Good morning!
Followthrough buying in soybeans, wheat... Soybeans and wheat built on Wednesday’s gains during the overnight session, while corn rebounded from yesterday’s modest declines. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents higher, soybeans are mostly 4 to 7 cents higher, winter wheat futures are 3 to 7 cents higher and spring wheat is narrowly mixed. Front-month crude oil futures are more than $1.00 higher and the U.S. dollar index is around 160 points higher.
Attaché: China to import ‘substantial amount’ of Brazilian corn... USDA’s attaché in Beijing reports: “Feed mills have resumed mixing more corn in feed rations as higher prices for wheat and sorghum reduce demand for corn alternatives. At the same time, Brazilian corn is now available and priced competitively with domestic corn... With the arrival of the first vessel of Brazilian corn in early January 2023, China will likely turn to Brazil for a substantial amount of its corn imports.”
USTR again raises ag biotech issues with Mexico... Deputy U.S. Trade Representative (USTR) Jayme White yesterday met with Mexico’s Under Secretary of Economy for Foreign Trade Alejandro Encinas in San Diego. White called on Mexico to “return to a science- and risk-based regulatory approval process for all agricultural biotechnology products in Mexico.” As we reported in “Evening Report” on Wednesday, an official from Mexico admitted the country can’t fully replace imports of U.S. corn. The two also discussed issues on Mexico’s energy policies that are under a U.S.-Mexico-Canada Agreement (USMCA) dispute process. White also met with Canada’s Deputy Minister for International Trade Rob Stewart, though the dispute between the two countries over Canada’s implementation of its dairy tariff-ratequotas was not mentioned in the readout from the Office of USTR. The three officials will take part today in a USMCA deputies meeting in San Diego.
Ukraine’s grain production will drop again due to lower planted area... Ukraine’s production of corn and wheat this year is not expected to exceed 18 MMT and 16 MMT, respectively, marking a second annual decline as farmers reduce plantings due to impacts of the war with Russia, the head of the Ukraine Grain Association said. Those projections are a best-case scenario and production could fall more sharply depending on weather and financial difficulties for farmers, UGA head Nikolay Gorbachov told Reuters. He said the country’s rapeseed and soybean production could be stable this year, though the sunflower crop is expected to decline.
Weekly Export Sales Report out this morning... For the week ended Jan. 19, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 600,000-1,400,000 | 1,132,142 |
Wheat | 150,000-500,000 | 473,124 |
Soybeans | 600,000-1,200,000 | 986,196 |
Soymeal | 150,000-400,000 | 362,479 |
Soyoil | 0-10,000 | 666 |
‘Worst food crisis’ since WWII... Cindy McCain, U.S. ambassador to the United Nations’ agencies for food and agriculture in Rome, has said a spike in food prices will continue this year — and that only when Russia’s war in Ukraine is over will supplies be safe. McCain called it the “worst food crisis” and “worst humanitarian crisis” since World War II. She also said U.S. funding for the agencies would be “tight” this year.
China had small share of foreign-owned U.S. farmland... China owned slightly less than 1% of foreign-held U.S. agricultural land at the end of 2021, while Canadian investors held the largest share, at 31%, according to USDA data (link). Investors from the Netherlands, Italy, the United Kingdom and Germany collectively held another 31% of foreign-held U.S. acres. Foreign investors held a total of roughly 40 million acres, or just over 3% of all privately held agricultural land, according to USDA.
U.S. money supply fell for first time ever in 2022... The Federal Reserve’s main measure of the nation’s money stock – known as M2 money supply – slid for a fifth straight month in December, dropping a record $147.4 billion to a seasonally adjusted $21.2 trillion from the month before. From a year earlier, the volume of cash, coins, checking and savings deposits, other small-time deposits and cash parked in money market funds fell by nearly $300 billion – the first ever annual decline. The recent decline in the money supply comes as the Fed has been aggressively raising rates to push inflation back to its 2% target. Since last June, it has also cut its holdings of Treasury and mortgage bonds by $400 billion to roughly $8.5 trillion to augment that process, further stripping the economy of financial liquidity. St. Louis Fed President James Bullard said the decline in money supply “bodes well for disinflation.”
Mosaic: Conditions not right to restart Canadian mine... Fertilizer producer Mosaic does not currently see the right market conditions to restart its idled Canadian potash mine, with high inventories in the U.S. and Brazil and cold weather slowing trains from Canada, Chief Executive Joc O’Rourke said. Mosaic curtailed potash production in December at its Colonsay, Saskatchewan, mine but said it expected to restart production in early 2023. “It’s just a matter of starting to see the inventories coming down,” O’Rourke told Reuters. “The last thing we want to do is start it up, run it for a month-and-a-half and have to shut it down again.” He declined to be more specific on timing for restarting the mine.
Malaysia keeps February palm oil export duty at 8%... Malaysia maintained its February export tax for crude palm oil at 8% and raised its reference price. The world’s second-largest palm exporter calculated a reference price of 3,893.25 ringgit ($917.14) per metric ton for February, up modestly from 3,889.52 ringgit this month.
Cold Storage Report signals potential demand shortfalls... USDA’s Cold Storage Report showed beef stocks rose more than average during December, while pork stocks increased versus the normal small drawdown in inventories during the month. Given beef production dropped 6% from year-ago last month and pork production was down 7%, the inventory data suggests meat demand didn’t keep pace with supplies during December. Beef stocks at the end of December totaled 544.0 million lbs., up 20.7million lbs. (4.0%) from November versus the five-year average increase of 4.7 million lbs. during the month. Pork stocks stood at 458.1 million lbs., up 6.6 million lbs. (1.5%) from November whereas they declined an average of 3.2 million lbs. over the previous five years.
Iowa confirms HPAI in turkey flock... The Iowa Department of Agriculture and USDA confirmed an outbreak of highly pathogenic avian influenza (HPAI) in a commercial turkey flock in Buena Vista County, Iowa. That’s the 12th HPAI confirmation in Iowa since October, with the last eight being commercial turkey flocks, but the first since Dec. 12, 2022.
Cash cattle standoff extends... Packers have been slow to establish cash cattle bids, and what bids are out there are at sharply lower prices compared to last week. Feedlots so far have shown no urgency to move cattle at lower prices despite poor conditions and the coming arctic temps next week. Cash sources expect trade to eventually take place at roughly steady prices with week-ago as packers are thought to be short-bought on near-term slaughter needs, though the trend since mid-December has been for prices to fall short of expectations.
Cash hog index posts modest gain... The CME lean hog index is 22 cents higher to $72.32 (as of Jan. 24). While that’s a modest increase, it’s the first rise since Dec. 27 and offers a glimmer of hope a seasonal low may not be far off. February lean hog futures finished Wednesday at a $4.48 premium to today’s cash quote, which is slightly more than the five-year average gain of $4.01 from now until Feb. 16 when the contract is cash settled.
Overnight demand news... South Korea purchased 11,000 MT of U.S. feed wheat but passed on an international tender to buy 20,000 MT of feed wheat. Iraq purchased 150,000 MT of Australian 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
- 7:30 a.m. Weekly Export Sales — FAS
- 2:00 p.m. Citrus: World Markets and Trade — FAS