Good morning!
Beans firmer, corn and wheat slightly lower overnight... Soybeans modestly built on Tuesday’s gains, while corn extended yesterday’s losses and wheat pulled back in overnight trade. As of 6:30 a.m. CT, corn futures are trading around 3 cents lower, soybeans are fractionally to 2 cents higher and wheat futures are 1 to 3 cents lower. Front-month crude oil futures are modestly higher and the U.S. dollar index is around 250 points lower.
Attaché slashes Argentine soybean crop estimate... The U.S. ag attaché in Argentina slashed its estimate of the country’s soybean crop to 36 MMT, 9.5 MMT below USDA’s official January forecast. The post said “dry weather and high temperatures have damaged the crop.”
December soy crush expected to slow... Traders expect USDA to report the December soybean crush totaled 188.0 million bu., which would be down from 189.5 million bu. in November and well below the 198.2 million bu. of soybeans processed in December 2021. Soyoil stocks are expected to rise to 2.249 billion pounds.
Fed expected to deliver smaller interest rate hike... Traders have priced in near 100% certainty the Fed will slow its interest rate increase to 25 basis points at the conclusion of today’s two-day monetary policy meeting. Markets will closely monitor Chair Jerome Powell’s post-meeting press conference for indications of the Fed’s plans moving forward.
Euro zone inflation drops more than expected in January... Consumer inflation in the euro zone increased 8.5% from year-ago in January, down from a 9.2% increase the previous month. But core inflation, which excludes food and energy prices, rose to 7% from 6.9% while an even narrower measure also excluding alcohol and tobacco that’s watched closely by the European Central Bank held at 5.2%. Data from Germany, the bloc’s biggest economy was missing and Eurostat was forced to use a model-based estimate for the country.
Ukraine official more optimistic on grain crop than others... Ukraine’s grain production may decrease to 49.5 MMT this year from around 51 MMT last year, Interfax news agency quoted deputy economy minister Denys Kudyn as saying. Prior to last year’s invasion by Russia, Ukraine produced a record grain crop of 86 MMT in 2021. Earlier this week, the head of the Ukrainian Agribusiness Club said he expected Ukraine’s grain production to fall to between 35 MMT and 40 MMT this year.
Biden, McCarthy to meet on debt ceiling today... A White House meeting is set for today between President Joe Biden and Republican House Speaker Kevin McCarthy over increasing the nation’s debt ceiling. McCarthy and his House GOP conservative allies want steep cuts to domestic programs and a trim to defense spending — but not making cuts to two programs to avoid voter blowback: Medicare and Social Security. White House officials insist they will not negotiate with House Republicans on the need for Congress to raise the $31.4 trillion borrowing limit and avoid the first-ever debt default, potentially by this summer. The first meeting between the new speaker and president is not expected to yield any agreement on how to lift the debt ceiling. Such a solution is expected much closer to the true deadline this summer.
China to auction more wheat... China will auction 140,000 MT of state-owned wheat reserves on Feb. 8.
China’s smaller factories contract at slower pace in January... China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI), which gauges the country’s smaller and privately owned factories, rose to 49.2 in January from 49.0 the previous month. That still marked the sixth straight month of contracting factory activity. Output fell the least in five months while the decline in new orders eased. Buying levels dropped at the slowest pace in three months.
Xi vows to help consumers spend ‘without worries’... China will establish a long-term mechanism to boost consumption so consumers will have a stable income and be able to spend “without worries,” President Xi Jinping was quoted as saying by state media. Beijing must resolutely implement a strategic plan to boost domestic demand, alongside efforts to push supply-side reforms, Xi said. China will strive to be a global leader in key scientific and technological innovation to achieve tech self-reliance and resolve the problem of foreign “strangleholds,” he said.
Cattle Inventory Report about as expected... USDA estimated the U.S. cattle herd at 89.274 million head as of Jan. 1, down 2.803 million head (3.0%) from last year. The beef cow herd dropped 1.065 million head (3.6%) to 28.918 million head. The 2022 calf crop was estimated at 34.465 million head, down 701,000 head (2.0%) from the previous year. The total cattle herd and last year’s calf crop were the smallest in eight years. The beef cow herd was the smallest since 1962. The number of beef heifers expected to calve in 2023 dropped 171,000 head (5.1%) and total beef replacement heifers declined 318,000 head (5.8%). That was the smallest number of heifers held back for breeding since 2011. Compared to pre-report expectations, the report data is largely neutral. But the underlying data is bullish as the U.S. cattle herd further contracted – and will continue to do so.
Pork cutout anchored near $80... The pork cutout slipped 3 cents on Tuesday to $80.25. The cutout has pivoted around the $80.00 level for the past three weeks, unable to move much above or below that mark. While packers have been unable to move prices up, movement remains solid with 319.8 loads changing hands yesterday.
Overnight demand news... South Korea purchased 117,500 MT of optional origin corn and 80,000 MT of feed wheat – 65,000 MT to expected to be sourced from Australia and 15,000 MT optional origin.
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
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks — NASS
- 2:00 p.m. Flour Milling — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS