Good morning!
Soybeans and wheat firmer, corn weaker to start the week... Soybeans and wheat posted mild corrective gains overnight, while corn futures extended their price slide. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 6 to 7 cents higher, SRW and HRS wheat are mostly a penny higher and HRW wheat is 3 to 4 cents higher. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is nearly 800 points higher.
Houthis hit U.S.-owned ship... An anti-ship ballistic missile fired by Houthi fighters struck the Gibraltar Eagle, a U.S.-owned cargo vessel, off the coast of Yemen yesterday. The ship and its crew, which had been headed toward the Suez Canal, were not seriously harmed, according to the U.S. military’s Central Command. The ship turned around to leave the area. This missile attack followed a previous attempt by the Iranian-backed Houthis to target a U.S. Navy ship in the Red Sea. There are concerns this escalation could lead to the Israel/Hamas conflict spreading further in the Middle East. Currently, the U.S. and Iran seem to be avoiding direct combat, despite these tensions.
Cordonnier cuts Brazil crop estimates, raises Argy production forecasts... South American crop consultant Dr. Michael Cordonnier cut his Brazilian soybean crop estimate 2 MMT to 149 MMT amid reports from almost every state of lower-than-expected yields on early harvested fields. He also lowered his Brazilian corn crop estimate 2 MMT to 115 MMT. For Argentina, Cordonnier raised his soybean crop forecast 2 MMT to 52 MMT and increased his corn production estimate 3 MMT to 56 MMT.
AgRural slashes Brazilian soybean production forecast... Brazil-based consulting firm AgRural now estimates the country’s soybean crop at 150.1 MMT, down 9 MMT from its prior forecast. In addition to reduced production in Mato Grosso, AgRural cited downward adjustments in Paraná, Mato Grosso do Sul, Goiás, São Paulo and Minas Gerais. AgRural estimates Brazil’s total corn production at 114.1 MMT.
Generally favorable conditions in Brazil, erratic rains for Argentina... Brazil will see a mostly good distribution of rain over the next 10 days, although recent drying will continue for several more days in Mato Grosso do Sul, southern Mato Grosso and parts of southern Goias, according to World Weather. Northern and far southern Argentina will continue to see erratic rain over the next 10 days resulting in some moisture stress, although at least a little shower activity is expected.
Record NOPA soybean crush expected... Analysts polled by Reuters expect the National Oilseed Processors Association (NOPA) to report its members processed 193.1 million bu. of soybeans in December, which if realized would be up 2.2% from November, 8.8% above year-ago and the highest ever for any month. Soyoil stocks at the end of December are expected to total 1.291 billion pounds.
China’s Q1 soybean imports seen slowing to four-year low as hog herds shrink... China’s once-soaring soybean demand will slow by about a fifth in the first quarter from a year earlier after record slaughter shrank pig herds, pressuring prices ahead of an expected glut of South American beans, according to a Reuters report citing analysts and traders. China is expected to import about 18.5 MMT of soybeans in the first quarter, down from 23.1 MMT a year ago and the smallest since 2020, four research and trading firms estimate. At least half the beans are expected to be from the U.S.
Temps not expected to be quite as cold across central United States... Bitter cold weather impacted North America during the extended holiday weekend, resulting in strong energy demand, stress to livestock and a threat to winter wheat. Some winterkill likely occurred in the Central and Northern Plains, though the extent won’t be known until spring. World Weather Inc. says it suspects no damage in the Southern Plains. Bitter cold temps will continue early this week but they are expected to abate late this week and into the weekend.
Cold didn’t impact Ukraine’s winter crops... Heavy frosts across almost all Ukrainian regions in the first half of January did not have a negative impact on winter grain crops, which are in mostly satisfactory condition, analyst APK-Inform quoted government scientists as saying. “Such weather conditions have no negative impact on wintering of winter crops and today winter crops in Ukraine are in satisfactory condition,” APK-Inform cited Ukraine’s National Agrarian Academy as saying of the recent frosts.
India has no plans to import wheat... India does not plan to import wheat and its farmers are likely to harvest a bumper crop that will boost stockpiles, the country’s trade minister said on Saturday. He noted “ground reports” indicated a record crop of 114 MMT. India’s wheat stocks at state warehouses stood at 16.47 MMT as of Jan. 1, the lowest since 2017. The minister noted India would for now continue its export curbs on wheat, rice and sugar.
China unexpectedly holds key rate unchanged while increasing liquidity... The People’s Bank of China maintained the rate on its one-year policy loans — called the medium-term lending facility — at 2.5%, contrary to widespread expectations among economists that it would make its first trim to the rate since August. It also offered 995 billion yuan ($139 billion) through the MLF, resulting in a 216-billion-yuan net injection that will boost liquidity and help meet funding demand.
The week ahead in Washington... Congressional leaders want to vote this week on a stopgap funding bill that would provide spending authority extensions beyond previous deadlines. One part of the government’s funding (including for USDA) would be extended until March 1, while the remaining portion would receive an extension until March 8. The agreement comes just before the first funding deadline of Jan. 19. The second government funding deadline was Feb. 2. Click here to view our special report. House Speaker Mike Johnson (R-La.) still wants a new farm bill this year – in March, according to key congressional sources. But getting floor time in March could be difficult and lawmakers still must deal with lingering FY 2024 spending issues. The economic focus will be the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, from Jan. 15-19. This event brings together representatives from over 100 governments, major international organizations, and 1,000 partner companies, along with civil society leaders, experts, youth activists, and social entrepreneurs. The Fed will release its Beige Book highlighting economic conditions in the 12 districts on Wednesday.
Probability of recession down sharply... That’s according to the Wall Street Journal’s (WSJ) latest survey of economists — but for a lot of people it’s still going to feel like a recession. Business and academic economists surveyed by the WSJ lowered the probability of a recession within the next year, to 39% from 48% in the October survey. Still, economists on average expect the economy to grow just 1% in 2024, about half its normal long-run rate, and a significant slowing from an estimated 2.6% in 2023.
Euro zone inflation expectations decline to nearly one-year low... Consumer expectations for euro zone inflation over the next 12 months dipped to 3.2% in November, marking the lowest rate since February 2022 and down from the previous month’s 4.0%, the ECB Consumer Expectations Survey showed. Expectations for inflation three years ahead decreased to 2.2% from 2.5%, also hitting its lowest level since early 2022.
Cash cattle uncertainty... Packers didn’t get many cattle bought last week due to the wintry weather conditions. As a result, showlist numbers will be up this week. But the heavy snow and blizzard conditions stressed cattle, which could impact weights and grading. Traders are generally expecting firmer cash prices, though they will likely have to wait until later in the week for a good read on this week’s cash trade, especially with USDA’s Cattle on Feed Report slated for Friday afternoon.
Cash hog index declines... The CME lean hog index is down 29 cents to $66.48 (as of Jan. 11), ending a three-day string of gains. While there’s a general sense the cash market has put in a seasonal low, traders may be cautious buyers as February lean hog futures finished last Friday $5.42 above today’s cash quote.
Holiday weekend demand news... Japan is seeking 87,641 MT of milling wheat in its weekly tender. Tunisia tendered to buy 150,000 MT of milling wheat and 50,000 MT of durum wheat – all optional origin. Algeria tendered to buy 160,000 MT of corn, 30,000 MT of feed barley and 50,000 MT of durum wheat – all optional origin.
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
- 10:00 a.m. Export Inspections — AMS
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 11:00 a.m. Feed Grains Database — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat data — ERS