Good morning!
Followthrough buying overnight... Corn, soybean and wheat futures built on their strong finishes Tuesday during the overnight session. As of 6:30 a.m. CT, corn futures are trading fractionally to 2 cents higher, soybeans are steady to 3 cents higher in most contracts, winter wheat futures are 5 to 8 cents higher and spring wheat is fractionally to 2 cents higher. Front-month crude oil futures are around $1.50 higher and the U.S. dollar index is about 275 points lower.
Asian buyers turn to India for cheaper soymeal... India’s soymeal exports could more than double in 2022-23, as drought in top exporter Argentina lifted global prices, prompting buyers to seek cheaper rates, four industry officials told Reuters. Indian mills have contracted to export around 160,000 MT of soymeal for January shipment and another 100,000 MT for February, mostly to Asian countries such as Vietnam, Bangladesh, Japan and Nepal, the officials said. India’s soymeal exports in the first three months of 2022-23, which started on Oct. 1, jumped 223% to 325,409 MT, according to trade body Solvent Extractors’ Association of India. An official at an oilseed processor estimated India’s soymeal exports could rise to 1.5 to 2 MMT in 2022-23, from 644,000 MT a year ago.
France raises wheat export forecast... France’s ag ministry now expects the country to export 10.6 MMT of wheat outside the EU trade bloc in 2022-23, up 300,000 MT from its prior forecast. French wheat exports have been active in January, including shipments to Morocco and Algeria.
China to auction wheat reserves... China will auction 140,000 MT of wheat from its reserves on Feb. 1. The sale includes 100,000 MT bought in 2016 and 2017 under its minimum purchase price policy, and another 40,000 MT of 2014, 2015 and 2016 wheat from its temporary reserve.
Investors make big bets on Chinese recovery... Overseas investors increased their holdings of the Chinese bonds in December, snapping a record 10-month of outflows, while capital inflows are expected to continue into the new year, the country’s foreign exchange regulator said. Risk appetite improved and investor sentiment was boosted after Beijing abruptly dismantled most of its strict COVID-19 curbs in December and reopened borders earlier this month, fueling expectations for a solid economic rebound this year. Foreign investors purchased a net $7.3 billion of Chinese bonds and another $8.4 billion of A-shares in December, according to the State Administration of Foreign Exchange. And foreigners added another $12.6 billion worth of Chinese stocks and bonds combined on a net basis in the first half of this month, it added. Cross-border flows are expected to become more stable this year, the regulator said, noting optimization in Covid policies and pro-growth measures should help the economy rebound. Meanwhile, China’s foreign direct investment (FDI) in 2022 rose 6.3% from a year earlier to 1.2327 trillion yuan ($181.90 billion), the ministry of commerce said.
Euro zone consumer inflation lowest since August, but core prices rose... Consumer inflation in the euro zone eased to 9.2% above year-ago in December, down from a 10.1% gain in November and the lowest level since August, amid continued declines in energy prices. However, core inflation excluding energy and food prices increased 6.9%, up from a 6.6% year-over-year rise in November.
British inflation slowed for a second straight month... British consumer prices rose 10.5% annually in December, down from the 41-year high of 11.1% in October and 10.7% in November. The drop was driven partly by falling fuel prices. Core inflation remained unchanged at 6.3%.
BOJ keeps rates unchanged... The Bank of Japan (BOJ) maintained its yield curve control targets at -0.1% for short-term interest rates and around 0% for the 10-year yield. The central bank also kept its 0.5% cap for bond buying, defying market speculation and signaling policymakers aren’t seeking a looser grip on bond yields after the bank unexpectedly tweaked its yield curve control range in December.
WOTUS details published... The Biden administration’s Waters of the U.S. (WOTUS) definition details are in in today’s Federal Register (link). EPA announced it Dec. 30 and the new definition becomes effective March 20. The definition reflects regulations in place before 2015 with adjustments based on court rulings since that time. EPA also included standing exemptions for agriculture in the updated version and appears to have jettisoned its initial plans to initiate yet another rulemaking to develop yet another definition of WOTUS. But the key WOTUS decision will come in June when the U.S. Supreme Court issues its ruling on the topic.
China’s December pork imports largest since November 2021... China imported 200,000 MT of pork in December, up 20,000 MT (11.1%) from November and 20.1% greater than last year. For 2022, China imported 1.76 MMT of pork, down 52.6% from the previous year.
China to buy pork for state reserves after holiday... China will organize purchases of pork for state reserves after the Lunar New Year holiday, an ag ministry official said.
China’s sow herd above ‘reasonable’ level... China’s sow herd at the end of 2022 was slightly higher than a reasonable level at nearly 44 million head, an ag ministry official said. “We... hope that the majority of farms will stabilize the number of high-quality reproductive sows and take early measures to deal with the downward price of pigs,” the official said. The official also said China’s hog slaughter increased 18.3% from November and 7.3% from last year in December.
Cash cattle could remain on the defensive... Cash sources changed their tone a little after Tuesday’s disappointing performance by live cattle futures. They expect packers to be even more passive in cash cattle negotiations in hopes of getting feedlots to sell cattle at lower prices again this week. Active followthrough selling in futures could further swing cash negotiations in packers’ favor.
Cash hog index below year-ago... The CME lean hog index is down another 16 cents to $74.18 (as of Jan. 16) and now $2.60 below year-ago at this time when it was nearly $6.75 off its seasonal low. The falling cash index will keep pressure on February lean hog futures, but price action in deferred contracts on Tuesday suggested traders sense a seasonal low is near.
Overnight demand news... Algeria purchased between 570,000 and 600,000 MT of optional origin milling wheat, with most of the tonnage expected to be sourced from the Black/Baltic Sea region (including Russia) and France. Japan tendered to buy 70,000 MT of feed wheat and 40,000 MT of feed barley. Tunisia tendered to buy 125,000 MT of optional origin durum wheat. Thailand tendered to buy 135,000 MT of optional origin feed 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: Yearbook Tables — ERS
- 2:00 p.m. Broiler Hatchery — NASS