Good morning!
Mixed price action overnight... Corn, soybean and wheat futures showed mild followthrough selling during most of the overnight session, but price action has turned narrowly mixed early this morning. As of 6:30 a.m. CT, corn futures are fractionally to a penny lower in most contracts, while soybeans and wheat are a penny lower to 1 cent higher. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is about 175 points lower this morning.
Weekly export sales data pushed back to Friday... Due to Monday’s government holiday, export sales data for the week ended Jan. 12 will be released Friday morning.
Russia has no plans to lower grain export quota... Russia’s ag ministry says it has no plans to lower its grain export quota, according to state-run Interfax news agency. There’s speculation Russia could lower its export quota after President Vladimir Putin earlier this week said his country needed to maintain stable food reserves, by restricting some exports if necessary, but did not provide specific details. The ministry expects the country to export 55 MMT to 60 MMT of grain in 2022-23.
Russia proposes hiking soy export tariff to spur more domestic crushing... Russia’s ag ministry proposed raising export tariffs on soybeans from 20% to 50% to stimulate domestic processing capacity in the country’s Far East region, the head of its oil and fat producers’ union told Reuters. The tariff would make raw soy exports, predominantly to neighboring China, unprofitable and incentivize firms to invest in soy processing facilities. Last year, the Far East region accounted for 2.3 MMT of Russia’s 6 MMT of total soybean production.
India considering measures to tame domestic wheat prices... India is considering measures to cool domestic wheat prices, which jumped to a record high this week as supplies dwindled, Food Secretary Sanjeev Chopra said, without providing any specifics. India banned wheat exports in May, but that has failed to stop domestic prices from rising. Meanwhile, India is not likely to allow more sugar exports, government and industry officials said, dampening speculation it would permit a second tranche of overseas shipments.
Indonesia aims to launch palm oil benchmark price by June... Indonesia plans to launch a crude palm oil benchmark price by June, the country’s trade minister said on Thursday. “If possible, before June we will have the palm oil (benchmark price), and no longer have to rely on Kuala Lumpur. We have more palm oil than them, why are we following Malaysia?” Trade Minister Zulkifli Hasan said. Zulkifli did not elaborate on how the government plans to get traders to use the new price as a benchmark. Most Indonesian palm oil exporters currently conduct sales directly with buyers without going through an exchange, while auctions held by state trading company KPB Nusantara only offer physical palm oil and not futures contracts.
China says Covid has peaked... China’s health authority said demand for critical care for Covid-19 patients had peaked, with 40% fewer people in hospital on Jan. 17 than on Jan. 5. For the first time since 2019 people may travel freely during the Lunar New Year celebration that starts on Sunday. Meanwhile, Hong Kong announced that it will scrap mandatory quarantine from Jan. 30.
Japan has record trade deficit... Japan logged its largest annual trade deficit at nearly 20 trillion yen ($155 billion) in 2022. The main cause was high import costs, which rose by 39% as energy prices soared and the yen weakened, in part because the Bank of Japan maintained an ultra-loose monetary policy while other countries aggressively raised interest rates. Also, Japan has scant natural resources so it relies heavily on imported fuel.
Special measures by Treasury to avoid default start today... The Treasury Department will begin taking special measures to keep paying the government’s bills today as the divided Congress braces for a potentially lengthy and difficult debate over raising the debt ceiling. With the federal government about to run up against the debt limit, the Treasury Department has said it expects to start deploying extraordinary measures. Those accounting maneuvers will allow the Treasury to keep paying obligations to bondholders, Social Security recipients and others until at least early June, giving lawmakers and the Biden administration roughly five months to pass legislation raising or suspending the debt limit.
Packers slow playing cash cattle negotiations... Packers have been slow to establish cash cattle bids this week, though the ones that have surfaced signaled they have little intent to pay even steady money compared to last week. Feedlots aren’t in any hurry to move cattle at lower prices. That suggests the bulk of this week’s cash trade will be pushed to Friday and final volume of sales may be light.
Retailers buying a lot of pork... Packers moved 388.1 loads of pork on Wednesday, bringing this week’s volume to 1,253.5 loads. Wholesale pork prices are cheap compared to beef, even though Choice beef prices have dropped more than $6 since late last year. The Choice beef/pork cutout ratio stands at an unusually wide 3.5, which should continue to attract active retailer pork purchases.
Overnight demand news... Japan purchased 77,763 MT of wheat in its weekly tender, including 27,550 MT U.S. and 50,213 MT Canadian. Tunisia purchased 125,000 MT of optional origin durum 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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: January 2023 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: January 2023 — ERS
- 2:00 p.m. U.S. Bioenergy Statistics — ERS
- 2:00 p.m. Livestock Slaughter — NASS
- 2:00 p.m. Pecan Production — NASS