Good morning!
Grains firmer to open the week... Corn, soybeans and wheat firmed overnight while holding in relatively tight trading ranges. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are 1 to 3 cents higher and wheat futures are mostly 3 to 5 cents higher. The U.S. dollar index is trading just below unchanged and front-month crude oil futures are about 70 cents lower.
Favorable conditions for Brazil’s crop development... Rains fell across nearly all of Brazil’s crop areas last week. AgRural notes there are only a few isolated areas of concern. The firm estimates Brazil’s soybean crop at 171.5 MMT, with corn production forecast at 121.3 MMT. World Weather Inc. says Brazil will continue to receive rains over the next two weeks, supporting crop development. Southern Argentina is forecast to be mostly dry over the next week.
NOPA crush expected to decline from all-time high but still be a Nov. record... Analysts expect members of the National Oilseed Processors Association (NOPA) to report November soybean crush at 196.7 million bu., which would be down 1.6% from the all-time record in October but a new high for the month. Soyoil stocks are expected to rise to 1.123 billion lbs. at the end of November.
The week ahead in Washington... Lawmakers this week will race to get a continuing resolution (CR) agreed to before the Dec. 20 timeline for stopgap spending for fiscal year (FY) 2025 that began Oct. 1. The ag sector awaits final decisions on disaster aid, a one-year extension of the 2018 Farm Bill and whether a last-minute compromise will produce billions in farmer aid. The Federal Reserve’s next meeting on interest rates takes place on Tuesday and Wednesday, with a 25-basis-point cut to interest rates widely expected. Key will be whether the Fed signal a pause ahead in cutting rates. The final estimate of third quarter GDP will be released on Thursday, with the personal consumption expenditures price index, the Fed’s preferred inflation gauge, scheduled for Friday morning. Key agricultural data includes USDA’s Food Price Outlook and Cattle on Feed Report on Friday.
Farm bill extension negotiations trigger partisan bargaining over aid and policy goals... A one-year extension of the 2018 Farm Bill, tied to the CR, has sparked intense negotiations over economic assistance to farmers. Initially, leaders considered diverting Inflation Reduction Act (IRA) funds intended for the National Resources Conservation Service in exchange for farmer aid. However, House Speaker Mike Johnson (R-La.) opposed this, aligning with President-elect Donald Trump’s intent to dismantle IRA in the next Congress. Sensing an opening, Democrats pushed for concessions in return for their support, proposing initiatives like 100% federal funding for Baltimore’s Francis Scott Key Bridge, duty-free trade benefits for Haiti and Africa, funding for museums honoring women and Hispanics, and re-entry support for former inmates under the Second Chance Act. Farm-state lawmakers, pushed by farm group lobbyists, said they would not support a CR without farmer aid. The dilemma: Democrats know Johnson wants farmer aid language and must rely on them to help pass it, perhaps a majority of votes. House GOP leaders may have to take the CR up under suspension, meaning it will need a two-thirds majority to pass. If congressional leaders release CR bill text today, the House may not vote until Thursday.
Trump transition team plans sweeping rollback of Biden EV, emissions policies... President-elect Donald Trump’s transition team is recommending sweeping changes to cut off support for electric vehicles (EVs) and charging stations and to strengthen measures blocking cars, components and battery materials from China, according to a document seen by Reuters. The recommendations come as the U.S. EV transition stalls and China’s heavily subsidized EV industry continues to surge, in part because of its superior battery supply chain. The transition team also recommends imposing tariffs on all battery materials globally, a bid to boost U.S. production, and then negotiating individual exemptions with allies, the document shows.
China’s industrial output rises, retail sales growth slows... China’s industrial output growth quickened slightly in November, while retail sales disappointed. China’s industrial output grew 5.4% from a year earlier in November, faster than the 5.3% pace seen in October. Retail sales grew 3.0% from year-ago, the weakest pace in three months, slowing sharply from 4.8% in October.
China to boost direct fiscal support to consumers... China will promote stable growth in household income in 2025 by stepping up direct fiscal support to consumers and boosting social security, state-run Xinhua news agency said. To boost consumption, China will “greatly increase” funds from ultra-long special bonds to support the industrial upgrades and consumer goods trade-in scheme next year, Xinhua reported, quoting an official of the Central Financial and Economic Affairs Commission. Steps will focus on boosting household income through greater fiscal spending on consumption, better social security, job creation, wage growth mechanisms, higher pensions for retirees, better medical insurance subsidies and policies to spur childbirth, Xinhua said. This year, 150 billion yuan ($20.60 billion) from such bonds was allocated to support consumer goods, including fridges and TVs trade-ins, with overall sales revenue driven by the scheme topping 1 trillion yuan so far. Policymakers are weighing inclusion of more products in high demand and with potential for replacement in the scheme.
China’s housing sector remains weak... China’s new home prices in 70 cities shrank 5.7% from last year in November, following the steepest decline in over nine years of 5.9% the previous month. This marked the 17th consecutive month of decreases, suggesting that Beijing’s attempts to mitigate the prolonged downturn in the property sector had yet to reverse conditions. Separate official figures showed home sales picked up, while real estate investment continued to decline.
South Korea’s political crisis deepens with Yoon’s impeachment... South Korea’s National Assembly impeached President Yoon Suk Yeol on Dec. 14, suspending him from office over his controversial Dec. 3-4 martial law declaration. Prime Minister Han Duck-soo has assumed the role of acting president as the Constitutional Court reviews the impeachment, a process that could take up to 180 days. Yoon’s impeachment temporarily stabilizes the political landscape in this key U.S. ally, but the uncertainty surrounding the court’s ruling risks reigniting social unrest. If confirmed, South Korea will hold a presidential election within 60 days, with the opposition Democratic Party poised for a likely victory. This shift could thaw relations with North Korea and China while scaling back military collaboration with the U.S. and Japan. Conversely, a mistrial or a hung court could trigger violent protests, disrupting the nation’s economy and rekindling public outrage over past martial law abuses.
Decline in euro zone business activity eases in December... HCOB’s preliminary composite euro zone purchasing managers index compiled by S&P Global rose to 49.5 in December from 48.3 in November, though that marked the second straight month of contraction. The manufacturing sector remained weak (45.2), while the services sector expanded (51.4).
Another case of HPAI in western Iowa commercial poultry... The Iowa Department of Agriculture and USDA announced a case of highly pathogenic avian influenza (HPAI) in a commercial layer flock in O’Brien County. This is Iowa’s eighth detection of HPAI within poultry in 2024 and the fifth in the past week. There has also been a pickup in HPAI cases in wild birds in the state. Hunters and the public are urged to avoid sick birds, report unusual deaths and practice caution to prevent disease spread.
USDA expands EID tag program for livestock in FY 2025... USDA’s Animal and Plant Health Inspection Service (APHIS) is distributing an additional 3 million electronic identification (EID) tags to states in fiscal year 2025, following the 8 million tags provided in 2024. This effort supports a nationwide traceability program aimed at improving the tracking of livestock and enhancing responses to disease outbreaks. Both visually and electronically readable ear tags are required for interstate movement. While Congress allocated $15 million for the program in 2024, some states, like North Dakota, reported tag shortages. The additional tags for 2025 aim to alleviate these gaps, though producers may need to source tags independently if supplies are depleted.
Eyes on cash cattle trade... Cash cattle prices rose for a fourth consecutive week, despite negative packer margins, suggesting they were short-bought on needs through year-end. With holiday-shortened slaughters in two of the next three weeks, cash sources say packers could pull back the reins on cash bids this week. Of course, they’ve been warning of that happening the past couple of weeks.
Signs cash hog fundamentals stabilizing... The CME lean hog index is down a penny to $83.90 as of Dec. 12, though the index rose in three of the last eight days. The pork cutout firmed $2.30 to $94.61 on Friday amid gains in all but ribs and is $5.97 off its Dec. 5 low.
Weekend demand news... Saudi Arabia purchased 804,000 MT of optional origin hard 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
- 10:00 a.m. Weekly Export Inspections — AMS
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: December 2024 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: December 2024 — ERS
- 2:00 p.m. 2022 Census of Aquaculture — NASS