Good morning!
Buyer interest fading early this morning... Corn, soybean and wheat futures extended Thursday’s USDA report-driven gains overnight but buyer interest is fading this morning. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny higher, soybeans and SRW wheat are narrowly mixed, HRW wheat is 4 to 7 cents higher and spring wheat is mostly a penny higher. Front-month crude oil futures are about 40 cents higher and the U.S. dollar index is around 250 points higher.
Holiday schedule for Martin Luther King Jr. Day... Grain and livestock markets trade normal hours today. All markets and government offices are closed Monday, Jan. 16, in observance of Martin Luther King Jr. Day. As a result, there will be no Pro Farmer market reports next Monday. Grain markets will reopen at 7:00 p.m. CT on Monday, Jan. 16, for the overnight session. Livestock markets will resume trade at 8:30 a.m. CT on Tuesday, Jan. 17.
China’s December soybean imports jump... China imported 10.56 MMT of soybeans in December, up 19.1% from last year and the highest monthly tally since June 2021, as importers tried to ease tight supplies. For 2022, China imported 91.08 MMT of soybeans, a 5.6% decline from the previous year.
China’s exports, imports fall sharply in December... China’s exports fell 9.9% versus year-ago in December, the steepest decline since January/February 2020. Its imports tumbled 7.5%, the third straight monthly decline. That left China with a trade surplus of $78.01 billion in December, up from $69.25 billion in November but down from $93.21 billion in December 2021. China’s 2022 trade surplus hit a record $876.91 billion, compared with $670.4 billion in 2021.
China approves more GMO crops... China has given safety approvals to both imported and domestically developed genetically modified (GMO) crop varieties, the agriculture ministry said. The approved imported crops include two Bayer glyphosate-resistant alfalfa varieties, a Brazil-developed GMO sugar cane and BASF herbicide-resistant cotton. Beijing also approved some domestic GMO varieties, including corn and soybeans.
China pledges more steps to boost economic recovery... China will take further measures to boost market confidence and increase support for manufacturers and small companies, without giving specific details. The People’s Bank of China (PBOC) also said it will take steps to improve the cash flows of high-quality property developers, in the latest official moves to get the sector back on more stable footing. PBOC officials also indicated a lengthy crackdown on the technology sector could wind down further, with the bank pledging it will support the development of online platform companies once they have resolved some small problems. But Xuan Changneng, a deputy governor of PBOC, reiterated a long-standing approach that monetary policy will be appropriate and not be “flood-like” stimulus.
China expects to keep inflation moderate in 2023... China’s inflation is expected to remain moderate this year and the inflationary pressure will be under control in the near term, Zou Lan, head of the monetary policy department at PBOC said. Rising demand may increase prices, said Zou, adding China should also guard against imported inflation.
Trade panel backs Mexico and Canada.... A trade panel backed Mexico and Canada in a dispute with the U.S. over rules to calculate regional content required for tariff-free automotive imports. Mexico and Canada had challenged the U.S. method for calculating the regional content required under the U.S.-Mexico-Canada Agreement (USMCA) trade pact for cars to have tariff-free access to the U.S., and requested the panel early last year after failing to reach agreement during consultations. The U.S. must use Mexico’s and Canada’s methods to calculate regional content or face retaliatory tariffs. In a statement, the U.S. Trade Representative’s office called the ruling “disappointing,” warning it could result in “less North American content in automobiles, less investment across the region and fewer American jobs.” USTR said it is considering its next move, adding it would discuss a possible resolution with Mexico and Canada. Mexico’s Economy Ministry said it would begin a dialogue with its trade partners on the ruling in the coming days.
Euro zone industrial output strengthens in November... Euro zone industrial production increased 1.0% from the previous month and 2.0% over year-ago in November. Those figures were above expectations for 0.5% growth both monthly and annually.
China’s meat imports continue to climb... China imported 700,000 MT of meat in December, up 30,000 MT (4.5%) from November and 7.7% greater than last year. China’s preliminary data doesn’t break down meat imports by category, but the steady increase since late summer has been due to higher pork imports. For 2022, China imported 7.4 MMT of meat, down 21.0% from the previous year.
Limited cash cattle trade... Cash cattle negotiations dragged on Thursday with limited sales, as feedlots tried to buy cattle at lower prices and feedlots wanted more money for supplies. February live cattle futures finished Thursday at $157.55, down just 19 cents from last week’s average cash price, indicating traders expect cash trade to eventually take place at around steady prices.
More cash hog/pork weakness... The CME lean hog index is down another 47 cents to $75.49 (as of Jan. 11), just 43 cents above last year’s level at this time when the cash market was already $5 above its seasonal low. The pork cutout value fell another $1.35 yesterday to $79.33, the lowest level since Jan. 20, 2021. Hog futures remain pressured by weakening cash fundamentals, though they are short-term oversold and due for a correction.
Overnight demand news... South Korea purchased 68,000 MT of U.S. or South American corn and 130,000 MT of U.S., Canadian or Australian feed wheat. Taiwan purchased 45,200 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
- 11:00 a.m. Feed Grains Database — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Turkey Hatchery — NASS
- 2:30 p.m. Commitments of Traders — CFTC