Good morning!
Corn and soybeans weaker, wheat mixed overnight... Corn and soybean futures faced pressure overnight after weekend rains fell on some dry areas of South America, while wheat showed a mixed tone. As of 6:30 a.m. CT, corn futures are trading mostly around 4 cents lower, soybeans are 9 to 10 cents lower, SRW wheat is around 2 cents higher, HRW wheat is a penny lower and HRS wheat is 2 cents lower to a penny higher. Front-month crude oil futures are around 60 cents higher and the U.S. dollar index is about 100 points lower.
Southern Brazil gets weekend rains... Needed rains fell on areas of southern Brazil over the weekend, but more will be needed to reverse the dry pattern. Northwestern areas of Argentina also received weekend rainfall, while other parts of the country were dry. Rains are expected across Argentina Thursday night through the coming weekend, while some areas of southern Brazil may also get needed precip. Northern Brazil is expected to be excessively wet in some areas.
China reported its first Covid-related deaths in weeks on Monday... There are rising doubts over whether the official count captured the full toll of Covid that is ripping through cities after the government relaxed strict anti-virus controls. According to reports, hospitals in Beijing are overwhelmed, and funeral homes are busier than usual.
The week ahead in Washington... Congress’ last task for 2022 is to pass the massive $1.7 trillion omnibus spending measure for fiscal year 2023, which could be released as early as today. Final passage should occur by week’s end. EPA is expected to announce a new Waters of the U.S. (WOTUS) regulation this week, despite calls from Congress to hold off on announcing any new guidance until the Supreme Court ruled on the Sackett v. EPA case in which EPA’s reach under the Clean Water Act is being litigated. The economic calendar is light this week. The focus for agriculture will be USDA’s food price outlook and Cold Storage Report, which will both be released on Thursday. On Friday, USDA will release its Cattle on Feed and Hogs & Pigs Reports.
Russia ships wheat to Syria via sanctioned ships... Using a low-profile fleet of ships under U.S. sanctions, Syria has this year sharply increased wheat imports from the Black Sea peninsula of Crimea that Russia annexed from Ukraine, Reuters reported. With sanctions making it more complicated for Syria and Russia to trade using mainstream sea transport and marine insurance, the two countries are increasingly relying on their own ships to move the grain, including three Syrian vessels that are subject to sanctions imposed by Washington. Wheat sent to Syria from the Black Sea port of Sevastopol in Crimea increased 17-fold this year to just over 500,000 MT.
Bigger EU + UK wheat crop expected in 2023... Soft wheat production in the European Union and the United Kingdom is expected to rise to 143.2 MMT in 2023, up from 140.7 MMT in 2022, European grain trade association Coceral said. France, the EU’s biggest wheat producer, was projected to harvest 34.1 MMT in 2023, up from 33.6 MMT, while No. 2 grower Germany’s soft wheat production was forecast to rise to 22.9 MMT from 22.5 MMT this year. UK soft wheat production was forecast to fall to 14.3 MMT from 15.2 MMT this year because of expected lower yields. In its first forecasts for next year’s harvest, Coceral said it expected EU and UK rapeseed production at 20.4 million MMT, down from 20.6 MMT this year, while corn would rise to 64.5 MMT from 50.7 MMT this year.
ECB official: Changing inflation target would hurt credibility... The European Central Bank will not revise its mid-term price stability goal of 2% as that would undermine credibility, Vice President Luis de Guindos said, adding that it was determined to keep raising interest rates to combat inflation. “I can say that we are not going to review it, even less so when our inflation is at 10%,” he said at an event in Madrid on Monday. “It would send a message that would generate a lot of uncertainty and central banks rely on their credibility... that is the last thing we should do. There will be more interest rate hikes, until when, I don’t know. I am absolutely honest, I don’t know,” De Guindos said.
SPR exchange... The Energy Department announced Friday it had entered into an exchange agreement for 1.8 million barrels of oil from the Strategic Petroleum Reserve with Exxon Mobil and Phillips 66 to “address potential supply disruptions” to areas affected by the shutdown of the Keystone pipeline.
Russia still considering response to oil price cap... The Kremlin said on Monday it was still considering what measures it would adopt in response to the West’s $60 per barrel price cap on Russia’s oil exports, state-run TASS news agency reported. Moscow had originally planned to publish a presidential decree outlining its response – including a possible ban on selling oil to countries that comply with the cap – last week, Kremlin spokesman Dmitry Peskov had told reporters. But Peskov said on Monday Russia was still weighing other options.
EPA report: Fuel economy flat, GHG emissions drop to new low... U.S. fuel economy for 2021 model year vehicles stayed flat from the previous year’s record mark at 25.4 miles per gallon, while greenhouse gas emissions fell by 2 grams per mile to a new low of 347, according to EPA’s annual Automotive Trends Report.
European Union clinches a deal on a carbon border tax... Members of the bloc agreed on how to create a tool that will force foreign companies to pay for the cost of their carbon emissions. The tax is a key element of the EU’s climate emissions goals, but trading partners accused Brussels of protectionism.
China’s pork imports rise in November but still below year-ago... China imported 180,000 MT of pork in November, up 20,000 MT (12.5%) from October but 11.1% below year-ago. For the first 11 months of this year, China imported 1.56 MMT of pork, down 56% from the same period last year.
Limited cash cattle trade likely... Packers have restricted cash cattle purchases the past two weeks and will be buying for holiday-shortened kills the remainder of the year. That’s likely to limit their willingness to aggressively chase after animals. With Christmas and New Year’s Day falling on Sundays, some plants are planning to take extended weekends the next two weeks.
Cash hog index weakens... After three days of modest price gains, the CME lean hog index is down 33 cents to $81.55 (as of Dec. 15), though that’s slightly above the Dec. 9 low of $81.47. February lean hog futures finished last week at a $4.225 premium to the cash index after strong corrective gains Friday.
Weekend 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
- 8:00 a.m. Cost-of-Production Forecast — ERS
- 8:00 a.m. Food Expenditure Series — ERS
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Milk Production — NASS
- 2:00 p.m. National Hop Report — NASS