Good morning!
Grains weaker overnight... Corn, soybeans and wheat were unable to build on Tuesday’s corrective gains during overnight trade. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are 2 to 4 cents lower, SRW wheat is around a penny lower, HRW wheat is 3 to 4 cents lower and HRS wheat is steady to fractionally lower. Front-month crude oil futures are modestly firmer and the U.S. dollar index is around 150 points lower.
Brazil slashes soybean crop forecast, trims corn production... Conab slashed the Brazilian soybean crop forecast by 4.9 MMT to 155.3 MMT, though that’s still higher than many private crop forecasters. The Brazilian government’s crop estimating agency lowered its Brazilian corn crop forecast 925,000 MT to 117.6 MMT. That cut was entirely to the first crop, as Conab maintained its safrinha corn projection, as it normally does until February.
Ukraine’s ag exports via humanitarian corridor surpass UN Black Sea grain deal... Ukraine’s agricultural product exports via its alternative Black Sea corridor reached 4.8 MMT in December, surpassing the maximum monthly total shipped via a former UN-brokered grain deal, brokers said on Wednesday. Ukraine launched the corridor along its western Black Sea coast near Romania and Bulgaria in August after Moscow withdrew from the U.N.-brokered deal in July and threatened to treat all vessels as potential military targets.
Romania’s Constanta port sets volume record due to Ukrainian grain... Romania’s Black Sea port of Constanta posted record grain exports in 2023 thanks to a surge in shipments from Ukraine and ongoing European Union-funded infrastructure projects, the port authority told Reuters. The port shipped 36 MMT of grain last year, up 50% from the previous year. Ukrainian grain accounted for roughly 40% of the total, or 14 MMT, up from 8.6 MMT in 2022.
Partial gov’t shutdown risk looms amid spending disputes... In less than two weeks, Congress may need to pass another short-term bill, known as a continuing resolution (CR), to prevent a partial government shutdown. This development could potentially force House Speaker Mike Johnson (R-La.) to go back on his vow to avoid such measures. Senate Minority Leader Mitch McConnell (R-Ky.) acknowledged the dwindling time left before the deadline and suggested Congress would have to enact a stopgap CR to keep the government funded while they continue working on the full-year fiscal 2024 budget. Senate Minority Whip John Thune (R-S.D.) signaled a CR until March may be necessary. The current interim spending law funds some government functions (including USDA) until Jan. 19 and the rest until Feb. 2. Some House Republicans have expressed their opposition to short-term measures and have even threatened to revolt if faced with another one. During a meeting with top House Republicans, Johnson indicated he was not interested in a short-term spending bill, despite McConnell’s suggestion.
World Bank warns about the global economy’s poor growth prospects for 2024... The World Bank projects the global economy will expand just 2.4% this year, down from 2.6% in 2023. This slowdown is attributed to higher borrowing costs and geopolitical tensions. The World Bank notes concern about the decade ahead if significant changes aren’t made to address these challenges. Additionally, it mentions that global trade growth is expected to be only half of what it was in the decade before the pandemic and developing countries have experienced lower growth rates since 2020 due to these factors. Advanced economies are also expected to see slower growth. U.S. economic growth is expected to slow to 1.6% this year from 2.5% in 2023. Chinese growth is projected to slow to 4.5% this year from 5.2% in 2023. Outside the pandemic-induced downturn, that would be China’s slowest expansion in 30 years. The World Bank projects economic growth in the euro area will rise to 0.7% in 2024 from 0.4% last year.
China asks U.S. to abide by ‘one China’ policy... China urged the U.S. to abide by the “one China principle” and stop arming Taiwan during two-day military talks held in Washington Jan. 8-9, according to a Chinese defense ministry statement. China also asked the U.S. to reduce military deployment and provocations in the South China Sea, it said, adding the U.S. should strictly restrain its front-line forces and stop hyping up security issues.
Weather heavily impacts cattle, hog slaughter... Tuesday’s estimated slaughter was only 94,000 head for cattle and 395,000 head for hogs as plants reduced runs or temporarily closed due to inclement weather. That was down 32,000 head from week-ago and 36,000 head from last year for cattle, while hog slaughter dropped 97,000 head from last week and 68,000 head from last year.
Wholesale beef prices continue to rebound... Wholesale beef prices firmed on Tuesday, with the Choice cutout up $1.33 and Select $3.47 higher. After a sharp plunge to end 2023 and start the new year, Choice cutout is signaling a low has been forged. Even with the recent gains, packer margins remain deep in the red.
Cash hog market hinting at a seasonal low... The CME lean hog index is up 9 cents to $65.83 (as of Jan. 8), marking three of the past five days with gains. While the gains over that span haven’t been strong, it at least hints that a seasonal low could be in the works or already in place. February lean hog futures finished Tuesday $6.045 above today’s cash quote, signaling traders could be growing more confident in a seasonal bottom – though the premium could also restrict near-term buyer interest.
Overnight demand news... Taiwan purchased 65,000 MT of corn expected to be sourced from Argentina. Japan tenders to buy 60,000 MT of feed wheat and 20,000 MT of feed barley. Jordan tendered to buy up to 120,000 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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 11:00 a.m. Livestock and Meat International Trade Data — ERS
- 2:00 p.m. Broiler Hatchery — NASS