Good morning!
Grains mildly firmer to open the week... Wheat futures led gains in the grain markets during the overnight session. As of 6:30 a.m. CT, corn futures are trading a penny higher, soybeans are 1 to 2 cents higher and wheat futures are 4 to 6 cents higher. The U.S. dollar index is nearly 600 points higher and front-month crude oil futures are modestly weaker.
USMCA panel rules against Mexico’s GM corn ban... A dispute panel has ruled Mexico violated its commitments under the U.S.-Mexico-Canada Agreement (USMCA) by issuing a decree banning genetically modified (GM) corn imports in early 2023, marking a crucial win for American corn growers. The ruling carries substantial economic implications, given that Mexico is the largest export market for U.S. corn. With this favorable ruling, U.S. industry officials will work closely with the U.S. Trade Representative and the incoming Trump administration to ensure the decision is enforced. If Mexico does not follow the USMCA panel decision, the U.S. would be allowed to suspend trade benefits with Mexico equivalent to the damage caused by Mexico’s GM corn measures, potentially involving imposing punitive tariffs on specific Mexican products and restricting imports from Mexico in other sectors.
Mexico will prohibit planting of GM corn by Constitutional reform... Mexico said it would adhere to the USMCA ruling, which obliges it to eliminate restrictions on imports of U.S. GM corn. Mexican President Claudia Sheinbaum announced she will seek to prohibit the planting of GM corn in the country through a reform to the Constitution in 2025. Mexico’s Ag Minister Julio Berdegué will aim to increase non-GM white corn production, to eliminate the need to import corn.
Vaden chosen for USDA Deputy Secretary... Stephen Vaden, President-elect Donald Trump’s nominee for USDA Deputy Secretary, is getting favorable reviews. One of them comes from ag consultant Randy Russell, who said, “Stephen is one of the smartest people I have ever met… brilliant. Any time you meet with him he is extremely well prepared. He has an extensive list of contacts with folks who served in the first Trump administration, which will be invaluable on issues that impact farmers and ranchers but are in the jurisdiction of EPA, FDA, USTR and Interior. We are blessed to have him as our soon to be Deputy Secretary of Agriculture.” Link to more about Vaden.
EPA’s Regan to depart by year’s end... EPA Administrator Michael Regan announced his resignation, effective Dec. 31. Jane Nishida, Assistant Administrator for the Office of International and Tribal Affairs, will serve as acting administrator, with Chief of Staff Dan Utech as acting deputy administrator. Regan plans to return to North Carolina to spend more time with his family. Additional Cabinet-level departures from the Biden administration are expected in the coming weeks.
The week ahead in Washington... With the new stopgap spending measure extending government funding until March 14, lawmakers are on recess until Jan. 3. It’s also a quiet week on the economic front given the midweek Christmas holiday.
U.S. launches new probe into legacy Chinese chips... The Biden administration announced a last-minute trade investigation into Chinese-made “legacy” semiconductors that will offer Trump a choice about whether to enact new tariffs on Chinese-made chips. Legacy chips use older, mature manufacturing processes and are found in a wide range of mass market applications. They do not include advanced chips for use in artificial intelligence applications or sophisticated microprocessors. The U.S. Trade Representative’s office, which will conduct the new probe, said it is aimed at protecting American and other market-driven chip producers from China’s massive state-driven buildup of domestic chip supply. USTR Katherine Tai said the trade agency has found evidence Beijing is targeting the semiconductor industry for global domination, similar to its buildup in steel, aluminum, solar panels, electric vehicles and critical minerals. The Biden administration will begin accepting public comments on the probe on Jan. 6, and has planned a public hearing for March 11-12, according to a Federal Register notice.
UK economy stalls in Q3... Revised figures showed Britain’s economy saw no growth in the third quarter, contrary to an earlier estimate of 0.1% expansion. UK Finance Minister Rachel Reeves stressed the enormous challenge ahead for the Labour government “to fix the economy” and adequately fund the public finances “after 15 years of neglect.”
Neutral Cattle on Feed Report... USDA estimated there were 11.982 million head of cattle in large feedlots (1,000-plus head) as of Dec. 1, down 34,000 head (0.3%) from year-ago. Placements declined 3.7%, while marketings dropped 1.5% from November 2023. This data is fully neutral and should have virtually no market impact.
Hog herd expected to be inch up from year-ago... Analysts expect USDA’s Hogs & Pigs Report this afternoon to show the U.S. hog herd up 0.1% from year-ago at 75.536 million head. The breeding herd inventory is anticipated to be about equal to last year, while market hog numbers are seen up 0.1%. After fourth-quarter slaughter ran under levels implied by the September H&P Report, some downward revisions are expected to past data.
Cold Storage Report also out this afternoon... USDA will detail frozen meat stocks at the end of November. The five-year average is a 13-million-lb. increase in beef stocks and a 37-million-lb. decline in pork stocks during the month.
Iowa announces first human case of HPAI... The Iowa Department of Health and Human Services announced Friday the state’s first human case of the highly pathogenic avian influenza (HPAI). The individual is a commercial poultry worker who was exposed by a flock in northwest Iowa, though the county of the outbreak wasn’t announced. The individual reported mild symptoms.
Wholesale beef prices return to recent comfort zone... Wholesale beef prices fell $4.84 for Choice to $315.85 and firmed $1.80 for Select to $285.91 on Friday. The $315.00 and $285.00 levels for Choice and Select beef, respectively, appear to be the comfort zone for packers and retailers, as values haven’t been able to sustain moves away from those levels.
February hogs now at premium to cash index... The CME lean hog index is up another 14 cents to $84.35 as of Dec. 19, marking gains in five of the last seven days. After strong gains Friday, February hogs finished $1.58 above today’s cash quote, signaling traders are gaining more confidence a seasonal low has been posted in the cash market.
Weekend demand news... Algeria tendered to buy a nominal 50,000 MT of optional origin 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
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. Hogs and Pigs — NASS
- 2:00 p.m. Poultry Slaughter — NASS