Good morning!
Grains firmer overnight... Corn and soybeans extended Thursday’s corrective gains during the overnight session, while wheat bounced from recent losses. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 6 to 8 cents higher, winter wheat markets are 1 to 2 cents higher and spring wheat is mostly 5 to 7 cents higher. The U.S. dollar index is more than 300 points lower and front-month crude oil futures are down around 65 cents.
Gov’t shutdown looms as latest GOP plan fails... The House rejected a temporary funding plan backed by President-elect Donald Trump on Thursday, leaving federal agencies on the brink of closure with the current funding measure expiring at midnight ET tonight. Congress remains at an impasse, with no clear path forward to prevent a government shutdown. Focus is on whether House Speaker Mike Johnson (R-La.) can find a majority within the GOP or win over enough Democrats. Punchbowl News reported JD Vance and Russ Vought, who is Donald Trump’s pick to lead the Office of Management and Budget, are meeting with the House Freedom Caucus this morning in Johnson’s office to attempt to resolve the funding impasse. Senate Majority Leader Chuck Schumer (D-N.Y.) said the House needs to embrace its original failed deal, while Sen. Joni Ernst (R-Iowa), a member of leadership, quipped: “They need to be talking to the Senate, too.”
Impacts of a gov’t shutdown on USDA... USDA has a contingency plan (link) that would retain a small number of administrative employees to oversee activities including disaster response and cybersecurity should funding lapse. Lance Honig at USDA’s NASS told us: “What impact a shutdown would have on our January reports:For all of our end-of-season crop and Dec. stocks data, we are finished collecting the data, so the only issue would be with timing. In other words, we have all of the data we need to work with, just need time to analyze and compile it. So if there were a shutdown, it would just depend on how long it was in determining when the reports could be published (if any delay were necessary). So not a question of if we could publish, just maybe when. Hogs & Pigs is scheduled to publish on Monday, so again just a timing issue. The one I would be watching more closely is the January Cattle Report. We will collect that data in January, so IF we were shut down then, it gets a little more complicated. Not saying we couldn’t do it — just that the overall timeline/process would have to be re-worked.”
China’s state stockpiler buys U.S. soybeans for winter, spring delivery... China’s Sinograin has bought nearly 500,000 MT of U.S. soybeans this week for shipment in March and April, paying more for U.S. supplies for state reserves rather than buying cheaper Brazilian beans, two U.S. traders familiar with the deals told Reuters. Sinograin’s purchases this week follow deals China booked last week for around 750,000 MT for shipment from January to March. Sinograin prefers U.S. beans when it is buying for storage because they are less prone to spoilage than those from Brazil, traders said. The purchases came as soybeans fell to near four-year lows and ahead of potential tariffs when President-elect Donald Trump takes office.
COFCO inks climate-linked loan... Crop merchant COFCO International on Friday announced a $600 million revolving credit facility with OCBC bank involving emissions reductions targets for soy and corn purchases. COFCO International, the overseas trading arm of Chinese food group COFCO Corp., will be eligible for interest discounts if it achieves the targets, which it aims to do mainly through steps to eliminate deforestation and land conversion from its soy and corn supply chains.
China’s soybean imports from U.S. jump in November but Brazil remains leading source... Of the 7.15 MMT of soybeans China imported last month, 2.79 MMT came from the U.S., up 21.8% from last year. November arrivals from Brazil declined from year-ago, though it was still the leading source at 3.94 MMT. For the first 11 months of 2024, China imported 97.09 MMT of soybeans, with 71.7 MMT from Brazil (up 10%) and 17.88 MMT from the U.S. (down 9%).
Russia’s wheat export quota lower than originally announced... Russia set its wheat export quota for the second half of 2024-25 at 10.6 MMT, the government said. That’s down from the 11 MMT quota announced last month by the Eurasian Economic Union, a trade association of Russia and other four ex-Soviet countries. The quota from Feb. 15 to June 30 is down 63.4% from 29 MMT last year.
Trump’s tariff threats loom over Europe... Trump has warned of “TARIFFS all the way” unless Europe significantly increases imports of U.S. oil and gas. The European Union is exploring options ranging from retaliatory tariffs to negotiated concessions, but divisions among member states and bureaucratic inertia complicate the process. Trump’s renewed threats of tariffs on European goods have unsettled leaders and businesses across the continent, raising fears of a potential trans-Atlantic trade war. With political instability in key EU countries and no unified strategy to counter these moves, Europe faces a precarious challenge. The European Commission said it was ready to discuss strengthening the EU/U.S. relationship and that the bloc is “committed to phasing out energy imports from Russia and diversifying our sources of supply,” a European Commission spokesperson said.
China leaves interest rates unchanged... The People’s Bank of China (PBOC) kept its key lending rates unchanged for the second straight month. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, was held at 3.1%. The five-year LPR, a reference for property mortgages, was unchanged at 3.6%. Both rates remain at record lows following rate reductions in October and July.
Dec. 1 feedlot inventory expected to be slightly below year-ago... Analysts expect USDA’s Cattle on Feed Report this afternoon to show the large feedlot (1,000-plus head) inventory down 0.3% from year-ago at 11.975 million head as of Dec. 1. The report is expected to show a 5.1% decrease in the number of cattle moved into feedlots last month, while marketings are anticipated to be down 1.8% from November 2023. Of note: The U.S. ban on Mexican cattle imports went into effect on Nov. 22, so this month’s report won’t fully reflect those restrictions. Next month’s report, featuring activity during December, will reflect the restrictions.
Michigan to go cage-free with eggs by year’s end... Starting Dec. 31, Michigan will require all eggs sold in stores to come from cage-free chickens, marking a significant shift in the state’s egg industry. While the law aims to improve animal welfare, experts warn of potential price increases, adding to existing inflation and bird flu challenges. The 2019 “cage-free” egg law mandates retailers sell only cage-free eggs. Small farms with under 3,000 hens are exempt. Cage-free systems incur higher production costs, passed on to consumers. Recent data shows cage-free eggs are 45 cents more expensive on average. The five-year phase-in period has allowed farmers to prepare for the transition, potentially mitigating drastic price hikes. Michigan joins some other states with similar laws, including California, Massachusetts, Nevada, Oregon, Washington and Colorado. Utah and Arizona are scheduled to go cage-free in 2025, with Rhode Island joining the list in 2026.
Cattle futures, cash market headed in opposite directions... Cattle futures posted sharp losses again on Thursday and look toppy on the daily charts. Cash cattle traded steady to $2.00 higher so far this week, despite the sharp break in futures. Those markets are unlikely to diverge for long, so either futures will pull cash lower or the strong cash market will cause traders to buy the break.
Cash hog index continues to inch higher... The case for a seasonal bottom in the cash hog market is building with the CME lean hog index up another nickel to $84.21 as of Dec. 18. That’s the fifth gain in the last seven days, though the net advance during that span is only 89 cents.
Overnight demand news... South Korea purchased 67,000 MT of corn that can be sourced from the U.S., South America or South Africa but passed on another tender to buy up to 69,000 MT of corn.
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. Food Price Outlook — ERS
- 11:00 a.m. Cotton Ginnings — NASS
- 2:00 p.m. Dairy: World Markets and Trade — FAS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Chickens and Eggs — NASS
- 2:00 p.m. County Estimates - Barley, Oats, Wheat — NASS
- 2:00 p.m. Hops — NASS
- 2:00 p.m. North American Potatoes — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC