Good morning!
Mostly weaker tone this morning... Corn and soybean futures are lower and near their session lows this morning after two-side trade overnight. Wheat futures are mixed. As of 6:30 a.m. CT, corn futures are trading 3 cents lower, soybeans are 5 to 8 cents lower, SRW wheat is around a penny higher, HRW wheat is 1 to 2 cents lower and HRS wheat is 3 cents lower to 2 cents higher. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is more than 300 points higher.
Exchange slashes Argentine wheat estimate... The Rosario Grain Exchange slashed another 1.9 MMT off its Argentine wheat estimate, lowering it to 11.8 MMT, and warned it may have to make additional cuts. At that level, Argentina’s wheat crop would be the smallest since it produced just 10.9 MMT in 2015-16. On Wednesday, USDA cut its Argentine wheat crop forecast by 2 MMT to 15.5 MMT.
India weighs steps to tame record wheat prices... Soaring wheat prices in India could prompt price-easing measures, trade and government sources told Reuters. India could consider offloading state stocks in the market for bulk consumers such as flour and biscuit makers to reduce prices, government sources said. “We are monitoring the price situation closely and we will intervene,” a source said. “The key question is how much stock do we need to release.” The government could also drop the 40% wheat import tax, sources said.
Weekly Export Sales Report out this morning... For the week ended Nov. 3, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 300,000-650,000 | 372,220 |
Wheat | 250,000-600,000 | 348,054 |
Soybeans | 600,000-1,200,000 | 830,194 |
Soymeal | 100,000-300,000 | 122,168 |
Soyoil | 0-20,000 | (2,352) |
EPA finally sends RFS plan to OMB... EPA sent its proposed levels under the Renewable Fuel Standard (RFS) for 2023 and beyond to the Office of Management and Budget (OMB) as it is facing a Nov. 30 deadline as part of a negotiated deal with Growth Energy. “For years 2023 and thereafter, EPA must set those volumes based on an analysis of factors specified in the statute,” the agency said in the description of the proposed rule. “This rulemaking will establish volume requirements beginning in 2023.” That leaves the door open for EPA to propose levels for multiple years via this rulemaking and prior reports indicated it would propose levels for 2023, 2024 and 2025.
Midterm election update... Control of the Senate is down to three races in Georgia, Arizona and Nevada, with each party needing to win two of those states to secure a majority. Republicans are currently locked into 49 Senate seats with Democrats at 48. The Georgia Senate race between incumbent Sen. Raphael Warnock (D-Ga.) and GOP challenger Herschel Walker will come down to a Dec. 6 runoff election. The Nevada race between Sen. Catherine Cortez Masto (D-Nev.) and GOP candidate Adam Laxalt has Laxalt holding a lead of less than 20,000 votes with 70% of ballots tallied. In the House, Republicans have gained 10 seats and captured 207 seats versus 184 for Democrats as of early this morning. There are still 44 seats where no winner has been declared with 22 of those in California. Election watchers signal Republicans will capture a narrow majority in the House, with David Wasserman of the Cook Political Report with Amy Walter signaling Republicans are on track to win 51% of House seats. That would give them 221 seats, just three more than the 218 needed for control.
Key U.S. inflation data out this morning... The U.S. consumer price index for October will be released at 7:30 a.m. CT, with expectations for a fall in the headline number from 8.2% above year-ago in September to 7.9%. But inflation expectations data released on Friday may carry more weight with the Federal Reserve. Central bankers will be looking for signs inflation is becoming entrenched in the University of Michigan’s measure of longer-term inflation expectations.
Climate change regulation coming... The Biden administration will propose a rule today to make companies with at least $7.5 million in annual federal contracts set targets to limit emissions. The U.S. government is the world’s largest buyer of goods and services, and this rule would cover around 85% of emissions from its supply chain, officials said.
China’s new bank loans tumble in October... Chinese banks extended 615.2 billion yuan ($84.86 billion) in new yuan loans in October, down sharply from 2.47 trillion yuan in September and 826.6 billion yuan last year. It was the lowest level in new bank loans since December 2017, as credit demand weakened and the economic outlook darkened further amid strict Covid-19 curbs and a deepening property sector debt crisis. Outstanding yuan loans in October grew 11.1% from a year earlier, compared with 11.2% growth in September. Broad M2 money supply grew 11.8% from a year earlier, down from 12.1% growth the previous month.
France issues ‘high’ alert for bird flu... France has put the country on “high” alert for bird flu, the agriculture ministry said on Thursday. The “high” risk level means all poultry should be kept inside on farms and additional security measures taken, including for hunting, to avoid a spread of the disease. Between Aug. 1 and Nov. 8, there have been 49 outbreaks of highly pathogenic avian influenza (HPAI) on French farms.
Cash cattle trade starts at lower prices... Light cash cattle trade was reported around $150 in Texas on Wednesday, down around $1 from last week’s action in the region. That’s a disappointing start to cash trade, as traders expected another upturn in prices. While that may still happen as this week’s cash activity picks up, the initial results suggest packers are digging in their heels.
Cash hog index continues to decline... The CME lean hog index is down another 82 cents to $89.48 (as of Nov. 8), the first time it has been below $90.00 since Feb. 10. While the cash index continues to fall seasonally, the national direct cash price firmed 48 cents on Wednesday, the second straight daily rise.
Overnight demand news... South Korea purchased 134,000 MT of optional origin corn. Saudi Arabia tendered to buy 595,000 MT o MT of milling wheat. Tunisia tendered to buy 100,000 MT of soft milling wheat, 100,000 MT of durum and 75,000 MT of feed barley – all optional origin.
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
- 11:00 a.m. Feed Grains Database — ERS
- 11:00 a.m. Meat Price Spreads — ERS
- 2:00 p.m. Dairy Monthly Tables and Dairy Quarterly Data — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS
- 2:00 p.m. Peanut Prices — NASS