Good morning!
Corn and soybeans firmer, wheat mixed overnight... Corn and soybeans firmed after initially trading lower overnight, while wheat futures favored the downside in two-sided price action. As of 6:30 a.m. CT, corn futures are trading around 2 cents higher, soybeans are 7 to 9 cents higher and wheat futures are 1 to 3 cents lower. Front-month crude oil futures are around 35 cents higher and the U.S. dollar index is about 200 points higher this morning.
China extends duties on U.S. DDGs for five years... China’s Commerce Ministry said it will continue to impose anti-dumping and anti-subsidy tariffs on dried distillers dried grains (DDGs) imported from the U.S. for another five years. The anti-dumping tariffs are between 42.2% and 53.7% while anti-subsidy tariffs range from 11.2% to 12%. Continued tariffs are not expected to have a significant impact on U.S. exporters who have shifted sales to other markets such as South Korea and Mexico since China implemented the duties in 2016.
India investigating possible corruption in gov’t grain program... India’s federal police are investigating officials of the state-run Food Corporation of India (FCI) for possible corruption in the purchase and distribution of grains, a government source told Reuters. The Central Bureau of Investigation is carrying out searches at more than 50 locations in Punjab and Haryana states, as well as in Delhi, the source said. FCI buys rice and wheat from growers every season at guaranteed prices.
‘What if we don’t get a farm bill in 2023?’... That is the title of a short piece put out by Dr. Joe Outlaw and Dr. Bart Fischer at Texas A&M University. “It may come as a surprise to many of our readers,” the two economists wrote, “that only about 5% of the [farm bill] funding is actually facing the threat of expiration (on Sept. 30, 2023).” Click here to read the full item.
China ramps up liquidity ahead of Lunar New Year... China’s central bank ramped up a liquidity injection on Wednesday, offering fresh funds to the banking system to help meet seasonal cash demand before the upcoming holiday season. The People’s Bank of China injected 87 billion yuan ($12.84 billion) through reverse repurchase agreements in open market operations, including 65 billion yuan through seven-day tenor and another 22 billion yuan through 14-day tenor. The increased cash injection was meant to help counteract higher cash demand ahead of the week-long Lunar New Year holidays, which starts on Jan. 21 this year.
Powell gives no clues on Fed monetary policy plans... Fed Chair Jerome Powell did not give any policy clues during a panel discussion in Stockholm on Tuesday. With other Fed officials saying the central bank’s next moves will be data-dependent, investors are keenly focused on U.S. consumer inflation data that will be released Thursday morning. Meanwhile, Powell said the Fed must avoid straying into political issues that are not directly related to its economic-management objectives, such as climate change, to protect its ability to bring down inflation without interference from elected officials. “We are not, and will not be, a ‘climate policy maker,’” Powell said.
ECB official: Nearing end of tightening cycle... European Central Bank’s governing council member Mario Centeno said on Tuesday the current process of interest rate increases is approaching its end. The central banker, who was answering Portuguese legislators during a committee hearing in Lisbon, added even though inflation may have some resistance in January and February it will resume falling in March.
BOJ’s 2% inflation target can be tweaked to ‘range,’ deputy governor candidate says... The Bank of Japan’s (BOJ) 2% inflation target can be modified into a “range” to sustain monetary policy flexibility amid possibly higher inflation compared to pre-Covid times, former board member Sayuri Shirai said. Shirai, widely seen as a candidate to become deputy governor at the central bank this spring, also said there should be a review of Japan’s monetary policy over the past 10 years. “The 2% inflation has been achieved, while it could have been due to supply-side (factors), and the structure of inflation might have changed long-term on coronavirus, geopolitical risks and aging demographics,” Shirai said. “Given the chance inflation may stay elevated compared to pre-pandemic, we must be careful about abolishing the 2% inflation target and I think making it a range is one possibility.”
Indonesia raises palm oil reference price... Indonesia planned to set its crude palm oil reference price at $920.57 per metric ton for Jan. 16-31, up from $858.96 for Jan. 1-15, the deputy coordinating minister of economic affairs said on Wednesday. That would put Indonesia’s palm oil export tax at $74 per metric ton and levy at $95 per metric ton for the period.
Choice beef continues to find resistance in mid-$280 level but solid underlying demand... Choice boxed beef prices dropped $1.71 on Tuesday and Select was $1.27 lower. Packers have struggled to keep Choice beef above $285.00, though dips below that level have attracted a pickup in retailer buying. Packers moved a solid 128 loads of beef on Tuesday’s price drop.
Hog market still searching for seasonal low... The CME lean hog index is down another 35 cents to $76.44 (as of Jan. 9) as the seasonal decline continues. February lean hog futures could be headed for a test of the October low at $76.40. The lead contract finished Tuesday $3.36 above today’s cash quote. While that’s small compared to the normal seasonal increase into mid-February, traders will remove more of that premium if the cash index continues to drop.
Overnight demand news... Taiwan purchased 65,000 MT of U.S. corn. South Korea purchased 65,000 MT of U.S. or Australian feed wheat and tendered to buy 50,000 MT of U.S. 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
- 2:00 p.m. Broiler Hatchery — NASS