Good morning!
Price pressure to open the week... Grain markets traded solidly lower overnight, with wheat and soybeans leading price declines. As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents lower, soybeans are 7 to 9 cents lower and wheat futures are 11 to 14 cents lower. Front-month crude oil futures are around 45 cents higher and the U.S. dollar index is near unchanged.
Limited rainfall expected in dry areas of South America... Rains across eastern Argentina and far southern Brazil will remain limited over the next 10 days to two weeks, according to World Weather Inc. The southwestern half of Argentina is expected to receive some needed rainfall Friday and Saturday. World Weather says a larger rain event for Argentina could come at the end of the month, though confidence is low. Needed rains fell on northern Rio Grande do Sul, Brazil, during the extended weekend. Rains are expected to be scattered across Brazil over the next two weeks.
Consultant makes additional cuts to Argentine crop estimates... South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate another 2 MMT to 39 MMT, citing lower yield potential and reduced planted area due to the ongoing drought. Cordonnier cut his Argentine corn crop estimate 1 MMT to 44 MMT, noting early planted corn yields will be hurt and plantings of later-seeded corn will be reduced. He also cut his Paraguay soybean crop estimate 1 MMT to 9 MMT amid irregular rains. Cordonnier kept his Brazilian crop estimates at 151 MMT for soybeans and 125 MMT for corn.
Early Brazil soybean harvest inching along... Brazilian farmers had harvested only 0.6% of the country’s soybean crop through last Thursday, AgRural said. That was up only 0.2 point from the previous week and half of last year’s pace at the time. AgRural said 4.5% of the first corn crop had been harvested, compared to 6.3% at this time last year.
NOPA crush expected to be up from November but below year-ago... Traders expect members of the National Oilseed Processors Association (NOPA) to report they crushed 182.9 million bu. of soybeans in December, based on a Reuters survey. That would be up 2.1% from November but 1.9% less than last year and the smallest December crush figure in three years. Soyoil stocks are expected to total 1.630 billion pounds.
Mexico adds temporary duty to white corn exports... The Mexican government announced on Monday a temporary 50% tax on white corn exports, saying it is necessary to guarantee domestic supply and price stability. The export duty will be in force through June 30.
China’s 2022 GDP slumps... China’s economic growth in 2022 slumped to one of its worst levels in nearly half a century as the fourth quarter was hit hard by strict Covid curbs and a weak property market. China’s GDP grew 2.9% in the fourth quarter, down from 2.9% the previous quarter. For 2022, GDP expanded 3.0%, falling well shy of the official target of “around 5.5%” and sharply below 8.4% growth in 2021. Excluding the initial impacts from Covid in 2020, last year was the worst performance by China’s economy since 1976.
The week ahead in Washington... It will be quiet in Washington with Congress on recess. Much of the economic focus this week is the World Economic Forum being held in Davos, Switzerland, as government officials and business leaders convene Jan. 16-20. Traders will also watch Wednesday’s producer price data to see if factory-gate prices are easing along with consumer inflation.
China’s 2022 pork production hits eight-year high... China’s pork production increased 4.6% last year to the highest since 2014, official data showed. Pork output reached 55.41 million MMT in 2022, up from 52.96 MMT in 2021 and the highest since 56.71 MMT eight years ago. Pork production totaled 13.91 MMT during the final quarter of last year. China’s beef output increased 3% to 7.18 MMT in 2022, the data also showed, while poultry production rose 2.6% to 24.43 MMT and lamb and mutton output increased 2% to 5.25 MMT.
Turnaround in cash cattle expected... Cash cattle averaged $156.78 last week, down 96 cents from the previous week. February live cattle futures finished last Friday at $157.725, a modest 94.5 cent premium over last week’s average cash price. While traders are hopeful for firmer cash trade this week after consecutive weeks of disappointing price action, they will likely be cautious buyers until the cash market gives a clearer signal.
Cash hog fundamentals continue to weaken... The CME lean hog index is down 66 cents to $74.83 (as of Jan. 12), extending the sharp seasonal price decline. The pork cutout value fell $1.05 on Monday, though packers moved a strong 445.4 loads on the day. Until cash market fundamentals find a seasonal bottom, buyer interest in lean hog futures will remain limited. February lean hog futures finished last Friday at $78.65, a $3.82 premium to today’s cash index quote.
Holiday weekend demand news... Egypt tendered to buy an unspecified amount of corn from unspecified origins. Japan is seeking 77,763 MT of milling wheat in its weekly tender. Algeria tendered to buy a nominal 50,000 MT of optional origin soft 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
- 10:00 a.m. Export Inspections — AMS
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 11:00 a.m. Cotton and Wool Outlook Tables: January 2023 — ERS
- 11:00 a.m. Oil Crops Outlook: January 2023 — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Feed Outlook: January 2023 — ERS
- 2:00 p.m. Rice Outlook: January 2023 — ERS
- 2:00 p.m. Wheat Outlook: January 2023 — ERS