Good morning!
Price pressure overnight... Wheat futures led overnight price declines in the grain markets on hopes of an extension to the Black Sea grain export deal. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 5 to 7 cents lower, SRW wheat futures are 10 to 12 cents lower, HRW wheat futures are 4 to 5 cents lower and HRS wheat is steady to 3 cents lower. Front-month crude oil futures are around 75 cents lower and the U.S. dollar index is about 550 points lower this morning.
Discussions continue, but Russia expected to extend Black Sea grain export deal... Russia is expected to agree to an extension of a United Nations-brokered deal allowing exports of grain and other agricultural products from the Black Sea, Bloomberg News reported, citing four people familiar with the discussions. Kremlin spokesman Dmitry Peskov said on Tuesday Moscow would announce whether it was extending its participation in the Black Sea grain deal “at the appropriate time,” state-run TASS news agency reported. The United Nations says discussions on the grain export deal are ongoing but there was nothing to announce yet. Russian Foreign Minister Sergei Lavrov said the UN was working to remove obstacles to Russian exports of grains and fertilizers and UN Secretary-General Antonio Guterres had set out promises from the U.S. and European Union that those involved in the Black Sea grain export deal would not be sanctioned.
Another union votes to reject rail agreement... Members of the International Brotherhood of Boilermakers (IBB) have rejected the tentative agreement reached between unions and freight railroads. A cooling off period will last until Dec. 9 and the union said they intend to continue negotiating. IBB is the smallest union involved in the situation, but all unions have said they will not cross picket lines if one union goes on strike. Two other unions have rejected the pact while a third rejected it but then approved a renegotiated deal. The two largest unions are set to announce their voting results Nov. 21. Seven unions have approved the deal. The Biden administration is not as directly involved in the subsequent negotiations as it was when the initial deal was struck, with Labor Secretary Marty Walsh indicating before the election Congress would have to step in if a strike was on tap.
Big jump expected in NOPA crush... Members of the National Oilseed Processors Association (NOPA) are expected to report soybean crush totaled 184.5 million bu. in October. That would be up 16.7% from September and 0.3% above last year. Soyoil stocks are expected to total 1.535 billion pounds.
HRW, SRW CCI ratings post solid advances... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 4.7 points to 270.6 while the SRW crop rose 6.6 points to 357.0. The bulk of the improvement for HRW was in Montana, while the SRW improvement was largely in Illinois, Michigan and Ohio. Despite the weekly improvements, CCI ratings remained 71.3 points below the five-year average for HRW and 5.3 below for SRW. Click here for more details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended Nov. 13.
- Corn: 93% harvested (85% average).
- Soybeans: 96% harvested (91% average).
- Cotton: 71% harvested (63% average).
- Winter wheat: 96% planted (93% average), 81% emerged (81% average), 32% good/excellent (30% last week).
Goldman Sachs expects ‘significant’ in U.S. inflation in 2023... Goldman Sachs said it expects a “significant” decline in U.S. inflation next year due to easing in supply chain constraints, a peak in shelter inflation and slower wage growth. The firm forecasts the core personal consumption expenditures (PCE) index will fall to 2.9% by December 2023 from the current rate of 5.1%.
China keeps interest rates unchanged... China’s central bank partially rolled over maturing medium-term policy loans while keeping the interest rates unchanged for a third straight month. The People’s Bank of China (PBOC) said it was keeping the rate on 850 billion yuan ($120.21 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions at 2.75%. With 1 trillion yuan worth of MLF loans set to expire on the same day, the operation resulted in a net 150 billion yuan medium-term cash withdrawal through the instrument.
Covid restrictions hit Chinese factory output, retail spending... China’s industrial output rose 5.0% in October from a year earlier, slowing from 6.3% growth seen in September, as Covid-19 restrictions weighed on factory activity. Economists expected industrial output to rise 5.2%. China’s retail sales fell 0.5% last month, the first drop since May. Analysts expected retail sales to rise 1.0%.
Japan’s GDP contracts in Q3... Japan’s economy unexpectedly shrank for the first time in a year in the third quarter, as a weak yen and higher import costs took a toll on household consumption and businesses. Japan’s gross domestic product fell an annualized 1.2% in the third quarter, down from growth of 4.6% in the previous three-month period. Private consumption, which makes up more than half of the Japanese economy, grew 0.3%, though that was down from the second quarter’s 1.2% gain.
GOP on cusp of winning House majority... House Republicans currently stand at 217 seats won, meaning they only need one more to ensure a majority in the next Congress. Key races were called Monday night in New York, Arizona and California in favor of GOP candidates and incumbents.
G20 countries announced a $20 billion fund to help Indonesia use less coal... The package of grants and concessional loans, from public and private sources, is modelled on an $8.5 billion deal struck with South Africa last year. In return, Indonesia promised its power-sector CO2 emissions will peak at 290 million metric tons by 2030, seven years earlier than previously forecast.
ERP payouts continue to edge higher... Payments under the USDA Emergency Relief Program (ERP) reached $7.15 billion as of Nov. 13, up from $7.13 billion the prior week. The total includes $6.12 billion in non-specialty crop payments ($6.11 billion prior) and $1.03 billion in specialty crop payments ($1.02 billion prior). Still awaited from USDA is the second phase of the ERP effort, which has been signaled to be coming soon.
Cash cattle performed better than expected, stronger hopes this week... Cash cattle averaged $152.71 last week, up 73 cents from the previous week and better than expected thanks to Friday’s action. Feedlots continue to have the upper hand in cash negotiations as marketings are current and market-ready supplies are tightening. Traders anticipate an even bigger advance in cash prices this week.
Cash hog/pork fundamentals weaken... The national direct cash hog price fell $1.26 Monday despite a $2.74 gain in the Iowa/southern Minnesota market. Meanwhile, the pork cutout value dropped $1.44 on Monday as losses in the other cuts more than offset gains in butts and hams. Weakening cash fundamentals will likely limit followthrough buying interest in lean hog futures after Monday’s gains.
Overnight demand news... China purchased around 120,000 MT of French wheat over the past week. Japan is seeking 94,687 MT of milling wheat in its weekly tender. Jordan passed on a tender to buy 120,000 MT of 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
- 11:00 a.m. Soybean Crush — NOPA
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
- 2:00 p.m. Rural America at a Glance: 2022 Edition — ERS