Good morning!
Soybeans firmer, corn and wheat mixed... Soybeans are firmer this morning on followthrough buying, while corn and wheat are pivoting on either side of unchanged. As of 6:30 a.m. CT, corn futures are narrowly mixed, soybeans are mostly 5 to 11 cents higher, SRW wheat futures are 1 to 3 cents higher, while HRW and HRS wheat futures are narrowly mixed. Front-month crude oil futures are around 25 cents lower and the U.S. dollar index is around 550 points lower.
Weekly Export Sales Report out this morning... For the week ended Feb. 2, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 600,000-1,200,000 | 1,593,223 |
Wheat | 125,000-450,000 | 136,383 |
Soybeans | 400,000-1,000,000 | 735,951 |
Soymeal | 100,000-300,000 | 165,419 |
Soyoil | 0-10,000 | 851 |
China the biggest buyer of Brazilian corn in January... China became the main destination for Brazilian corn exports in January, surpassing traditional importers, according to revised trade data released by the Brazilian government on Wednesday. Brazil exported 983,684 MT of corn to China last month. Corn exports to Japan totaled 975,858 MT.
U.S. trade with China is on the rise... U.S. imports of goods from China totaled $536.8 billion in 2022, a 6.3% increase from the prior year and close to the record $538.5 billion reached in 2018, the Commerce Department said earlier this week. U.S. exports to China grew 1.6% to $153.8 billion last year, pushing the total commerce between the two countries to a record $690.6 billion. The figures weren’t adjusted for inflation.
China declines call with U.S. over balloon incident... China declined a proposed phone call with U.S. officials because Washington hadn’t created “an appropriate atmosphere” for the call, a Chinese defense ministry spokesperson said. America’s shooting down of what China claims was a civilian unmanned airship was a serious violation of international practice and has set a bad precedent, the official said. Meanwhile, the U.S. say it held briefings in Washington and Beijing with nearly 150 foreign diplomats from 40 nations about the Chinese balloon.
Yellen still hopes to visit China... U.S. Treasury Secretary Janet Yellen said on Wednesday she still hoped to visit China but offered no details on plans or timing. A team of U.S. Treasury officials was scheduled to travel to China this month to prepare for a visit by Yellen but that was before a diplomatic row over the Chinese balloon. China’s commerce ministry said it welcomes Yellen’s willingness to visit the country.
Chinese companies may face sanctions over Russia... G7 member states are discussing whether to sanction companies in China, Iran and North Korea they believe are providing Russia with parts and technology with military purposes. The U.S. already has raised concerns with China about non-lethal equipment provided to Russia.
Report: Nord Stream pipeline bombings a U.S. covert operation... The bombing of the Nord Stream underwater gas pipelines in the Baltic Sea was a covert operation ordered by the White House and carried out by the CIA, according to a report by investigative journalist Seymour Hersh. He claims U.S. deep-sea divers, using a NATO military exercise as cover, planted mines along the pipelines that were later detonated remotely. The report says the “Black Op” was ordered by President Joe Biden, and that the attack was carried out by the CIA in cooperation with Norway. The White House dismissed the allegations as “utterly false and complete fiction.” Russia is calling for an international investigation into the situation.
Firm raises EU wheat production forecast... Consultancy Strategie Grains for a second month in a row raised its forecast of European Union soft wheat production this year, citing good growing conditions to date. The firm now expects EU soft wheat output of 129.7 MMT in 2023-24 season, up 400,000 MT from last month’s forecast. That would be a 4.1-MMT (3.3%) increase from 2022-23. Strategie Grains cut its forecast of EU soft wheat exports in 2022-23 by 1.7 MMT to 30.1 MMT, though it increased its outlook for 2023-24 exports by 400,000 MT to 30.6 MMT.
Indonesia, Malaysia to send palm oil envoys to EU over deforestation law... Indonesia and Malaysia plan to send delegates to the European Union to discuss the impact of the bloc’s new deforestation law on their palm oil sectors, ministers from the two countries said. The EU in December agreed on a deforestation law that requires companies to produce a due diligence statement showing when and where their commodities were produced and provide “verifiable” information that they were not grown on land deforested after 2020, or risk hefty fines. Indonesia and Malaysia have accused the EU of implementing discriminatory policies targeting palm oil.
Egg prices falling but still elevated... The average wholesale price for a dozen Midwest large eggs stands at $2.81, down nearly 50% from a record of more than $5 in December, research firm Urner Barry found. Retail prices have stayed in the $4 range, according to NielsenIQ data.
Cattle futures pause... Nearby live cattle futures firmed a little on Wednesday, though buyer interest was limited as traders waited on cash cattle trade to develop. Cash cattle prices are expected to rise again this week, but with futures marking contract highs on Tuesday and at premiums to the cash market, traders aren’t likely to get too aggressive until higher cash trade is confirmed.
Cash hog fundamentals firming... The pork cutout value firmed 73 cents on Wednesday, though movement slowed to 259.7 loads. The CME lean hog index is up 24 cents to $73.75 (as of Feb. 7), marking the fifth straight daily gain and nine of the last 11 days it has been higher. As cash fundamentals show more signs of a seasonal bottom, buyer interest should start to build in lean hog futures.
Overnight demand news... South Korea purchased a total of 200,000 MT of corn from three tenders – 65,000 MT expected to be U.S. and 135,000 MT likely to be sourced from South America. Taiwan purchased 48,100 MT of U.S. milling wheat. Algeria purchased between 360,000 and 390,000 MT of optional origin milling wheat.
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
- 7:30 a.m. Weekly Export Sales — FAS
- 11:00 a.m. Feed Grains Database — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Wheat Data — ERS