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Quiet, two-sided overnight price action in grains... Corn, soybeans and wheat traded on both sides of unchanged while holding in tight ranges during the overnight session. As of 6:30 a.m. CT, corn futures are trading mostly around a penny lower, soybeans are 1 to 2 cents higher and wheat futures are 2 to 5 cents lower. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is trading mildly firmer this morning.
Cordonnier cuts Brazilian crop estimates... South American crop consultant Dr. Michael Cordonnier cut his Brazilian soybean crop estimate 1 MMT to 157 MMT, saying recent rains came too late for a full recovery in early planted soybeans in central Brazil. He noted soybean harvest started in remote areas of Mato Grosso last week, a month earlier than normal, with yields predictably well below average. Cordonnier cut his Brazilian corn crop estimate 3 MMT to 118 MMT, saying “all indications point to smaller safrinha corn acreage.” Cordonnier left his Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn.
Brazil exports record amounts of soybeans, corn in November... Brazil exported 5.196 MMT of soybeans in November, slightly topping the previous record for the month. For the first 11 months of 2023, Brazil exported nearly 98 MMT soybeans, up almost 18% from the prior record from two years ago. Brazil exported a record 7.406 MMT of corn during November, far exceeding the previous high for the month. For August through November, Brazil shipped almost 34 MMT of corn, 28% more than the prior record for that four-month period.
Moody’s cuts China’s credit outlook... Ratings agency Moody’s cut its outlook on China’s government credit ratings to negative from stable, in the latest sign of mounting global concern over the impact of surging local government debt and a deepening property crisis on the world’s second-largest economy. The downgrade reflects growing evidence Beijing will have to provide more financial support for debt-laden local governments and state firms, posing broad risks to China’s fiscal, economic and institutional strength, Moody’s said. The action by Moody’s was the first change on its China view since it cut its rating by one notch to A1 in 2017, also citing expectations of slowing growth and rising debt. While Moody’s affirmed China’s A1 long-term local and foreign-currency issuer ratings – saying the economy still has a high shock-absorption capacity – it expects the country’s annual GDP growth to slow to 4.0% in 2024 and 2025, and to average 3.8% from 2026 to 2030.
China’s state banks support yuan... China’s major state-owned banks actively bought yuan in currency markets on Tuesday to prevent it from weakening too much, two sources with knowledge of the matter said, with buying intensifying after rating agency Moody’s cut China’s outlook to negative. State banks were swapping yuan for U.S. dollars in the onshore swap market and quickly selling those dollars in the spot market to support the yuan.
Euro zone producer prices inch up in October but still well below year-ago... Factory-gate prices in the euro zone rose 0.2% from the previous month during October, the third consecutive month of increases in producer prices. On an annual basis, producer prices dropped 9.4%, following a record 12.4% decline the previous month. Excluding energy, producer prices experienced a 0.2% annual decrease in October, marking the first decline since October 2020.
Putin, to visit UAE, Saudi Arabia... Russian President Vladimir Putin is set to make a rare trip abroad since the invasion of Ukraine, with plans to visit the United Arab Emirates and Saudi Arabia. The visit highlights the importance of the Gulf states to Russia due to their dependence on energy-export revenues. All three countries, Saudi Arabia, UAE and Russia, are part of OPEC+, making discussions between the leaders crucial for oil policy. The trip comes as the UAE hosts the COP28 summit and has become a refuge for Russian companies facing Western sanctions. Putin has been largely isolated internationally since the Ukraine conflict, but this trip signals his increasing confidence in making external visits.
Another increase in ERP Phase 2 payments... Total payments under the Emergency Relief Program (ERP) moved up to $8.26 billion as of Dec. 3. Phase 2 payments reached $814.0 million to 10,117 recipients, up from $974.08 million the prior week. Phase 1 payments remained at $7.45 billion.
France on ‘high’ alert for HPAI... France raised the risk level of highly pathogenic avian influenza (HPAI) to “high” from “moderate” on Tuesday after the detection of new cases of the disease. The “high” risk level implies all poultry should be kept inside on farms and additional security measures taken to avoid a spread of the disease.
WOAH warns of ASF vaccine risks as Vietnam readies exports... The World Organization for Animal Health (WOAH) warned more testing of African swine fever (ASF) vaccines is needed, triggered by Vietnam’s plans to export doses in coming months. WOAH says AVAC Vietnam JSC, the producer of one of the two vaccines, has not shared sufficient data with international researchers and bodies. It urged countries interested in using AVAC’s vaccines to conduct their own trials before approving it.
Cattle futures, cash market still searching for bottoms... Cattle futures faced more heavy selling pressure on Monday as the technical picture continued to erode. Last week’s average cash cattle price fell another $2.32, marking the fourth straight weekly decline, with prices dropping $10.44 over that span. Traders expect cash market weakness this week unless futures aggressively bounce.
Cash hogs drop again, pork cutout firms... The CME lean hog index dropped another 74 cents to $69.84 (as of Dec. 1), extending the seasonal price decline in the cash hog market. The pork cutout value firmed 88 cents on Monday to $84.43, led by a $3.88 gain in primal bellies.
Overnight demand news... South Korea purchased 65,000 MT of corn to be sourced from the U.S., South America or South Africa. Japan is seeking 132,504 MT of milling wheat in its weekly tender. Egypt tendered to buy an unspecified amount of wheat from multiple origins.
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
- No reports scheduled.