Good morning!
Corrective buying in grains overnight... Corn, soybeans and wheat firmed amid corrective buying during the overnight session. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 6 to 8 cents higher and wheat futures are mostly 5 to 7 cents higher. The U.S. dollar index is around 100 points lower and front-month crude oil futures are about 85 cents higher.
Cordonnier again raises Brazilian soybean crop forecast... South American crop consultant Dr. Michael Cordonnier raised his Brazilian soybean crop estimate another 2 MMT to 170 MMT, noting the only regional concern for dryness in Brazil was in western Parana, southern Mato Grosso do Sul, western Santa Catarina and parts of Rio Grande do Sul. He maintains a neutral/higher bias toward the crop. Cordonnier left his Brazilian corn crop forecast at 125 MMT. In Argentina, Cordonnier left his production forecasts at 57 MMT for soybeans and 48 MMT for corn, with a neutral bias toward both crops.
Study: Lack of investment, cost hampering SAF usage by airlines... Most of the world’s airlines are not doing enough to switch to sustainable aviation fuel (SAF), according to a study by Brussels-based advocacy group Transport and Environment, which also found too little investment by oil producers in the transition. Currently, SAF makes up about 1% of aviation fuel use on the global market, which needs to increase for airlines to meet carbon emission reduction targets. A lack of investment by major oil players, who have the capital to build SAF processing facilities, is hampering the market’s growth, the study says. SAF also costs two to five times more than regular jet fuel. The study noted 87% of airlines are failing to make meaningful efforts to meaningfully adopt SAF into fuel usage – and even those who are trying could miss their own targets without more investment.
Italy to require companies buy insurance for climate risks... Starting Jan. 1, every company in Italy must buy insurance to protect its assets from drought, floods, landslides and other natural hazards that have become more common in a sign of Europe’s rising anxiety about climate change. As the fastest-warming continent, Europe’s climate losses have increased by 2.9% a year from 2009 to 2023, according to the European Environment Agency. The new law will require companies to buy coverage and insurers to write policies or face fines. The plan is backed by a 5-billion-euro ($5.3 billion) reinsurance fund, set up by a state-controlled financial institution. But there are rumblings the plan’s rollout may be delayed amid concerns that one big catastrophe could overwhelm the new fund.
China’s shortfall on Phase One deal highlights persistent U.S./China trade imbalance... Citigroup economists, analyzing the Phase One trade deal from Donald Trump’s first term, report that China significantly underperformed on its import commitments. China fulfilled less than 60% of the agreed $200 billion increase in purchases for 2020-21 compared to 2017 levels. Economists argue this underscores the difficulty in addressing the U.S./China trade imbalance, likely to remain a focal point in Trump’s second term.
EPA proposes rule to restrict chlorpyrifos use to 11 crops... EPA proposed a rule to revoke chlorpyrifos tolerances for all but 11 food and feed crops, addressing a U.S. Court of Appeals ruling. The organophosphate insecticide, historically used on diverse crops like soybeans and fruit trees, had its tolerances reinstated after a 2021 revocation. The retained uses — limited to alfalfa, apples, asparagus, tart cherries, citrus, cotton, peaches, soybeans, strawberries, sugar beets and wheat — would reduce chlorpyrifos usage by 70%. An amended Interim Registration Review Decision is expected in 2026.
Senate GOP plots policy priorities at strategic retreat... Senate Republicans are convening for a five-hour retreat at the Library of Congress, led by incoming GOP Policy Chair Shelley Moore Capito (R-W.Va.). The session aims to align on key goals, including approving regular spending bills and utilizing budget reconciliation to advance priorities like tax cuts without Democratic support. Achieving this would require passing budget resolutions and navigating procedural challenges in both chambers.
China escalates trade tensions with U.S. via critical mineral export ban... China will ban exports to the U.S. of items related to gallium, germanium, antimony and superhard materials that have high-tech and military applications, its commerce ministry said, citing national security concerns. Beijing’s directive on so-called “dual-use” materials also requires stricter review of end-usage for graphite items shipped to the United States. The curbs strengthen enforcement of existing limits on exports of the critical minerals that Beijing began rolling out last year and come a day after Washington’s latest crackdown on China’s chip sector.
China’s sow herd, hog slaughter contract... China’s sow herd totaled 40.73 million head at the end of October, according to the ag ministry, down 3.2% from year-ago. Through the first 10 months of the year, China’s hog slaughter fell 2.6% from the same period last year to 264.21 million head.
China lifts final trade restrictions on Australian meat processors... China has lifted trade restrictions on two Australian meat processing facilities, allowing the full resumption of red meat exports to the country, the Australian government said. Beijing has now removed restrictions from all 10 Australian meat processors it banned between 2020 and 2022. China is the second largest market for Australian beef and veal after the United States.
Wholesale beef prices strengthen... Wholesale beef prices rose $2.49 for Choice to $313.01 and $2.70 for Select to $277.00 on Monday. Despite the beef strength, packer margins remain solidly in the red. Given negative margins, the availability of December-contracted cattle, strong packer purchases the past two weeks and holiday-shortened slaughter schedules around the upcoming holidays, traders sense the recent cash market strength may end.
Traders sense cash hog weakness will end soon... The CME lean hog index is down another 85 cents to $84.36 as of Nov. 29, extending the recent price slide. After strong gains on Monday, December lean hog futures finished $1.135 below today’s cash quote, while February hog futures hold a $3.59 premium.
Overnight demand news... Japan is seeking 111,405 MT of milling wheat via its weekly tender. Jordan passed on a tender to buy 120,000 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. December 2024 Farm Income Forecast — ERS