Good morning!
Grains mildly weaker overnight... Corn, soybeans and wheat mildly favored the downside during a relatively quiet overnight session to open the week. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 2 to 3 cents lower and wheat futures are 2 to 4 cents lower. The U.S. dollar index is around 500 points higher and front-month crude oil futures are about 80 cents higher.
Record soybean crush expected... Analysts expect USDA to report U.S. processors crushed an all-time record 210.6 million bu. of soybeans in October, according to a Bloomberg survey. That would be up 24.1 million bu. (12.9%) from September and 9.2 million bu. (4.6%) above year-ago. Corn-for-ethanol use is expected to total 462.3 million bu., up 22.1 million bu. (5.0%) from September and 2.3 million bu. (0.5%) above year-ago.
Russia slashes wheat export quota... Russia’s wheat export quota from Feb. 15 to June 30 will be 11 MMT, according to the Eurasian Economic Union Council (EEUC), down from 29 MMT in the same period in 2024. Quotas for corn, barley and rye will be set at zero during the same period, unlike previous seasons when no separate restrictions were applied. In a separate announcement, Russia’s ag ministry hiked the wheat export duty another 22% from Dec. 4-10. Russia’s Deputy Prime Minister Dmitry Patrushev said the government is working to increase food imports from “friendly” countries, while EEUC said it introduced duty-free quotas for imports of potatoes, carrots, apples and butter. EEUC comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia and coordinates the customs and tariff policy of its members.
Argentina seeks its first wheat shipments to China in decades... Argentina wheat traders are seeking to close their first significant sales to China since the 1990s, the head of the country’s top grain-exporting group told Bloomberg. China is making overtures for wheat purchases after it authorized Argentine shipments earlier this year, said Gustavo Idigoras, president of CIARA-CEC, whose members include the major agricultural trading houses. China also recently authorized purchases of Argentine corn, though no cargoes have yet sailed.
Dollar supported by French financial crisis... French financial markets are under significant strain as a deepening budget crisis collides with political instability. The far-right National Rally said it could topple the government as soon as this week after the French finance minister said his administration would not be blackmailed. The U.S. dollar index is higher on safe-haven demand as the French crisis deepens, weighing on the euro. Some veteran market watchers are worried the situation in France could highlight burdensome government debt in major economies and turn into a contagion at some point.
Trump issues warning to BRICS countries’ potential move away from dollar... On Saturday, President-elect Donald Trump demanded a commitment from BRICS countries not to create a new currency or support any alternative to the U.S. dollar. He threatened to impose a 100% tariff on these nations if they fail to comply with this demand. The BRICS alliance, which originally included Brazil, Russia, India, China and South Africa, has recently expanded to include Iran, Egypt, Ethiopia and the United Arab Emirates, have been discussing moving away from the U.S. dollar in recent years, particularly after the U.S. imposed sanctions on Russia over its war in Ukraine in 2022. Trump’s threat carries significant weight, as several BRICS countries are key trading partners with the United States.
The week ahead in Washington... The lame-duck congressional session begins this week with a focus on trying to pass another continuing resolution for fiscal year 2025 spending (current measure runs through Dec. 20), disaster aid, ag financial aid and an extension of the 2018 Farm Bill. The economic focus will be Friday’s employment data for November. Key agricultural data will be USDA’s updated farm income forecast on Tuesday.
Biden administration tightens controls on technology exports to China... The Biden administration unveiled new restrictions aimed at curbing China’s development of advanced semiconductor technologies critical to military and AI advancements. The measures include barring sales of specific chips and equipment, placing over 100 Chinese firms on a restricted trade list, and requiring companies to ensure technology is not diverted to blacklisted entities. Commerce Secretary Gina Raimondo called the move the “strongest controls ever enacted” to undermine China’s military modernization. Allies like Japan and the Netherlands are expected to implement similar restrictions. Critics argue that delays in allied coordination have allowed China to stockpile resources, while Beijing has condemned the measures as a “malicious blockade.” These steps underscore the deepening technological divide between the U.S. and China.
China’s manufacturing sector expands in November... China’s official manufacturing purchasing managers index (PMI) rose to 50.3 in November, marking the second straight month of expansion and the highest reading since April. However, foreign orders for large, state-owned factories remained weak. The Caixin/S&P Global manufacturing PMI rose to 51.5 in November, the highest since June. New export orders among smaller manufacturers rose for the first time in four months and marked the highest in seven months.
China’s 10-year bond yield falls to all-time low... China’s 10-year yield dropped to the lowest level on record, breaking the psychological 2.0% barrier as a sputtering economy and bets on further rate cuts drive investors into safe-haven bonds. Despite efforts from authorities to restrain the bond rally, including episodes of central bank selling and an increase in issuance, investor appetite seems insatiable and analysts expect the rally to continue.
China skips Politburo readout... The Communist Party’s elite decision-making body skipped releasing a readout for its regular November meeting, leaving investors hungry for signs of stimulus waiting for the conclusion of two major economic confabs this month. Bloomberg reported the 24-man Politburo, led by President Xi Jinping, appeared to have missed its meeting last month, the first time the group failed to publicly convene since May 2023. Investors are now turning their attention to this month’s Politburo assembly — one of three annually to normally focus on economic policy, although an extra month was devoted to that cause this year. While such meetings normally take place at the end of each month, December’s confab is typically brought forward to set up the Central Economic Work Conference. Investors are betting Beijing will use both meetings to unlock more forceful measures to bolster growth as the world’s No. 2 economy braces for the return of Donald Trump to the White House.
Update on the New World screwworm situation... USDA’s Animal and Plant Health Inspection Service (APHIS) is working to re-establish a biological barrier in Panama to prevent further northward movement of New World screwworm (NWS) into Mexico. The agency is also calling on producers along the southern U.S. border to remain vigilant and report any suspicious cases immediately. The duration of the ban on Mexican cattle imports to the U.S. is uncertain. APHIS initially signaled late December/early January for a possible lifting of the ban, but nothing is official at this time. Bottom line on duration of ban is whether the outbreak can be contained from spreading. The larger the area, the longer the ban.
Traders cautious toward cash cattle market... Cash cattle traded sharply higher last week, with the average price likely above where nearby live cattle futures ended on Friday. That suggests traders sense the recent cash market strength may end as packers will have fresh contracted supplies available with the flip of the calendar.
Cash hog index continues to drop, pork cutout firms... The CME lean hog index is down another 30 cents to $85.21 as of Nov. 27, extending the decline since early November, though it is still $1.36 above the October low. The pork cutout firmed $1.37 on Friday to $90.31 from the previous day’s low, which was the lowest since Feb. 14.
Weekend demand news... South Korea purchased 40,000 MT of U.S. non-glutinous milled medium grain rice.
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. Census - Specialty Crops — NASS
· 2:00 p.m. Cotton System Consumption and Stocks — NASS
· 2:00 p.m. Fats and Oils: Oilseed Crushings, Production, Consumption — NASS
· 2:00 p.m. Grain Crushings and Co-Products Production — NASS