Good morning!
Firmer tone overnight... Corn and wheat futures extended Monday’s corrective gains overnight, while the soybean market recouped a small portion of yesterday’s losses. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 5 to 6 cents higher and wheat futures are 6 to 8 cents higher. Front-month crude oil futures are around 35 cents higher and the U.S. dollar index is about 250 points lower this morning.
Consultant again lowers Argentine crop estimates... South American crop consultant Dr. Michael Cordonnier cut his Argentine crop estimates for a third straight week due to impacts from persistent heat and dryness. While Argentina received beneficial rains during the weekend, they will provide only temporary relief and hot, dry conditions are forecast to return. Dr. Cordonnier lowered his Argentine soybean and corn crop estimates another 1 MMT each, cutting both to 47 MMT. He has a neutral to lower bias for both crops. Cordonnier kept his Brazilian crop estimates at 151 MMT for soybeans and 125.5 MMT for corn.
Ships depart Ukraine’s Odesa port... Eight ships loaded with grain left ports in Ukraine’s Odesa region on Tuesday after a pause caused by power cuts following Russian missile strikes over the weekend, the Ukrainian infrastructure ministry said. The Black Sea port of Odesa did not operate on Sunday and the ports of Chornomorsk and Pivdennyi, which are also authorized to export grain had operated only partially.
Ukrainian grain exporters ask gov’t to ensure power supply... The Ukrainian grain traders union UGA asked the government on Tuesday to ensure electricity to grain facilities to reduce potential damage to stored crops. Russia has been targeting Ukraine’s energy infrastructure with missile and drone strikes since October. UGA said this made production processes at grain storage enterprises virtually impossible. “This in turn leads to grain spoilage and, as a result, loss of funds, and most importantly, (this is) extremely important for the country’s food security and export of products,” UGA said. “Due to the lack of electricity, it is impossible to cool or ventilate it by moving it. Moreover, such self-heating is dangerous because it can cause an emergency situation at the enterprise,” UGA said.
One-week continuing resolution extension proposed... As expected, Congress is pushing for a one-week extension for “more time” to get a final omnibus budget for fiscal year 2023, which began Oct. 1. The current continuing resolution expires Dec. 16. The measure will be taken up by the House Rules committee today and go to the floor Wednesday. The Senate will then get the bill before Friday’s deadline. The omnibus spending package includes an extension of the Emergency Relief Program for eligible 2022 crops and livestock, and a separate aid package for rice growers.
Gov’t budget deficit widened in November... The monthly federal budget deficit widened to $249 billion in November, $57 billion more than the same month last year. The deficit narrowed sharply last fiscal year, which ended Sept. 30, as broad fiscal support during the Covid-19 pandemic ended. At the same time, rapid economic growth also helped power record-level tax revenues. Both those trends are on track to end this fiscal year.
China delays key economic meeting due to Covid surge... China is delaying a key economic meeting after Covid-19 infections surged in Beijing, according to a report by Bloomberg News, citing people familiar with the matter. The closed-door Central Economic Work Conference was initially expected to kick off later this week, when Chinese leaders, including President Xi Jinping, were expected to chart a recovery course for the Covid-hit economy in 2023, including more stimulus plans. Bloomberg said there was no set timetable for when the meeting will be rescheduled. Meanwhile, Beijing deactivated a state-mandated app used to track weather people had traveled to infection-stricken areas as the easing of its strict zero-Covid policy appeared to be moving forward.
European Parliament agrees to enforce the world’s first carbon border tax... The carbon border adjustment mechanism imposes tariffs on the imports of goods, such as cement and steel, to account for the carbon-dioxide emissions they generate. It seeks to prevent European firms outsourcing production to parts of the world with weaker environmental standards.
French wheat acreage forecast up slightly from last year... France’s ag ministry estimates wheat acreage for harvest next year will increase to 4.75 million hectares. That would be up 1.7% from last year and 0.1% above the five-year average. Sowing of durum wheat was estimated down 4.4% at 233,000 hectares, 12.5% below the five-year average. The ministry projected winter barley area would reach 1.30 million hectares, up 1% from 2022 and 3.9% above the five-year average. Rapeseed area was pegged at 1.29 million hectares, up 4.9% from 2022 and 6.5% above the five-year average.
Indonesia raises palm oil reference price... Indonesia plans to set the crude palm oil reference price for Dec. 16-31 at $871.99 per metric ton, up from $824.32 per metric ton for Dec. 1-15. The reference price would put the export tax for the period at $52 per metric ton and the export levy at $90 per metric ton.
Packers bought limited cash cattle last week... Packers purchased only 59,000 head of cattle in the negotiated market last week. The average cash price dropped 63 cents to $155.79. Cash sources expect generally steady cash cattle prices this week, supported by last week’s light volume but limited by the upcoming holiday-shortened slaughter schedules.
December hog futures now above the cash index... The CME lean hog index is down another 52 cents to $81.47 (as of Dec. 9). December lean hog futures finished Monday 48 cents above that level, suggesting traders sense the cash index will soon bottom. Meanwhile, traders continue to take premium out of deferred contracts, with February hogs finishing Monday just $2.23 above today’s cash quote.
Overnight demand news... Japan is seeking 154,942 MT of wheat in its weekly tender.
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. Cotton and Wool Outlook: December 2022 — ERS
- 11:00 a.m. Meat Price Spreads — ERS
- 11:00 a.m. Oil Crops Outlook: December 2022 — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Feed Outlook: December 2022 — ERS
- 2:00 p.m. Rice Outlook: December 2022 — ERS
- 2:00 p.m. Wheat Outlook: December 2022 — ERS
- 2:00 p.m. Fresh Apples, Grapes, and Pears: World Markets and Trade — FAS