadian and 23,570 MT Australian. Saudi Arabia tendered to buy 595,000 MT of optional origin wheat. The Philippines tendered to buy 60,000 MT of feed 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
- 11:00 a.m. Cotton and Wool Outlook: December 2024 — ERS
- 11:00 a.m. Oil Crops Outlook: December 2024 — ERS
- 2:00 p.m. Feed Outlook: December 2024 — ERS
- 2:00 p.m. Rice Outlook: December 2024 — ERS
- 2:00 p.m. Vegetable and Pulses Outlook: December 2024 — ERS
- 2:00 p.m. Wheat Outlook: December 2024 — ERS
- 2:00 p.m. Fresh Apples, Grapes, and Pears: World Markets and Trade — FAS