Good morning!
Grains firmer overnight... Corn and wheat extended their recent rallies overnight, while soybeans firmed amid a corrective rebound. As of 6:30 a.m. CT, corn futures are trading mostly 1 to 2 cents higher, soybeans are 3 to 6 cents higher, winter wheat markets are 5 to 7 cents higher and spring wheat is 1 to 3 cents higher. Front-month crude oil futures are around 60 cents lower and the U.S. dollar index is just above unchanged.
Russia’s winter grains in better-than-average condition... Russia’s winter crop conditions are better than average, with only 4% rated poor, a meteorological official said. The head of Russia’s state weather center Hydrometcentre noted the five-year average is an 8% poor rating. World Weather Inc. says, “Bitter cold in Russia will shift southeast into Kazakhstan and eventually to Mongolia and eastern China during the coming week to 10 days. Winter crops are expected to be adequately protected from the cold by snow that covers the ground in the coldest areas.”
Lawmakers urge USDA to revert to 2021 ERP guidelines... House Budget Chair Jodey Arrington (R-Texas) and Sen. Roger Marshall (R-Kan.) have led a group of 65 members of the U.S. House and Senate in sending a letter to USDA Secretary Tom Vilsack expressing concerns about changes to the Emergency Relief Program (ERP) payments for losses incurred in 2022. The lawmakers urged USDA to revert to 2021 guidelines in alignment with congressional intent. The changes to ERP include increased crop insurance premium reimbursements for “socially disadvantaged” farmers, defined as female or of a certain ethnicity, and the implementation of a progressive payment model that may hinder those who suffered the most significant losses from receiving sufficient assistance. The group insists these changes do not adhere to the intended purpose of disaster relief programs and could negatively impact farmers’ ability to secure financing and plan for the next crop year. They emphasize the need for USDA to follow the law and congressional intent in addressing crop losses without unauthorized pay limits or preferences. Earlier this year, Arrington and Marshall also urged USDA to reconsider ERP Phase 2 implementation and return to the Phase 1 methodology for 2022 crop disaster assistance. The concerns expressed by lawmakers come amid widespread farmer complaints about the program.
China banks continue to support yuan... China’s major state-owned banks sold U.S. dollars in the onshore spot foreign exchange market for a second day on Wednesday to support the yuan currency, three sources with knowledge of the matter told Reuters. The dollar selling was reportedly mild compared to Tuesday. Chinese exporters usually convert their FX receipts into the yuan towards year-end for various payments, including year-end bonus handouts, which typically supports the Chinese currency. But with the Chinese economy sputtering and the U.S. dollar surging until recently, the yuan has come under pressure.
Chinese official stresses promoting stable, healthy Sino/U.S. relations... China’s Foreign Minister Wang Yi said promoting healthy, stable and sustainable China/U.S. relations is an important task, in a phone call with U.S. Secretary of State Antony Blinken. In the call, the two top diplomats exchanged views on the Israeli-Hamas conflict and agreed to maintain communication on the situation in the Middle East, according to a Chinese foreign ministry statement. Wang also repeatedly stressed that the U.S. should fully understand the importance of the Taiwan issue to China. Both officials also emphasized the importance of building upon progress made on key issues in the summit between the countries’ respective presidents in California in November.
House Ag Committee chair diagnosed with prostate cancer... House Ag Committee Chair Glenn “GT” Thompson (R-Pa.) has been diagnosed with prostate cancer, he said Tuesday. Thompson said, “While this diagnosis is a surprise, I feel well, and I will continue my work representing the people of Pennsylvania’s 15th District.” Thompson, 64, said he will “tackle this head on” and appreciates the prayers and privacy during this time. He appears to still be running for re-election in 2024 in the wake of the diagnosis, according to his campaign website.
Russia skirts Western sanctions on oil exports... Moscow’s monthly income from oil exports is greater now than before the invasion of Ukraine, highlighting the failure of measures to curb Russia’s war chest. According to Bloomberg, the sanctions have “fostered a lucrative business for scores of difficult-to-trace traders and shipping companies. As much as $11 billion a year of petrodollars are evaporating between when the oil leaves Russia to when it reaches buyers.”
EV sales to reach 14 million in 2023, Up 36% from 2022... Despite recent headlines suggesting a slowdown in electric vehicle (EV) demand, data from Bloomberg Hyperdrive suggests otherwise. Passenger EV sales are set to reach 14 million this year, marking a 36% increase from 2022. In the U.S., where concerns about EV demand have been particularly prominent, sales are expected to increase 50% this year. While these figures may fall short of some manufacturers’ expectations, they align with forecasts made by BloombergNEF at the start of the year.
Venture Global embroiled in major global energy dispute... Venture Global LNG, a U.S. gas startup, is embroiled in a major dispute with global energy giants, the Wall Street Journal reports. The company has risen to prominence as one of the largest natural gas exporters globally by offering cost-effective contracts to energy firms and swiftly responding to supply gas to Europe after Russia’s invasion of Ukraine disrupted exports. However, some of its initial customers, such as BP and Shell, allege Venture Global has failed to uphold its contractual obligations, a claim that Venture Global refutes.
Smithfield ends contracts with 26 Utah pig farms, citing oversupply... Smithfield Foods said on Tuesday it will end contracts with 26 hog farms in Utah, in the latest contraction by the world’s largest pork processor. A company statement cited an “industry oversupply of pork, weaker consumer demand and high feed prices: as challenges.
Another HPAI case in Arkansas... USDA’s Animal and Plant Health Inspection Service (APHIS) verified the presence of highly pathogenic avian influenza (HPAI) in a commercial broiler flock located in Johnson County, Arkansas. This outbreak affects approximately 109,000 birds. Notably, there were 55 confirmed U.S. cases of HPAI in commercial poultry flocks in November, and as of December, three more cases have been reported, indicating an ongoing concern for the poultry industry.
France orders third shot of HPAI vaccination... France on Wednesday ordered that a third dose of vaccine against HPAI be applied on ducks in areas most at risk, citing “new scientific evidence” and to avoid a surge in the disease. The order came a day after France elevated the risk level of HPAI to “high” following news cases of the virus.
Big beef movement continues... Wholesale beef prices dropped $1.24 in Choice and $3.70 for Select on Tuesday, while packers moved a strong 155 loads on the weaker values. That extends the now week-long string of movement topping 100 loads. While packers haven’t been able to push wholesale beef prices higher, retailer demand has been strong, signaling purchases for active year-end features.
Rinse and repeat in the hog/pork markets... The CME lean hog index is down another 24 cents to $69.60 (as of December 4), extending the seasonal price decline. The pork cutout value firmed 24 cents to $84.67. While the wholesale pork market has stabilized in the mid-$80.00 range, the cash hog market is still searching for a seasonal bottom.
Overnight demand news... South Korea purchased between 55,000 MT and 68,000 MT of corn to be sourced from the U.S., South America or South Africa and 65,000 MT of optional origin wheat, excluding Russia, Argentina, Pakistan, Denmark and China. Algeria purchased 450,000 to 500,000 MT of durum wheat, expected to be sourced mostly from Canada and Australia. Japan tendered to buy 60,000 MT of feed wheat and 20,000 MT of feed barley.
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
- 2:00 p.m. Broiler Hatchery — NASS