Good morning!
Big price rebound overnight... Soy complex futures led a wave of strong corrective buying overnight on support from outside markets and stronger risk appetite as China eased its Covid regulations. As of 6:30 a.m. CT, soybeans futures are trading 16 to 20 cents higher, corn is 2 to 4 cents higher and wheat futures are 3 to 6 cents higher. Front-month crude oil futures are around $2.75 higher and the U.S. dollar index is more than 1,200 points lower and trading at the lowest level since Aug. 18.
Veterans Day... Federal offices, including USDA, are closed today for Veterans Day. Most markets are open. Pro Farmer salutes all those who served to secure the freedoms that make our country great.
China eases some Covid regulations... China on Friday eased some of its strict Covid rules even as case numbers surged to their highest since April. Under the new rules, centralized quarantine times for close contacts and travelers from abroad were shortened by two days. China will also stop trying to identify “secondary” contacts while still identifying close contacts. The loosening of regulations came a day after Chinese President Xi Jinping led his new Politburo Standing Committee in a meeting on Covid. While the regulations were eased, some cities stepped up their Covid lockdowns as case numbers surged.
Kremlin: Work underway to address Russia’s concerns on grain deal... “Negotiations and contacts are continuing,” Kremlin spokesman Dmitry Peskov said, as officials from Russia and the United Nations met in Geneva to discuss a possible extension of the deal. “It is necessary to resolve a number of issues related to a well-known part of the so-called grain deal that concern us. Here there is mutual understanding on the part of our counterparts in the United Nations, so work is underway,” he said. Russia’s agricultural exports have not been directly targeted by Western sanctions, but Moscow says blocks on Russia’s payments, logistics and insurance industries were a “barrier” to Russia being able to export its grain and fertilizer.
Yellen doesn’t know if lower U.S. inflation data is turning point... Treasury Secretary Janet Yellen told Reuters it was good to see the latest U.S. consumer inflation data suggests upward pressures are easing, but she doesn’t know if it was “a turning point.” She added, “I never make more of one data point. That is one data point. It was certainly nice to see an inflation report that came in on the low side of expectations rather than the high side and, you know, we’ve seen early indications along the pipeline that inflation might be diminishing.”
What ag bankers told us... Bankers at the American Ag Bankers Association annual conference told us the ag sector overall will be in good shape for 2023, largely because of relatively firm prices this past year. But most are concerned about 2024 as some income transfer payments end and input prices that are expected to remain high will impact operations. If the Fed funds rate goes to around 5%, operating loans will rise to 10.5% to 11% from the current 7.5% to 8%, we were told. This is one of the reasons USDA’s FSA loan programs will see increased use as those rates are much lower and will give farmers cash flow while awaiting marketing opportunities.
EU revises GDP, inflation forecasts... The euro zone economy will grow more than previously expected in 2022, the European Commission forecast on Friday, and decelerate more than previously thought in 2023. The commission forecasts the euro zone economy will grow 3.2% this year, up from its 2.7% projection in July, but then slow down sharply to 0.3% growth next year, well below the July forecast of 1.4%, before rebounding 1.5% in 2024. Euro zone inflation is expected to decelerate from 8.5% this year to 6.1% in 2023 and ease to 2.6% in 2024.
Election update... House control remains uncertain but most signal a modest GOP takeover of the chamber. Republicans appear to be slowly inching toward the 218 seats that would deliver them a narrow victory, but incoming results from California and Colorado could ultimately determine which party controls the chamber. The situation with eventual control of the Senate is fluid and bewildering. Some are predicting Democrats will retain control of the chamber while others note they are awaiting outcomes of many votes still to be counted in Arizona and Nevada. We still can’t rule out the Georgia Dec. 6 runoff deciding who controls the Senate.
Russia lowers wheat export tax... Russia’s wheat export tax for Nov. 16-22 will be 2,922.1 rubles ($48.60) per metric ton based on an indicative price of $312.30. That’s down from a rate of 3,012.0 rubles per metric ton the previous week.
Indonesia raises palm reference price, export tax... Indonesia plans to set reference price of its crude palm oil at $826.58 per metric for Nov. 16-30 shipments, Trade Ministry official Farid Amir said on Friday. The planned reference price would put the export tax for the period at $33 per metric, up from $18 for Nov. 1-15 period, and would trigger a $85 per metric ton levy.
China to auction more soybeans... China will auction another 500,000 MT of imported soybeans from state-owned reserves on Nov. 25.
COP 27 update... Scientists presented findings at the United Nation’s COP27 summit in Egypt that showed the Earth to be on course to breach the 1.5-degree limit — set in Paris in 2015 — in only nine years. Global carbon emissions increased by 1% this year, even during an energy crisis. Meanwhile, the heads of several African governments said that they must be allowed to use fossil fuels to lift their countries out of poverty.
Not much cash cattle activity... Packers have been reluctant to offer even steady prices for cash cattle this week and most feedlots have shown no willingness to move animals at lower prices. It doesn’t appear packers need near-term supplies and feedlots are current enough they could carry some animals into next week. Therefore, the cash standoff could extend late into today if neither side is willing to budge in negotiations.
Cash hog fundamentals weaken... The CME lean hog index is down 50 cents to $88.96 (as of Nov. 9), extending its seasonal price decline. After two straight days of gains, the national direct cash hog price dropped $2.47 on Thursday. Given weakening cash fundamentals, buyer interest in lean hog futures will be limited – even with December lean hogs more than $4 below the cash index.
Overnight demand news... South Korea purchased 69,000 MT of optional origin corn and passed on another tender to buy up to 68,000 MT of optional origin corn. Japan purchased 94,603 MT of wheat in its weekly tender, including 62,423 MT of U.S. and 32,180 MT Canadian. Indonesia purchased 60,000 MT of U.S. milling wheat and 60,000 MT of Canadian milling wheat. The Philippines passed on a tender to buy 60,000 MT of 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
- No reports scheduled. Veterans Day.