Good morning!
Grains pressured by broader risk aversion... Concerns with surging Covid cases in China triggered risk aversion in markets overnight, including grain and soy futures. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are mostly 3 to 5 cents lower and wheat futures are 10 to 14 cents lower. Front-month crude oil futures are around $1.25 lower and the U.S. dollar index is more than 200 points lower this morning.
Export sales pushed back to Friday morning... Due to Monday’s government holiday, USDA’s export sales data for the week ended Dec. 22 will be delayed until Friday morning.
U.S. to require Covid tests for travelers coming from China... The Biden administration announced Wednesday it will require anyone arriving by air from China (including Hong Kong and Macau) to provide a negative Covid test, following a surge of Covid-19 cases across China as Beijing has eased its strict zero-Covid rules. Under the new rules, which will take effect Jan. 5, anyone two years and older will need to show a negative result from a test taken within two days of their departure from airports in mainland China, Hong Kong and Macau, administration officials said. The U.S. will also ask passengers flying to the U.S. from Seoul, Toronto and Vancouver if they have been in China during the previous 10 days. If so, they will also have to submit a negative test within two days of their departure to the United States.
More companies are shifting their supply chains away from China... Apple plans to make some MacBooks in Vietnam next year, Nikkei reported, while major international automakers aim to gradually shift production away from China, according to the Financial Times. Both moves are driven by the twin risks of growing political tensions between Beijing and major Western governments, and China’s fluctuating Covid-19 strategy — until recently draconian in its restrictions, and now suddenly free-flowing and open.
New China grain reserves company will begin operations in January... China state-owned grains trader COFCO said a new joint venture it has set up with state stockpiler Sinograin to manage the country’s grain reserves will officially begin operations next month. The China Enterprise United Grain Reserve Co. Ltd was established in September, according to COFCO, and is part of Beijing’s efforts to improve the efficiency of its grain reserves and better ensure food security.
China to adjust trade tariffs on some goods... China will adjust import and export tariffs on some goods from Jan. 1 to speed and promote development and expand domestic demand, the finance ministry said. Export tariffs on aluminum and aluminum alloys will be raised. The current import tariff will stay on seven types of coal until March 31, with tariffs adopted for most favored nations from April 1. As competition grows with the U.S. on technology issues, China will further reduce the tariffs for most favored nations on 62 types of information technology products from July 1.
China moves to step up supervision of banks’ custody business... China’s banking and insurance regulator on Thursday issued draft rules to step up supervision and management of commercial banks’ custody business. The move aims to “enhance transparency... and control business risks,” the China Banking and Insurance Regulatory Commission (CBIRC) said. Banks should ensure the independence of custody assets from their own assets, and isolate such funds, according to the draft. Commercial banks should also enhance due diligence of customers and enhance risk management and data protection of their custody business.
India extends policy to import refined palm oil at lower duty... India extended a policy to import refined palm oil at a lower duty “until further orders.” In December 2021, India cut basic import tax on refined palm oil and brought down the total taxes on imports to 13.75% from 19.25% previously. The concessional duty structure for the refined palm oil was due to expire on Dec. 31. India also raised the duty-free import quota of extra-long staple cotton to 51,000 MT for 2023 from 419 MT this year.
Indonesia delays B35 blending mandate to Feb. 1... Indonesia will start its mandatory 35% palm oil biodiesel blending requirement on Feb. 1, a month later than initially planned, the energy ministry said. The start date for the B35 program was delayed “to ensure that supply, infrastructure, everything is ready,” energy ministry director Edi Wibowo said. Indonesia will maintain next year’s biodiesel allocation for domestic consumption at 13.15 million kiloliters, with Wibowo noting “excess January allocation will be used if there is an increase in demand.”
World Gold Council reports central bank gold buying at highest rate since 1967... China and Russia were the likely leaders in gold purchases, though many central banks including those two countries do not always report gold holdings. “Sanctions on Russia and strained relations between the West and China have led to both countries adopting a policy of ‘de-dollarization’ to rely less on the policies of the U.S. central bank and government,” said broker SP Angel in a morning email dispatch. According to the World Gold Council, central banks bought 399 MT of gold in the third quarter, compared to 186 MT in the second quarter and 88 MT in the first quarter of 2022.
Slow developing cash cattle market... Cash sources signaled a couple packers in the northern market raised cash cattle bids from week-ago, an indication they need supplies for post-holiday slaughter runs. But most packers have been reluctant to bid more than steady prices as showlist numbers are up from last week. Feedlots appear to have no urgency to move cattle, suggesting it could take at least $1 higher prices to encourage active sales.
Big jump in cash hog index.... The CME lean hog index is up $2.09 to $80.69 (as of Dec. 24). That’s the highest price since Dec. 19 and the biggest one-day jump since Feb. 21. A jump that big could mark the seasonal low, though prices are more likely to grind higher than see daily price surges.
Overnight 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
- 9:30 a.m. Weekly Ethanol Production — EIA