Good morning!
Mostly firmer tone overnight... Corn and wheat futures posted corrective gains overnight, while soybeans traded mixed. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 2 cents lower to 2 cents higher, winter wheat futures are 7 to 9 cents higher and spring wheat is mostly 4 to 6 cents higher. Front-month crude oil futures are more than $1.50 higher and the U.S. dollar index is nearly 200 points higher this morning.
U.S. gives Mexico timeline to explain GMO corn ban... Doug McKalip, the U.S. Trade Representative’s (USTR) new chief ag trade negotiator told Reuters he has given Mexico until Feb. 14 to respond to a U.S. request to explain the science behind its planned bans on GMO corn and glyphosate herbicide. He noted Mexico’s response will help the trade agency decide next steps in its quest to resolve a long running dispute over Mexico’s biotechnology policies. The U.S. request came in a previously unreported letter sent by USTR on Jan. 30 to Mexico’s economy ministry seeking scientific evidence behind the bans and risk assessments backing the decisions, which are required under the U.S.-Mexico-Canada Agreement. The letter marks a legal step in the process, and further steps include seeking formal consultations over the dispute or asking for a dispute settlement panel to determine whether Mexico’s policies violate the trade deal. Earlier this week, we reported Mexico’s Secretary of Economy Raquel Buenrostro said a new decree on Mexico’s GMO corn ban was coming soon, indicating it would allow U.S. GMO corn to be imported if it cleared a scientific sanitary review.
Russia to cut oil production... Russia said it plans to cut its oil production by around 500,000 barrels a day, or about 5%, next month. Moscow said the cut was in response to Western sanctions. Two OPEC+ delegates told Reuters the group plans no action after Russia announced its oil output cuts.
Russia again complains about Black Sea export deal... Russia’s ambassador to the United Nations said on Friday the country has not been able to export any grain as part of the Black Sea grain deal. Russia has maintained its disapproval of how the deal is structured, though it continues to export large volumes of grain and other ag products outside the Black Sea initiative. Meanwhile, Ukraine’s ag ministry has proposed increasing the minimal tonnage of ships which carry grain from the country via the protected corridor, aiming to boost exports despite opposition from Russia.
Record Russian wheat exports expected... Russia-based ag consultancy IKAR expects the country to export a record 46 MMT of wheat in 2022-23. Russia issued export quotas for all grain of 25.5 MMT, most of which will be wheat, from Feb. 15 through June 30. During the first half of 2022-23, Russian wheat exports totaled around 21.3 MMT, pending official data for January.
Chinese consumer inflation rises, producer prices drop... China’s consumer price index rose 2.1% annually in January, up from 1.8% in December and the highest in three months, as food inflation accelerated 6.2%. Core CPI, minus food and energy prices, rose 1.0% from year-ago. China’s producer price index dropped 0.8% versus January 2022. This was the fourth straight month of producer price deflation, as domestic demand deteriorated further amid easing commodity prices.
China says U.S. property ownership laws violate rules... The U.S. is violating the principles of market economy and international trade rules in considering a ban on Chinese citizens buying property in the United States, the Chinese foreign ministry said on Friday. “Generalizing the concept of national security and politicizing economic, trade and investment issues violate the rules of market economy and international trade rules,” ministry spokesperson Mao Ning said. Texas, Florida, Arkansas and several other states are weighing legislation that would bar Chinese citizens from buying real estate, as tensions rise between the two countries over national security issues.
China new bank loans jump to record level in January... New bank loans in China jumped more than expected to a record 4.9 trillion yuan ($720.21 billion) in January, as the central bank moved to shore up growth in the world’s second largest economy following the lifting of tough pandemic controls. January new loans more than tripled December’s tally. While Chinese banks tend to issue more loans at the beginning of the year, the size of the increase spurred hopes business and consumer confidence is rapidly improving after Beijing’s lifting of its strict Covid-zero policy.
China speeds up clearing of Aussie beef shipments... China’s ports have been clearing cargoes of Australian beef within one or two weeks since the start of this year, much faster than the months taken during the last two years, according to an Australian trade body. “Australian beef distributors are reporting much faster processing times recently at Chinese ports,” Andrew Cox, Singapore-based general manager for international markets at trade body Meat & Livestock Australia (MLA), told Reuters. Australia is one of China’s top suppliers of beef but import volumes have plunged since 2020 when Beijing suspended six Australian beef plants, citing labelling irregularities and other technical issues.
Indonesia raises palm reference price... Indonesia plans to set its crude palm oil (CPO) reference price at $880.03 per metric ton for Feb. 16-28, up from $879.31 in Feb. 1-15, a senior economic ministry official said. The reference price would put Indonesia’s CPO export tax at $74 per metric and export levy at $95 per metric ton.
Cash cattle trade sharply higher... Cash cattle trade developed late Thursday, with prices as much as $4 higher in the northern market. Packers dragged out cash cattle negotiations as long as possible, hoping feedlots would sell around steady prices. But feedlots dug in their heels and were rewarded. The sharply higher cash prices should trigger a wave of buying in live cattle futures.
Slow but steady climb in cash hog market... The CME lean hog index is up 5 cents to $73.80 (as of Feb. 8), the sixth straight daily gain and 10 of the last 12 days it has been higher. The index is now $1.69 above its January low. The cash rally seems likely to persist through late winter and then accelerate seasonally during spring into early summer as market hog numbers decline. April hogs finished Thursday less than $10 above the cash index, while the June contract held nearly a $28 premium. The five-year average is roughly a $7 rally into mid-April and about a $19 climb to mid-June.
Overnight demand news... South Korea purchased 64,000 MT of optional origin corn.
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. Cotton and Wool Outlook Tables: February 2023 — ERS
- 11:00 a.m. Oil Crops Outlook: February 2023 — ERS
- 2:00 p.m. Feed Outlook: February 2023 — ERS
- 2:00 p.m. Rice Outlook: February 2023 — ERS
- 2:00 p.m. Wheat Outlook: February 2023 — ERS
- 2:00 p.m. Catfish Production — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC