Good morning!
Mostly weaker tone this morning... Corn and soybeans are weaker this morning after two-sided price action overnight, while wheat futures are mostly firmer. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are mostly 4 to 5 cents lower and wheat futures are steady to 2 cents higher. Front-month crude oil futures are around $1.75 lower and the U.S. dollar index is modestly weaker this morning.
Stopgap spending bill pushes issue until next week... The Senate passed a stopgap measure to fund federal agencies through Dec. 23, averting a government shutdown. The House earlier this week passed the continuing resolution. Next step: Working out details and votes next week for an omnibus spending measure through fiscal year 2023, which ends Sept. 30. Text for the omnibus package is expected Monday. Work on several policy riders continues, including an extension of the Emergency Relief Program (ERP) for eligible 2022 crops and livestock, and a possible rice aid package around $350 million.
Defense/WRDA bill clears... The Senate passed an $858 billion defense spending bill on Thursday that would end the Defense Department’s mandate for troops to receive the Covid-19 vaccine. The bill was linked to the Water Resources Development Act (WRDA). It now heads to President Biden’s desk for his signature. Efforts by Sens. Ted Cruz (R-Texas) and Ron Johnson (R-Wisc.) to include measures to reinstate and provide back pay to service members fired by the military for refusing to take the Covid-19 vaccine were thwarted and not included in the final bill. The bill also boosts next year’s Pentagon budget by $45 billion more than Biden had requested. It also grants 4.6% pay raises to military personnel, provides $800 million more in security aid to Ukraine, and gives the president authority to give Taiwan up to $1 billion in weapons and munitions. It also includes changes to the Pentagon’s policy for handling sexual assault and harassment cases and earmarks $1 billion to resupply the nation’s defense stockpile.
Indonesia to mandate B35 in January... Indonesia will raise mandatory biodiesel blending to 35% starting Jan. 1, to reduce fuel imports amid high global energy prices and to shift to cleaner energy, the energy ministry said on Friday. Indonesia currently requires 30% of fuel be blended with biodiesel. “The estimated demand for biodiesel to support B35 implementation is 13.15 million kiloliters, or around a 19% increase compared to 2022 allocation of 11.03 million kiloliters,” energy ministry spokesperson Agung Pribadi said. Indonesia has been running road tests for biodiesel that is 40% palm oil since July 2022 and is expected to conclude the trial by end of this year.
Brazil court decision could increase ethanol use... A settlement reached by Brazil’s Supreme Court in a case opposing the federal government and Brazilian states about state-level taxation on fuels could lead to higher gasoline prices, and improved market conditions for ethanol. The federal government and the states agreed late on Wednesday to a proposed settlement that will continue to limit the so-called ICMS state tax on items considered “essential” such as diesel fuel, natural gas and cooking gas, but free up others. There will be no specific ceiling for some goods, including gasoline, leading the way for states to reinstate higher levies and recover lost revenue.
Argentina’s planting remains slowed by drought... Recent rainfall has not been enough for rapid advancement of soybean planting, the Buenos Aires Grain Exchange said in its weekly report. It noted soybean planting in the core production area was around 20% behind last year’s pace and overall, farmers had planted 51% of intended acres. Corn planting was 43% done, five points behind last year. The exchange rates Argentina’s soybean crop as 19% good, 61% normal and 20% poor. It rates corn conditions 18% good, 59% normal and 23% poor.
Russian wheat export tax rises again... Russia’s wheat export tax for Dec. 21-27 will be 3,333.8 rubles ($51.43) per metric ton based on an indicative price of $314.40. That’s up from a rate of 3,143.4 rubles per metric ton the previous week and the highest rate since early September.
India’s wheat planting up 3% from last year... Indian farmers have planted wheat on 28.65 million hectares (70.8 million acres) since Oct. 1, up nearly 3% from a year ago, according to the country’s ag ministry. Rapeseed acreage reached 9 million hectares, up from 8.3 million last year.
Euro zone business activity falls at slower rate in December... Euro zone business activity shrank at the slowest pace in four months in December. S&P Global’s flash Composite Purchasing Managers’ Index (PMI) rose to a four-month high of 48.8 this month from 47.8 in November. But December was the sixth month below the 50 level that signals contraction, the longest streak of a downturn since June 2013. Meanwhile, euro zone consumer inflation rose 10.1% in November, slightly higher than the initial estimate of 10.0% but down from a 10.6% jump in October. Energy accounted for 3.82 points of the rise, with food, beverages and tobacco adding 2.84 points to consumer prices.
Cash cattle trade at steady/firmer prices... Cash cattle trade got underway at $155 in the Southern Plains and $248 in the northern dressed market on Wednesday. The price in the Southern Plains was steady with week-ago, while northern trade was up $1. With packers bidding more aggressively than anticipated, some feedlots held out for even stronger prices.
February hog futures below cash index... The CME lean hog index is higher for a third straight day, rising 20 cents to $81.88 (as of Dec. 14). After a sharp loss that dropped prices to the lowest level since mid-October, February lean hog futures finished Thursday 23 cents below today’s cash quote.
Overnight demand news... Exporters reported no tenders or sales.
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
- 10:00 a.m. Fruit and Tree Nuts Data — ERS
- 10:00 a.m. Vegetables and Pulses Data — ERS
- 2:00 p.m. Vegetable and Pulses Outlook: December 2022 — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Potato Stocks — NASS
- 2:30 p.m. Commitments of Traders — CFTC