Good morning!
Beans, soyoil face active followthrough selling overnight... Soybeans plunged to contract lows overnight amid heavy pressure from soyoil, while corn and wheat traded mildly higher. As of 6:30 a.m. CT, corn futures are trading mostly a penny higher, soybeans are 9 to 11 cents lower and wheat futures are 2 to 4 cents higher. The U.S. dollar index is trading just below unchanged and front-month crude oil futures are around 50 cents higher.
Details of ag provisions in spending measure... The ag sector portion in the continuing resolution (CR) through March 14 echoes what we reported Tuesday. Highlights: A one-year extension of the 2018 Farm Bill, including provisions that don’t have “baseline,” or cost money to extend; $10 billion in farmer financial aid along the lines of a bill introduced by Rep. Trent Kelly (R-Miss.); $21 billion in ag disaster aid for farmers and ranchers ($2 billion specifically for livestock producers) as part of an overall $100.4 billion disaster package; year-round E15 sales and short-term biofuel blending relief to small refiners; language extending authorization of a program that replenishes stolen Supplemental Nutrition Assistance Program (SNAP/food stamp) benefits; and delaying implementation of a “beneficial ownership” database designed to crack down on money laundering until 2026. Bottom line: The disaster crop loss program will likely operate similar to the 2020-21 program without any of the 2022 quirks that made it into a debacle. The livestock program will likely operate similar to the 2022 livestock program where the Biden administration actually managed to get it correctly. The economic aid program is very similar to Trent Kelly (R-Miss.) FARM Act with a factor applied to keep it within budget. House Speaker Mike Johnson (R-La.) is expected to turn to Democrats to supply the bulk of votes needed to get the bill to the Senate. It appears lawmakers would have at least a day to review the package.
Fed’s forward guidance will be focal point... The Fed is widely expected to cut interest rates another 25 basis points at the conclusion of the two-day monetary policy meeting this afternoon. Focus will be on forward guidance via the Fed’s quarterly summary of economic projections, which will provide forecasts for GDP growth, unemployment, inflation and the Fed funds rate for 2025 and beyond.
France cuts wheat export forecast... France’s ag ministry cut its forecast for 2024-25 French wheat exports outside the EU by 400,000 MT to 3.5 MMT, down 66% from last year. It raised wheat exports within the bloc by 260,000 MT to 6.16 MMT, still 2% below year-ago.
Sinograin halts imported corn auctions to support domestic prices... China’s Sinograin announced it will stop auctioning imported corn from its inventories in an effort to boost domestic corn prices, which have dropped to their lowest level in four-and-a-half years. The state stockpiler previously committed to increasing purchases and storage of domestically produced corn. However, the impact of this action may be limited, as auction volumes of imported corn are relatively small. Additionally, China has significantly reduced corn imports, with November imports down 91.8% from year-ago. From January to November, total corn imports fell 39.9% from the same period last year to 13.32 MMT.
China to promote modernization of farms in pledge to ensure food security... China will accelerate the pace of agricultural and rural modernization and stabilize planted area in its quest to ensure stable and high grain production, state-run Xinhua news reported. At an annual meeting that sets rural policy priorities for the year ahead, policymakers highlighted a need to improve farmers’ incomes and strengthen the use of agriculture science, technology and equipment. “We must resolutely shoulder the important task of ensuring national food security... stabilize the grain planting area, deepen the action of increasing the yield of grain and oil crops on a large scale,” Xinhua reported. Policymakers said China will also improve the policy system for supporting grain production and improve the protection and quality of cultivated land.
Canada to impose more tariffs on Chinese imports... Canada plans to impose tariffs on a slew of Chinese products from as soon as early in the new year, the government’s fiscal update showed, as part of its wider investigation into imports from the country. Prime Minister Justin Trudeau’s government has already slapped a 100% tariff on all Chinese electric vehicles and a 25% tariff on imports of Chinese steel and aluminum products. The mid-year fiscal update presented on Monday showed that Ottawa has decided to apply tariffs to imports of certain solar products and critical minerals from China early in the new year, with levies on semiconductors, permanent magnets and natural graphite following in 2026. The Fall Economic Statement did not detail the extent of the duties to be imposed, nor on which specific products, but said further details on the measures would be announced soon.
China pushes back against bond buying spree... China’s central bank sent its first signal in months of its discomfort with the record-setting bond rally that drove yields to record lows. The People’s Bank of China (PBOC) has urged financial institutions involved in “aggressive trading” in the bond market to pay close attention to relevant risks including those in the rates market, PBOC-backed Financial News reported, citing unidentified people. Investors had been piling into Chinese government bonds on bets rising risk of a trade war with the U.S. will prompt top leaders to roll out bolder monetary stimulus to support the economy next year. Plunging Chinese yields stoked concern the country is heading into a Japanese-style balance sheet recession. The widening China/U.S. yield differential also weighed heavily on the yuan.
Panic hits Brazilian markets... First it was a collapse in the real, which fell to a record low against the U.S. dollar. Now the rest of Brazil’s financial markets are in the crosshairs as investors lose faith in the government’s ability to contain a deepening fiscal crisis, as deficit concerns outweigh economic growth. Market watchers say extraordinary measures on Tuesday by the central bank to stem the currency’s slide are little more than a temporary fix and warn that lawmakers’ moves to water down a high-profile austerity package are likely to only add to the turmoil.
Euro zone consumer inflation rises less than initially estimated in November... The annual consumer inflation rate in the euro zone increased 2.2% in November, up from a 2.0% rise in October but below the 2.3% preliminary estimate. Core inflation increased 2.7%, unchanged from October and in line with the initial estimate.
China’s pork imports double in November but still below year-ago... China imported 180,000 MT of pork in November, double the amount it brought in during the previous month but still 3.4% less than last year. Through the first 11 months of this year, China imported 2.09 MMT of pork, down 17.4% from the same period last year.
Wholesale beef rally halted... After three days of price gains, wholesale beef values weakened on Tuesday with Choice down $1.74 to $315.63 and Select $1.07 lower to $288.50. Despite the lower prices, movement slowed to 112 loads, signaling retailers have completed purchases for holiday features.
Cash hog index hinting at seasonal low... The CME lean hog index is up 14 cents to $83.98 as of Dec. 16. The index is only 65 cents off its recent low but has risen in three of the last five days, hinting that a seasonal bottom may be in the works.
Overnight demand news... Japan purchased 4,000 MT of feed wheat. Tunisia tendered to buy 100,000 MT of soft milling wheat and 100,000 MT of durum wheat – all optional origin.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 1:00 p.m. FOMC Meeting Concludes — Fed
- 2:00 p.m. Coffee: World Markets and Trade — FAS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Potato Stocks — NASS