Good morning!
Price strength ahead of USDA reports... Grain and soybean futures firmed overnight amid followthrough buying as traders awaited USDA’s January crop reports later this morning. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents higher, soybeans are mostly 6 to 9 cents higher and wheat futures are 1 to 4 cents higher. Front-month crude oil futures are around $1 higher and the U.S. dollar index is about 175 points lower.
Barrage of USDA report data out this morning... USDA will release its Annual Production Summary, Supply & Demand Report, Winter Wheat Seedings and Quarterly Grain Stocks Report at 11 a.m. CT. With that much data, there are likely to be some surprises, and the markets have a history of big price moves following the barrage of January data. Quarterly grain stocks have been particularly difficult for analysts to peg, especially for corn, and the range of pre-report estimates for Dec. 1 corn stocks is historically wide. Click here to view the pre-report trade estimates.
Weekly Export Sales Report out this morning... For the week ended Jan. 5, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 300,000-1,000,000 | 319,242 |
Wheat | 75,000-450,000 | 47,142 |
Soybeans | 500,000-1,200,000 | 720,997 |
Soymeal | 75,000-300,000 | 79,259 |
Soyoil | 0-12,000 | 353 |
Exchange slashes Argentine crop estimates, warns of more cuts... The Rosario Grain Exchange slashed its Argentine soybean and corn production forecasts as the country faces the worst drought in 60 years. The exchange now estimates the soybean crop at 37 MMT, down 12 MMT from its previous forecast. It cut 10 MMT from its corn crop estimate, which is now 45 MMT. The exchange warned that losses in planting areas, especially late-planted soybeans, could skyrocket and become “massive” without “imminent help” from significant and widespread rainfall.
Conab trims soybean, corn crop forecasts... Conab lowered its official Brazilian soybean and corn production estimates from last month, citing “poor distribution of rainfall” mainly in Rio Grande do Sul, though it continues to forecast record production for both crops. Conab forecasts Brazilian soybean production at 152.7 MMT, down 765,000 MT from last month. It also cut the 2022-23 corn production forecast by 765,000 MT to 125.1 MMT. Conab cut its 2022-23 soybean export forecast to 93.9 MMT, though that would still be up 15 MMT (19%) from the previous year. Conab left its 2022-23 corn export forecast at 45 MMT, which would be up 3.4% from the previous year.
China raises corn, soybean production forecasts... China’s agriculture ministry raised its forecasts for corn and soybean production, bringing the figures in line with the statistics bureau’s December estimates. Corn production in 2022 was raised to 277.2 MMT, up 1.7% from the prior year. Soybean output was raised to 20.3 MMT, up 23.7% from 2021. The ag ministry trimmed China’s 2022 cotton production estimate by 50,000 MT to 5.98 MMT, up 4.2% from 2021. It made no changes to its 2022-23 Chinese imports for corn, soybeans or cotton.
Strategie Grains raises EU wheat crop forecast... Consultancy Strategie Grains now sees EU soft wheat output at 129.3 MMT this year, compared with its initial projection of 128.7 MMT in December. That would be 3% above 2022’s production. “Winter wheat is currently in good condition across the EU-27, with the growing area slightly above the five-year average,” Strategie Grains said. “The soft wheat balance sheet is set to be heavy” in 2023-24. For barley, the consultancy trimmed its crop forecast to 52.3 MMT from 52.5 MMT projected last month, but that would still be 2% above 2022 production. For corn, it increased its 2023 production outlook to 63.8 MMT from 63.7 MMT, which would be up sharply from last year’s drought-ravaged production of only 50.6 MMT.
India’s wheat crop like to top 112 MMT... India’s wheat output in 2022-23 is likely to top 112 MMT, a top government source told Reuters. “We’ve reviewed the crop situation and the current cold wave condition is quite favorable for the wheat crop,” the source said. Earlier this week, the director at the Indian Institute of Wheat and Barley Research said production would reach a record 112 MMT.
China’s consumer inflation accelerates in December, producer prices fall... China’s consumer price index rose 1.8% annually in December, up from an eight-month low of 1.6% in November. The rise in consumer inflation was driven by a 4.8% jump in food prices. Core inflation, which excludes food and energy prices, is still subdued, although it did edge up from an annual rate of 0.6% in November to 0.7% last month. China’s producer price index slowed to 0.7% in December from the 1.3% rise seen in the previous month. This was the third straight month of producer price deflation, as domestic demand deteriorated further amid rising Covid cases while commodity prices continued to ease.
China says its imports, exports hit new highs in 2022... China’s imports and exports are estimated to have reached new highs in 2022, a Commerce Ministry spokesperson said. China is scheduled to release preliminary December trade data at 9:00 p.m. CT. The spokesperson said increasing risk of a global economic recession and continuing slowdown in external demand are the greatest pressures affecting the steady growth of foreign trade.
Malaysia could stop palm oil exports to EU after new curbs... Malaysia could stop exporting palm oil to Europe in response to a new EU law aimed at protecting forests by strictly regulating sales of the product. Commodities Minister Fadillah Yusof said Malaysia and Indonesia would discuss the law, which bans sales of palm oil and other commodities linked to deforestation unless importers can show that production of their specific goods has not damaged forests. “If we need to engage experts from overseas to counter whatever move by EU, we have to do it,” Fadillah said. “Or the option could be we just stop exports to Europe, just focus on other countries if they (the EU) are giving us all a difficult time to export to them.”
Slow developing cash cattle trade... Packers don’t want to pay more than last week for cash cattle, while feedlots are in no hurry to sell at lower prices. Unless either side changes their stance, it appears cash negotiations could extend into Friday. The longer the negotiations extend this week, the more likely the two sides will meet in the middle and prices will be about steady.
Cash hog fundamentals continue to weaken... The CME lean hog index is down another 48 cents to $75.96 (as of Jan. 10), extending its seasonal price slide. The pork cutout value fell $1.05 on Wednesday to $80.68, the lowest level since Feb. 3, 2021. Until cash fundamentals post seasonal lows and start to strengthen, there will be additional downside risk in lean hog futures despite being short-term oversold.
Overnight demand news... South Korea purchased 133,000 MT of optional origin corn and 80,000 MT of U.S. milling wheat. Japan purchased 89,735 MT of wheat from its weekly tender, including 40,781 MT U.S. and 48,954 MT Canadian. Egypt purchased 120,000 MT of Russian wheat via a World Bank-funded tender. Turkey started making provisional purchases of wheat (mostly Russian and Ukrainian origin) in an international tender, with about 320,000 MT initially bought; more purchases are expected.
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. Meat Price Spreads — ERS
- 11:00 a.m. Cotton Ginnings — NASS
- 11:00 a.m. Crop Production — NASS
- 11:00 a.m. Crop Production - Ann. — NASS
- 11:00 a.m. Grain Stocks — NASS
- 11:00 a.m. Rice Stocks — NASS
- 11:00 a.m. Winter Wheat/Canola Seedings — NASS
- 11:15 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. Livestock and Poultry: World Markets and Trade — FAS