Good morning!
Corn and beans weaker, wheat mixed... Corn and soybean futures were pressured by outside markets and a surge in Chinese Covid cases. Wheat futures traded mixed overnight. As of 6:30 a.m. CT, corn futures are trading 2 to 4 cents lower, soybeans are 7 to 10 cents lower, SRW wheat is 3 to 4 cents lower, HRW wheat is 2 to 5 cents higher and HRS wheat is 4 to 6 cents higher. Front-month crude oil futures are around $1 lower and the U.S. dollar index is more than 850 points higher this morning.
Russia: Grain talks with UN ‘fairly constructive’... The Kremlin said work to renew the Black Sea grain export deal is ongoing and talks with the United Nations last week were “fairly constructive.” The Kremlin said, “We are actually still a week away from the extension date (Nov. 19), so work is ongoing.” Russia has repeatedly complained its shipments of grain and fertilizers, though not directly targeted by Western sanctions, are constrained because the sanctions make it harder for exporters to process payments or to obtain vessels, insurance and access to ports.
Biden, Xi meet... President Joe Biden met this morning with Chinese leader Xi Jinping ahead of the G20 summit — their first in-person encounter since Biden took office. Xi told Biden the current state of China/U.S. relations was not in the interests of both countries and they needed to “steer the rudder,” according to China state broadcaster CCTV.
Election update... Sen. Catherine Cortez Masto’s victory in Nevada against GOP candidate Adam Laxalt gave Democrats the 50 seats they needed to keep the Senate, since Vice President Kamala Harris can cast tiebreaking votes. Sen. Mark Kelly (D-Ariz.) was re-elected in Arizona against challenger Blake Masters, who said he would not yet concede. If Sen. Raphael Warnock beats GOP challenger Hershel Walker, Senate committees will no longer be evenly split — they would have Democratic control/majority on committees. That means no nominees or bills being deadlocked in committee. Democrats say that will speed things up — because ties in committee require discharge votes on the Senate floor — and allow the pace of judicial nominations to quicken. Walker’s odds are expected to narrow in a runoff when voters know the overall midterm results and turnout drops. Meanwhile, there was still no certainty about which way the House of Representatives would fall, as glacial counts in several too-close-to-call races continued. Republicans are six seats short of the 218 they would need for a majority. Democrats stand at 204. Final results may not be known for days.
The week ahead in Washington... Lawmakers return to Washington as they prepare for leadership elections and a lame-duck legislative session. In the Senate, some Republicans believe this week’s leadership elections should be postponed until after the outcome of the Dec. 6 runoff contest in Georgia. Key ahead: Stalemate and likely fireworks on two spending issues: the fiscal year (FY) 2023 budget (latest funding deadline is Dec. 16) and perhaps a push to increase or suspend the debt limit, though that could wait until the new Congress. Meanwhile, talks on a potential year-end tax package are expected to ramp up as lawmakers return. On the economic front, the U.S. producer price index for October will be released on Tuesday. Retail sales data for October will be released on Wednesday.
Fed official: ‘A ways to go’ on inflation... Federal Reserve governor Christopher Waller said the U.S. central bank needs to keep raising interest rates, even after last week’s report showed inflation slowed in October. “The market seems to have gotten way out in front on this,” Waller said. “Everybody should just take a deep breath — calm down. We have a ways to go yet.”
China tries to reinvigorate struggling property sector... Beijing over the weekend unveiled its “most comprehensive” support measures aimed at boosting liquidity in the property sector. The package, which sources say lays out multiple financing measures for the cash-strapped industry, was hailed by analysts as a “turning point.” Two sources told Reuters on Sunday a notice to financial institutions from the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) outlined 16 steps to support the property sector, including loan repayment extensions. Meanwhile, CBIRC on Friday issued a notice allowing commercial banks to issue letters of guarantee to real estate firms for escrow pre-sale housing funds.
India wheat acreage up nearly 10%... Indian farmers have planted wheat on 4.5 million hectares since Oct. 1, up 9.7% from a year ago, according to the country’s ag ministry. Sowing of rapeseed reached 5.5 million hectares, up from 4.8 million hectares a year ago.
Methane regulations... The Biden administration on Friday proposed to tighten regulations on the oil and gas sector aimed at controlling emissions of methane. EPA projects that in 2030, the requirements would cut 87% of methane emissions from the pollution sources that it regulates when compared to 2005 levels. The proposal strengthens a Biden administration proposal from last year that was expected to have cut methane emissions from regulated sources by 74% in 2030 compared to 2005 levels. EPA said its two methane proposals would reduce about 36 million tons of methane emissions between 2023 and 2035, which it said is nearly the planet-warming equivalent of greenhouse gases emitted from all the country’s coal-fired power plants in 2020. Methane has a shorter lifespan than carbon dioxide, but is more than 25 times as potent.
Chinese pork imports to rise... China will increase pork imports in the coming months, industry participants said, after losses for farmers last year caused a reduction in hog numbers that appears larger than official data suggests. A manager at a feed producer that supplies more than 100 mid-sized pig producers across China told Reuters, “I think there’s 25% to 30% less fatteners [hogs] than a year ago.” Pan Chenjun, senior analyst at Rabobank, said: “I expect more [pork] shipments to arrive in Q4,” adding that 2023 imports will be higher than this year.
Bullish cash cattle hopes... After disappointing cash cattle trade last week, traders expect a better price performance. Packers pulled heavily from previously contracted supplies and cattle bought with time the past two weeks, so their need for cattle in the negotiated market should be stronger this week.
Traders expect cash hog weakness to persist... The CME lean hog index is down another 33 cents to $88.63 (as of Nov. 10). December lean hog futures finished Friday $4.28 below that level, signaling they expect the cash index to continue to slide over the next month ahead of the contract’s cash settlement.
Weekend demand news... Saudi Arabia purchased 1.009 MMT of optional origin milling 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
- 10:00 a.m. Export Inspections — AMS
- 11:00 a.m. Oil Crops Outlook: November 2022 — ERS
- 2:00 p.m. Feed Outlook: November 2022 — ERS
- 2:00 p.m. Rice Outlook: November 2022 — ERS
- 2:00 p.m. Wheat Outlook: November 2022 — ERS
- 3:00 p.m. Crop Progress — NASS