Good morning!
No overnight grain trade... Grain and livestock markets will reopen at 8:30 a.m. CT following the extended holiday weekend. As of 6:30 a.m. CT, front-month crude oil futures are trading around 35 cents higher after earlier rising $1.50. The U.S. dollar index is around 200 points lower this morning.
Putin says Russia ready to negotiate over Ukraine war, claims Kyiv, West refuse... President Vladimir Putin said Russia was ready to negotiate with all parties involved in the war in Ukraine, but that Kyiv and its Western backers had refused to engage in talks. Putin also signaled Moscow remains committed to the war, saying the Russian population is prepared to endure a protracted conflict. Just about everyone, or “99.9% of Russians,” he said, is “ready to put everything toward the interests of the motherland.” Both U.S. and Ukrainian officials believe Russia is not serious about negotiations and suspect the claim is a ploy to buy time amid Russian fallbacks on the battlefield.
South American weather update... Argentina’s central crop areas were dry during the holiday weekend while some significant rain fell in central through southeastern Buenos Aires and in far northwest areas of the country. World Weather Inc. says Argentina will not likely see much precipitation until this weekend and early next week, then another period of drying is expected. Brazil is expected to see routine rainfall later this week.
Consultant cuts Argentine crop estimates, Brazilian corn forecast... South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate for a fifth consecutive week as approximately 40% of the country’s soybean acreage is still unplanted. His Argentine soybean crop forecast now stands at 43 MMT, down 2 MMT from last week. Cordonnier cut his Argentine corn crop estimate by 1 MMT to 46 MMT, noting there is still 45% of corn acreage left to plant. He trimmed his Brazilian corn crop estimate by 500,000 MT to 125 MMT, noting drought problems in Rio Grande do Sul, the country’s largest first corn crop state. He left his Brazilian soybean crop estimate at 151 MMT.
China further eases Covid rules... China will stop requiring inbound travelers to go into quarantine starting from Jan. 8, the National Health Commission said on Monday. China’s management of Covid-19 will also be downgraded to the less strict Category B from the current top-level Category A, the health authority said, as the disease has become less virulent and will gradually evolve into a common respiratory infection. Chinese officials estimate about 18% of the population were infected with Covid-19 in the first 20 days of December.
Geopolitical tensions in Asia... Taiwan’s defense ministry said China sent 71 warplanes and seven naval vessels on “strike drills”— rehearsals for conflict — into its air-defense zone within 24 hours. China had condemned an American spending bill that included military assistance for Taiwan, accusing both countries of escalating their “collusion and provocation.” Taiwan extended mandatory military service in response to growing fears of China. From 2024, conscripts will spend a year in the military, up from four months currently. The move could increase Taiwan’s military manpower by about 40%, analysts told Reuters. Meanwhile, South Korea scrambled warplanes and fired warning shots after unmanned drones flown from North Korea “violated” its airspace. South Korea spotted the aerial vehicle crossing the “military demarcation line” separating the two countries on Monday morning.
Indonesia’s palm oil export tax, levy unchanged for first half of January... Indonesia plans to set the crude palm oil reference price for Jan. 1 to Jan. 15 at $858.96 per metric ton, deputy coordinating minister of economic affairs Musdhalifah Machmud told Reuters. The reference price would put the export tax for that period at $52 per metric ton and the export levy at $90 per metric ton, unchanged from current levels. The reference price for Dec. 16 to Dec. 31 is $871.99.
The week ahead in Washington... It will be quiet in Washington this week as Congress is adjourned. The first session of the new Congress will begin Jan. 3. There also is no major economic data or USDA reports aside from the normal weekly releases, which are pushed back a day due to Monday’s holiday.
Pandemic changed how people use restaurants... Delivery service is up more than 5% and drive-through is up 13%, compared with before the pandemic, while 16% fewer people are eating out in person. Other trends: More diners ordered food online this year, and restaurants streamlined menus to save money without raising prices.
Cattle on Feed Report: Placements drop less than expected... USDA estimated there were 11.673 million head of cattle in large feedlots (1,000-plus head) as of Dec. 1, down 312,000 head (2.6%) from year-ago but 24,000 head more than the average pre-report estimate implied. November placements dropped 42,000 head (2.1%), though traders expected a 4.2% decline from year-ago. November marketings were slightly stronger than anticipated at 1.2% above year-ago. There was nothing in the data to greatly move the market. While placements were near the top of the range of trade estimates, they still declined notably from year-ago.
H&P Report: Herd smaller than expected, but signs contraction phase is ending... USDA estimated the Dec. 1 hog herd at 73.119 million head, down 1.327 million head (1.8%) from year-ago and 210,000 head less than the average pre-report estimate implied. The market hog inventory at 68.321 million head declined 2.0%, while the breeding herd at 6.154 million head rose 0.5% from last year. The data should be supportive for winter-, spring and early-summer lean hog futures. Far-deferred contracts could face mild pressure with the data implying the herd contraction phase may be coming to an end.
Holiday weekend demand news... Egypt tendered to buy up to 60,000 MT of wheat from unspecified origins as part of a World Bank-funded food security program. South Korea tendered to buy 25,000 MT of optional origin GMO-free, food-quality soybeans.
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. Export Inspections — AMS