Good morning!
Quiet overnight grain trade... Corn, soybeans and wheat held in relatively tight trading ranges overnight ahead of USDA’s December crop reports later this morning. As of 6:30 a.m. CT, corn futures are trading steady to fractionally higher, soybeans are 3 to 4 cents higher, SRW wheat is 6 to 7 cents lower, HRW and HRS wheat futures are 2 to 3 cents lower. Front-month crude oil futures are around $1.25 higher and the U.S. dollar index is nearly 200 points higher this morning.
December crop reports out later this morning... USDA won’t update its corn and soybean crop estimates in the Crop Production Report at 11:00 a.m. CT, though there will be a revised cotton production forecast. Any changes to domestic use in the Supply & Demand Report will likely be limited, with traders expecting ending stocks to come in at 2.152 billion bu. for corn (2.156 billion bu. in November), 243 million bu. for soybeans (245 million bu. in November) and 684 million bu. for wheat (same as November). The bigger focus will be global production forecasts, especially for South America.
Slight uptick expected in November non-farm payrolls... Economists polled by Reuters expect non-farm payrolls to rise 180,000 for November, which would be up from 150,000 in October that was the smallest monthly gain since January 2021. The unemployment rate is expected to hold at 3.9%.
FAO food price index steady in November... The UN Food and Agriculture Organization global food price index dropped 10.6% from year-ago, matching the revised October level that was the lowest since March 2021. Increases in the price for vegoils, dairy products and sugar were fully offset by decreases in cereal grains and meat. Compared to year-ago, prices declined 2.4% for meat, 16.9% for dairy, 19.4% for cereal grains and 19.8% for vegoils, while sugar prices jumped 41.1%.
India lowers wheat stockpile limit, extends export ban on deoiled rice bran... India lowered the limit of wheat traders and millers can hold to increase domestic availability and moderate prices, the food ministry said. Traders and wholesalers can now hold 1,000 MT of wheat stocks, half of the previous limit, The government is also prepared to release an additional 2.5 MMT of wheat in the domestic market if required to rein in prices, along with potentially slashing the import duty on Russian wheat. The Indian government also extended the export ban on deoiled rice bran until March 31, 2024.
India’s wheat stockpiles fall to 7-year low... India’s wheat inventories at state warehouses have dropped to 19 MMT, the lowest in seven years, two government sources told Reuters. “Stocks are lower, but the government still has sufficient stocks to ensure that prices do not rise sharply. The government can still offload more wheat in the market if there’s a requirement,” said one of the sources. “The government has adequate stocks until the next crops arrive in the market.” Wheat prices in India have jumped 20% over the past few months, despite a ban on exports.
India working to prevent disruption of ethanol supplies for gasoline blending... India is working to ensure supplies of ethanol for blending with gasoline are not disrupted, government officials said on Friday, a day after curbs were placed on ethanol production from cane juice to boost sugar supplies. The government will now rely on corn for ethanol production to meet gasoline blending goals.
China’s Politburo signals commitment to economic support... China’s top 24 Communist Party leaders, known as the Politburo, indicated their commitment to providing support for the country’s economy. During the meeting, chaired by President Xi Jinping, no new policies were introduced, but there was a clear emphasis on strengthening fiscal measures and improving the effectiveness of monetary policy. Specifically, the statement highlighted that fiscal policy would be enhanced “appropriately,” indicating a willingness to increase government spending as needed. Additionally, the statement noted monetary policy should be flexible, appropriate, targeted and effective. Notably, the previous description of monetary policy as “forceful” was omitted from the statement, suggesting a potential shift in approach toward a more measured and targeted approach to monetary measures. Separately, China’s foreign exchange regulator said the country will relax restrictions on outbound direct investment and capital rules for foreign direct investment.
FY 2024 funding update... House Speaker Mike Johnson (R-La.) suggested the possibility of a continuing resolution (CR) that would last for the remainder of the fiscal year. He emphasized this point in a recent letter to his colleagues, stating he has no intention of considering any more short-term extensions. While firm on not wanting short-term extensions, Johnson appears open to negotiations on broader government funding issues. He specifically mentioned the debt-limit measure, which contains statutory spending caps and is supported by a significant majority of his party’s Conference. This measure serves as the foundation for ongoing negotiations. However, he did not address other important factors in these negotiations, such as redirected rescissions (reducing previously allocated funds) and cap-exempt emergency funds. These are additional elements that will likely play a role in determining final funding outcomes.
Beef movement stays strong as prices slide... Choice wholesale beef prices fell another 72 cents on Thursday, while Select dropped $1.07. Packers continued to move a lot of beef at the lower prices, with 218 loads changing hands – the second straight day with spot movement of more than 200 loads.
Cash hog market continues seasonal slide... The CME lean hog index is down another 31 cents to $69.12 (as of Dec. 6). Hog supplies are likely peaking seasonally, with this week’s kill total usually marking the annual peak. But market-ready supplies are likely to remain above year-ago levels, which seems likely to keep a lid on cash prices through the balance of this year and may continue weighing on the market in early 2024.
Overnight demand news... Exporters reported no sales or tenders.
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
- 11:00 a.m. WASDE — WAOB
- 11:00 a.m. Crop Production — NASS
- 11:00 a.m. Cotton Ginnings — NASS
- 11:15 a.m. Cotton: World Markets and Trade — FAS
- 11:15 a.m. Grains: World Markets and Trade — FAS
- 11:15 a.m. Oilseeds: World Markets and Trade — FAS
- 11:15 a.m. World Agricultural Production — FAS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC