Good morning!
Grains mildly weaker overnight... Corn, soybeans and wheat mildly favored the downside overnight in a continuation of Wednesday’s selling. As of 6:30 a.m. CT, corn futures are trading a penny lower, soybeans are 2 to 3 cents lower and wheat futures are mostly 2 to 4 cents lower. The U.S. dollar index is 190 points higher and front-month crude oil futures are up around a quarter.
Export sales pushed back to Friday... Due to Monday’s government holiday, export sales data for the week ended Jan. 16 will be released on Friday.
ADM declares force majeure along U.S. Gulf... Archer-Daniels-Midland Co. halted loading of grain vessels at U.S. Gulf terminals as the region’s worst snowstorm in 130 years slams the region. The company declared force majeure in southern Louisiana with vessels struggling to navigate the weather conditions, Bloomberg reported Wednesday evening, citing a person familiar with the matter.
Brazil says halt to soy shipments to China will have minimal impacts... China has stopped receiving Brazilian soybean shipments from five firms after cargoes did not meet plant health requirements, according to a statement from the Brazilian government, confirming what we reported on Wednesday. Brazil’s ag ministry said only a small volume of soybeans were affected and the impact on the country’s exports was minimal. “The companies’ units were suspended, but other units of the same companies can continue exporting,” said Luis Rua, the Ministry of Agriculture’s secretary of commerce and international relations.
North American gov’ts respond to Trump’s tariff threats... Canada and Mexico are taking swift action to address concerns raised by President Donald Trump’s recent tariff threats. Both nations are implementing measures to tackle issues related to migration and drug trafficking, aiming to prevent potential economic repercussions. Mexico has intensified its efforts to deter migration and increase seizures of illicit opioids. Canada has bolstered its border patrol resources, deploying two new Blackhawk helicopters and purchasing 60 U.S.-made drones for border surveillance. While it’s unclear if China has taken new steps in response to Trump’s tariff threats, the Chinese government has previously made commitments to stem fentanyl exports and cooperate with the U.S. on narcotics issues and has expressed willingness to engage with the Trump administration. Beijing has avenues to reach a compromise on some of the issues that Trump has raised. For example, China could offer to buy more American agricultural products.
American firms in China fearful of U.S./China trade turmoil at 5-yr high... The annual survey by the American Chamber of Commerce in China showed 51% of respondents were concerned about a future deterioration in the U.S./China relationship. Geopolitical tensions, policy uncertainties and trade disputes were major concerns of U.S. businesses in China, the survey noted. The survey of 368 member companies was completed between October and November last year, partly after Donald Trump won the presidential election on Nov. 5. Almost half the respondents still ranked China as a top-three global investment priority, around the same level as the previous survey. However, the proportion of companies that no longer listed China as a preferred investment destination rose three percentage points to 21% – more than double pre-pandemic levels. About a third of businesses reported unfair treatment in China compared with local firms, particularly in relation to market access and public procurement, around the same level as the previous annual survey.
China prods insurers to invest billions to support equities market... China announced plans to channel hundreds of billions of yuan of investment from state-owned insurers into shares as part of the government’s latest efforts to support a struggling stock market. The new measures, spanning higher investments by insurers and mutual funds, lower fees and other corporate reform initiatives, are also the latest in a slew of steps authorities have taken since last September to revive the stock market. Regulators will encourage big state insurers to invest 30% of new annual premiums in A-shares, and encourage mutual funds to increase their A-share holdings’ tradable market value by at least 10% annually over the next three years. These measures will channel “several hundred billion” into onshore stocks every year and consolidate the positive trend of the capital market. The plan also involves guiding mutual fund managers to increase investments in their own equity products, cut fund sales fees and promote the development of exchange-traded fund products.
China’s bond outflows hit highest since 2022... Chinese sovereign bonds’ falling yields are driving onshore investors to actively hunt for overseas alternatives with higher returns. Capital outflows from mainland China via its Southbound Bond Connect program totaled nearly 52 billion yuan ($7.1 billion) in December, the highest since August 2022, according to Bloomberg-compiled data. The program allows mainland investors to invest in the Hong Kong bond market. A bond bull run in China last year drove the yields to record-low levels, making dollar bonds and Dim Sum bonds attractive to Chinese investors looking for higher yields. Yields in the nation’s benchmark 10-year bonds have plunged over 30 basis points to around 1.65% since the beginning of December, dragged by poor domestic consumption and expectations for more monetary easing to boost the sluggish economy. China’s yield discount to the U.S. also widened to a record earlier this month, amplifying the allure of foreign assets.
Indonesia aims for food self-sufficiency by 2026... Indonesian President Prabowo Subianto aims for self-sufficiency in rice and corn by the end of this year, emphasizing the importance of food independence amid the global crisis. “We must achieve food self-sufficiency. We can reach that target by the end of 2025, or at the latest 2026, three years earlier than the initial plan,” Prabowo said. Indonesia aims to produce 32 MMT of rice this year, up from 30.41 MMT in 2024. Corn production is expected to increase to 20 MMT, exceeding domestic needs of 11 MMT.
Rollins’ Senate testimony today... Brooke Rollins, President Donald Trump’s nominee for USDA Secretary, is set to testify before the Senate Ag Committee today. In her opening statement, Rollins is expected to outline four main priorities if confirmed: Rapid deployment of disaster and economic assistance authorized by Congress; addressing current animal disease outbreaks; developing a new farm bill; and revitalizing USDA. Rollins has acknowledged the challenging economic times facing American agriculture and has committed to ensuring that farmers, ranchers and rural communities thrive. Rollins is expected to be asked about her past positions on ethanol and farm subsidies during her tenure as the leader of the Texas Public Policy Foundation (TPPF). Under her leadership, TPPF criticized ethanol production, labeling it a “national security” threat in 2012, and described farm subsidies and government loan guarantees as “corporate welfare” in a 2016 report. These positions have drawn scrutiny from lawmakers representing farm states where ethanol production and subsidies are critical to their economies. Key senators, including Republican Joni Ernst of Iowa and Democrat Tina Smith of Minnesota, have expressed concerns about Rollins’ views. Ernst has stated she wants Rollins to publicly support biofuels during the hearing.
Mexico feeder cattle NWS update... As of Jan. 23, the import of live cattle from Mexico to the U.S. remains suspended due to the detection of New World screwworm (NWS) in southern Mexico. The ban, implemented on Nov. 22, 2024, is still in effect with no definite date set for its lifting. USDA’s Animal and Plant Health Inspection Service (APHIS) is currently working on protocols for the importation of cattle from Mexico. While cattle imports remain suspended, APHIS has announced that equine imports from Mexico resumed on Jan. 21. APHIS emphasized it will only approve measures for cattle imports once it is confident the threat of NWS crossing the border has been mitigated.
Cattle futures score all-time high... February live cattle futures settled at $200.05 on Wednesday, marking an all-time high on the continuation chart and the first time above the $200.00 level. Funds continue to pile money into long positions, despite their aggressive long stance given futures’ big discounts to the cash market.
Cash hog index rises, pork cutout drops... The CME lean hog index is up another 26 cents to $81.72 as of Jan. 21, the eighth straight daily gain. During that span, the index has risen $1.29. The pork cutout declined 65 cents on Wednesday to $90.17, as weaker prices for loins, butts, picnics and bellies more than offset gains in ribs and hams.
Overnight demand news... Indonesia passed on a tender to buy 195,000 MT of feed wheat and instead purchased an unspecified amount of corn from the Asian region.
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. Weekly Ethanol Production — EIA
- 2:00 p.m. Livestock Slaughter — NASS
- 2:00 p.m. Slaughter Weekly — NASS