Good morning!
Light grain trade overnight... Corn, soybeans and wheat traded on both sides of unchanged in light trade overnight. As of 6:30 a.m. CT, corn futures are trading fractionally lower, soybeans are around a penny higher, winter wheat markets are 2 to 4 cents lower and spring wheat is narrowly mixed. The U.S. dollar index is more than 300 points higher and front-month crude oil is 35 cents higher.
Conab slightly raises Brazilian soybean, corn crop forecasts... Conab increased its 2024-25 Brazil soybean crop forecast by 140,000 MT from last month to 166.14 MMT. Soybean plantings are expected to rise 2.6% to 47.35 million hectares, up from 47.33 million hectares expected last month. Conab also inched up the Brazilian corn crop forecast by 70,000 MT to 119.81 MMT. Despite the slightly bigger production forecast, Conab lowered its 2024-25 soybean export outlook to 105.47 MMT, down 70,000 MT from last month. Conab left its 2024-25 corn export forecast at 34 MMT.
Republicans secure control of House, narrow majority expected... A win by GOP Rep. Juan Ciscomani in Arizona gave Republicans the 218 seats needed for a majority of the House’s 435 lawmakers, the Associated Press projected late Wednesday. Democrats have so far won 208 seats, while some contests are still uncalled. Minority Leader Hakeem Jeffries (D-N.Y.) acknowledged the outcome, noting Democrats’ efforts and emphasizing the razor-thin GOP majority. Key Republican wins included flipping districts in Pennsylvania, Michigan and Colorado, while Democrats made gains in New York and redistricted Alabama and Louisiana. With a narrow majority, the GOP faces challenges enacting President-elect Donald Trump’s agenda, though House leadership vows readiness to pursue aggressive tax, immigration, and energy reforms starting in January.
Moolenaar pushes for major tariffs on China with new trade bill... Rep. John Moolenaar (R-Mich.) introduced legislation to revoke normal trade relations with China, imposing steep tariffs of 35% on non-strategic goods and 100% on strategic imports, gradually phasing in over five years. His proposal, which also ends de minimis treatment for low-value Chinese imports, is likely to trigger a trade war, with anticipated Chinese retaliation potentially affecting U.S. industries such as agriculture. Revenue from tariffs would support impacted American farmers and manufacturers. Moolenaar’s bill aligns with past calls for similar measures by Trump-aligned figures and faces mixed reception due to potential cost impacts.
China taking proactive measures to prepare for trade war... China has prepared powerful countermeasures to retaliate against U.S. companies if president-elect Donald Trump reignites a smoldering trade war, Financial Times reported. China has enacted comprehensive laws over the past eight years that provide it with more tools to retaliate against U.S. actions, according to the Financial Times, including an “anti-foreign sanctions law” to counteract foreign measures, an “unreliable entity list” for companies that threaten China’s national interests and an enhanced export control law that allows Beijing to leverage its dominance in crucial resources like rare earths and lithium. China is also actively working to reduce its vulnerability to U.S. trade actions by accelerating efforts to fortify its technology and resource supply chains against potential U.S. sanctions, boosting trade with nations less aligned with Washington and redirecting purchases of agricultural commodities, such as soybeans, from American farmers to suppliers in Brazil and Argentina, according to the New York Times.
Export sales data pushed to Friday... Due to Monday’s government holiday, export sales data for the week ended Nov. 7 will be published Friday morning.
EU wheat plantings expected to rise... Soft wheat seeded area in the European Union should rebound sharply planting weather improved during fall, consultancy Strategie Grains said. In initial projections for the 2025-26 crop, the firm estimated the area sown with soft wheat will rise 1 million hectares, or about 5%, from the 20.4 million hectares in 2024-25. “The drier conditions of recent weeks enabled farmers to make good planting progress (in western Europe), whilst conversely, in the southeast EU countries, the return of rains has been the saving grace,” Strategie Grains said. The favorable turn in weather has eased concerns about a repeat of last year when torrential rain led to a steep drop in wheat planting in parts of western Europe including France. However, Strategie Grains warned last week the tough start to planting had already affected yield potential for wheat.
Traders bet on December rate cut as inflation data matches forecasts... Following Wednesday’s consumer inflation data, traders increased bets on a Federal Reserve interest rate cut in December. The market response reflects relief over cooling inflation concerns. However, market expectations for rate reductions moving forward have declined dramatically. The highest probabilities in CME Fed fund futures for each of the Federal Open Market Committee meetings now would see only two rate reductions of 25 basis points in 2025 after a cut of that size in December. Meanwhile, bond yields remain volatile amid anticipation of fiscal changes under President-elect Trump and expected higher Treasury debt issuance to fund potential tax cuts.
EPA proposes waiver for 2024 cellulosic biofuel requirements... EPA has submitted a proposal to the Office of Management and Budget (OMB) for a partial waiver of the 2024 cellulosic biofuel volume requirement under the Renewable Fuel Standard (RFS). Relabeled as “Renewable Fuel Standard (RFS) Program: Partial Waiver of 2024 Cellulosic Biofuel Volume Requirement and Extension of 2024 Compliance Deadline,” the rule is expected to adjust volumes by a few hundred million gallons. No other significant changes to the RFS program are anticipated.
U.S. budget deficit widens sharply in October... The U.S. budget deficit expanded to $121 billion in October, up 89% from last year, mainly due to increased spending on health, defense and rising debt-interest costs, according to the Treasury Department. Adjusted for deferred tax revenue distortions in 2023, the deficit was 22% higher. Key drivers included a 12% rise in Health and Human Services outlays and a 13% increase in defense spending. President-elect Donald Trump has enlisted Elon Musk and Vivek Ramaswamy to explore spending cuts, though politically challenging areas dominate outlays. Treasury debt-servicing costs rose slightly, but inflation-linked debt costs fell due to easing inflation.
China’s stimulus priorities are plain to see... Recent economic planning meetings talked up the need to reorganize local government debt and to reflate asset prices. This lays out Beijing’s stimulus priorities and implies measures involving heavy spending may only follow if other efforts to re-invigorate the economy fail, according to Reuters Breakingviews columnist Chan Ka Sing. Planners want to make it easier for local governments to meet their basic spending commitments including on pensions and healthcare. They also want to tackle the deflationary mindset: Chinese people are more likely to spend their savings if they believe the value of their properties or equity market holdings are rising.
Euro zone economic growth builds in Q3... The euro zone economy grew 0.9% from year-ago in the third quarter, up from 0.6% growth the previous quarter, according to the second estimate. On a quarterly basis, economic growth in the bloc rose 0.4%. However, industrial production fell 2.8% from year-ago in September.
Wholesale beef resumes price slide... After modest gains the two previous days, Choice beef dropped $1.33 to $306.94 on Wednesday. Select beef fell $1.26 to $278.66. Despite negative margins, packer inquiry into cash cattle picked up Wednesday, giving some hopes of steady cash cattle trade.
Hog pause... Lean hog futures have paused after the recent pullback from their highs as traders wait to see if cash fundamentals will face seasonal pressure. The CME lean hog index is up 6 cents to $89.94 as of Nov. 12, ending a three-day slide. The pork cutout declined 42 cents on Wednesday to $97.62 and fell $4.89 over the past week.
Overnight demand news... Japan purchased 114,403 MT of wheat via its weekly tender, including 58,046 MT U.S., 31,937 MT Canadian and 24,420 MT Australian. South Korea purchased 65,000 MT of feed wheat expected to be sourced from the U.S.
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
· 11:00 a.m. Feed Grains: Yearbook Tables — ERS
· 11:00 a.m. Census of Agriculture: Irrigation and Water Management — NASS
· 2:00 p.m. Cost-of-Production Forecast — ERS