Good morning!
Grains mostly firmer overnight... Corn and soybeans extended Thursday’s gains during the overnight session, while wheat futures posted modest corrective gains in most contracts. As of 6:30 a.m. CT, corn futures are trading mostly a penny higher, soybeans are 3 to 4 cents higher, SRW wheat futures are narrowly mixed, while HRW and HRS futures are fractionally higher. The U.S. dollar index is modestly weaker and front-month crude oil futures are around $2.25 higher.
Barrage of USDA reports out later this morning... Today is one of the biggest report days of the year for the grain markets as USDA will release its Annual Production Summary, monthly Supply & Demand Report, Quarterly Grain Stocks and Winter Wheat Seedings at 11:00 a.m. CT. Much of the focus will be on USDA’s “final” crop estimates for corn and soybeans. But Dec. 1 grain stocks have a history of providing market-moving surprises, especially for corn. Click here to view pre-report expectations.
Reuters: Biden administration today to release guidance on 45Z credit... Reuters reported the Biden administration plans to issue short-term guidance for the 45Z production credit today, citing two people familiar with the situation. The report also reiterated previous information that the Trump administration is expected to finalize the rules for the credit, which took effect on Jan. 1. The delay in releasing guidance has caused significant uncertainty in the biofuels industry. Many producers have expressed concerns about potential production shutdowns or reduced operations due to the lack of clarity on the 45Z credit. Some industry groups previously requested a one-year extension of the now-lapsed biodiesel and renewable diesel tax credit to provide stability during this transition period, but there has been no movement on the request.
Slower jobs growth expected for December... Economists polled by Reuters expect the Labor Department to report non-farm payrolls increased 160,000 in December, which would be down from 227,000 jobs added the previous month. The unemployment rate is expected to hold at 4.2%.
Weekly Export Sales Report out this morning... For the week ended Jan. 2, traders expect:
| 2024-25 expectations (in MT) | Last week (in MT) | |
| Corn | 700,000-1,400,000 | 776,992 |
| Wheat | 150,000-500,000 | 140,591 |
| Soybeans | 400,000-1,300,000 | 484,679 |
| Soymeal | 150,000-400,000 | 203,814 |
| Soyoil | 20,000-60,000 | 38,147 |
China slashes corn import forecast... China’s ag ministry raised its estimate for the 2024 crop by 1.08 MMT to a record 294.92 MMT. The ministry slashed its 2024-25 corn import forecast by 4 MMT to 9 MMT, which is now down 14.41 MMT (61.6%) from last year. The ministry kept its 2024-25 soybean import forecast at 94.6 MMT, down 10.15 MMT (9.7%) from last year.
India’s rice stocks hit record high... India’s rice stocks hit a record high at the start of January, reaching eight times the government’s target, while traders urged the government to increase wheat sales. Rice reserves in state reserves, including unmilled paddy, totaled 60.9 MMT of Jan. 1, compared to the government’s target of 7.6 MMMT, data compiled by the Food Corporation of India showed. Wheat stocks as on Jan. 1 stood at 18.4 MMT against a targeted 13.8 MMT but were far below the five-year average of 26.7 MMT.
China vows proactive fiscal policy, bigger deficit to aid growth... China has “ample fiscal policy room and tools to deal with new domestic and external problems,” Vice Finance Minister Liao Min said. He repeated a pledge that the 2025 deficit-to-GDP ratio will rise, adding details will be announced after due legal process. China’s top leaders have vowed greater fiscal support for the world’s second-largest economy this year. Government expenditure will help encourage consumption and fund infrastructure projects to drive domestic demand, as exports may face higher U.S. tariffs. “The direction of fiscal policy in 2025 is clear, very proactive,” Liao said. “We will provide strong support for economic and social development.” Liao pledged to accelerate the spending pace this year “as much as possible,” after slow implementation of the annual budget in recent years dragged on the economy.
IMF cuts Hong Kong growth forecast... The International Monetary Fund (IMF) lowered its forecast for Hong Kong’s economic growth this year and warned of the risks Asia’s financial capital faces as it integrates more closely with mainland China. IMF cut its GDP forecast to 2.7% from 3% previously. It expects growth to “slow modestly” and reach about 2.5% by 2029. A key risk is Hong Kong’s economic and financial integration with China, along with the increasing exposure to its housing market downturn and global geopolitical divides. IMF mentioned that risks are to the downside, warning that a sharper-than-expected slowdown in China or a fractured global market could lead to weaker demand for Hong Kong’s goods and services. The city’s financial system remains resilient, it said.
BOJ to weigh raising inflation forecast amid rising rice prices, weak yen... Bank of Japan (BOJ) officials are set to discuss raising inflation projections for fiscal years 2024 and 2025 at their upcoming policy meeting. The revision, according to Bloomberg, is attributed to surging rice prices and a weakening yen, though no immediate rate decision is expected. Current projections for underlying inflation hover around 2%, with potential upgrades signaling consistency above this key level. Governor Kazuo Ueda has stressed the importance of wage momentum and U.S. policy uncertainties in rate decisions, suggesting inflation alone won’t trigger a hike. The price of rice, which surged 63.6% in November — the highest jump on record — remains a critical factor driving inflation.
Cash cattle prices jump again... Cash cattle traded as much as $4.00 to $5.00 higher on Thursday as packers continued their active pursuit of animals despite negative margins. The cash market will post an all-time high for a second straight week, which triggered strong gains in futures that remain at steep discounts.
February hogs now premium to cash index... The CME lean hog index is down another 46 cents to $80.59 as of Jan. 8. The strong corrective gains in February lean hog futures on Thursday pushed the contract $1.185 above today’s cash quote.
Overnight demand news... South Korea purchased 199,000 MT of corn that can be sourced from the U.S., South America or South Africa.
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
- 10:00 a.m. Livestock and Meat International Trade Data — ERS
- 11:00 a.m. Crop Production — NASS
- 11:00 a.m. Crop Production – Annual Summary — NASS
- 11:00 a.m. Grain Stocks — NASS
- 11:00 a.m. Rice Stocks — NASS
- 11:00 a.m. Winter Wheat/Canola Seedings — NASS
- 11:00 a.m. WASDE — WAOB
- 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. Peanut Prices — NASS
- 2:00 p.m. Slaughter Weekly — NASS