Good morning!
Quiet overnight grain trade... Corn and soybeans favored the downside in two-sided trade overnight, while the winter wheat markets posted modest corrective gains. As of 6:30 a.m. CT, corn futures are trading 2 cents lower, soybeans are 6 to 8 cents lower, winter wheat markets are 1 to 3 cents higher and spring wheat is steady to a penny lower. Front-month crude oil futures are around $1.30 lower and the U.S. dollar index is modestly firmer.
Biden administration to redesignate Houthi rebels as global terrorists amid Red Sea attacks... The Biden administration is set to announce today the redesignation of Iranian-backed Houthi rebels in Yemen as specially designated global terrorists, the Associated Press reports. This decision comes in the wake of multiple attacks by the Houthis on commercial vessels in the Red Sea. The group has claimed these attacks as a response to Israel’s military actions in Gaza following an attack by Hamas on Oct. 7.
France lowers wheat export forecast... France’s ag ministry trimmed its 2023-24 wheat export forecast outside the EU by 100,000 MT to 10.1 MMT, which would be 0.5% below last year. The export forecast within the bloc was reduced 440,000 MT to 6.55 MMT, which would be 2.5% higher than in 2022-23.
China’s GM crops can hit 85% market penetration in 3-5 years... Market penetration of genetically modified crops in China could reach 85% within three to five years once the industry is fully commercialized, GMO developer Beijing Dabeinong Technology said. Dabeinong said its forecast is based on the experience in the U.S., Brazil and Argentina, where GM corn and soybeans are widely planted. China, long cautious about GM technology, has opened up to commercial planting of GM corn and soybeans this year, granting seed breeding and sales licenses to 26 companies in certain provinces.
China’s GDP lowest in 33 years sans Covid... China’s economy expanded 5.2% annually in the final quarter of 2023, faster than the 4.9% growth the previous three-month period but less than market forecasts of 5.3%. Activity data for December showed industrial production rose the most in almost two years, but retail sales increased the least in three months. For 2023, China’s economy grew 5.2%, exceeding the official target of around 5.0% and picking up from a 3.0% rise in 2022. Excluding the pandemic years through 2022, the 2023 GDP growth was the slowest annual rise since 1990.
China’s industrial production improves, retail sales weaken... China’s industrial production grew 6.8% from year-ago in December, accelerating from a 6.6% gain the prior month. That was the steepest expansion in industrial output since February 2022. For 2023, industrial output grew by 4.6% from a year earlier. China’s retail sales increased 7.4% versus last year in December, slowing from a 10.1% jump in November. While marking the 12th consecutive month of rise in retail sales, the latest figure was the softest since September. China’s retail sales increased 7.2% in 2023.
China’s property market slide worsens... China’s troubled property market ended last year with the worst declines in new home prices in nearly nine years, despite government efforts to prop up the sector. New home prices in December logged their steepest drop since February 2015, while property sales measured by floor area fell 23% in December from a year earlier. Property investment by developers in December fell at the fastest annualized clip since at least 2000. For 2023, property investment dropped 9.6%, roughly the same as the slide in 2022.
Euro zone inflation rises for first time in eight months but core prices ease... Consumer inflation in the euro zone rose 2.9% annually in December, in line with the preliminary data and the first uptick since April, mainly driven by energy-related base effects. Core inflation, minus food and energy costs, cooled to 3.4%, the lowest since March 2022.
UK inflation unexpectedly rises... Britain’s annual consumer inflation unexpectedly rose to 4.0% in December from a nearly two-year low of 3.9% in November, the first increase in inflation rate in 10 months. Core inflation, minus food and energy costs, held at 5.1%.
China’s pork production reaches record in 2023... China produced a record 57.94 MMT of pork in 2023, official data showed, after farmers ramped up slaughter during the last quarter to cut losses amid an oversupply of pigs. Annual pork output expanded 4.6% from the previous year, as slaughter rose 3.8% to 726.62 million head. Pork production in the fourth quarter totaled 14.93 MMT, up 7% from the same period in 2022. China’s beef output rose 4.8% to 7.53 MMT, poultry meat production rose 4.9% to 25.63 MMT and mutton increased 1.3% to 5.31 MMT in 2023.
Philippines bans poultry imports from California, Ohio due to HPAI... The Philippines’ ag ministry has banned poultry imports from California and Ohio because of several outbreaks there of highly pathogenic avian influenza (HPAI). The ban covers imports of domesticated and wild birds, including poultry meat and eggs, the ministry said. All shipments coming from California and Ohio that are already in transit, loaded or accepted at Philippine ports before Jan. 15 will be allowed entry if they were slaughtered two weeks before the outbreak began. In 2023, the Philippines imported 166,356 MMT of poultry products worth $175.8 million from the U.S., government data showed.
Wholesale beef price recovery continues... Wholesale beef prices extended their strong rebound with gains of $3.57 for Choice cutout and $7.42 for Select on Tuesday. Since bottoming at $275.90 on Jan. 4, Choice cutout has jumped $19.09. Packer margins remain in the red but have improved significantly.
February hog futures narrow premium to cash index... February lean hog futures dropped $1.125 on Tuesday as traders narrowed the premium the lead contract holds to the cash index. The CME lean hog index firmed 30 cents to $66.85 (as of Jan. 15), marking five of the last six days with gains. As of Tuesday’s close, February hogs were $3.925 above today’s cash quote.
Overnight demand news... Algeria purchased up to 900,000 MT of optional origin milling wheat, with the bulk expected to be sourced from the Black Sea region and France. Jordan purchased 120,000 MT of optional origin milling wheat. Japan purchased 2,305 MT of feed wheat and 220 MT of feed barley. Egypt tendered to buy an unspecified amount of wheat from multiple origins.
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. Cotton and Wool Outlook Tables: January 2024 — ERS
- 11:00 a.m. Oil Crops Outlook: January 2024 — ERS
- 2:00 p.m. Feed Outlook: January 2024 — ERS
- 2:00 p.m. Rice Outlook: January 2024 — ERS
- 2:00 p.m. Wheat Outlook: January 2024 — ERS
- 2:00 p.m. Broiler Hatchery — NASS