Good morning!
Moderate to heavy price pressure overnight... Grain markets faced pressure overnight and are trading near session lows this morning as the war escalation concerns that fueled gains late Tuesday have eased. As of 6:30 a.m. CT, corn futures are trading 5 to 8 cents lower, soybeans are 10 to 13 cents lower, SRW wheat is 20 to 23 cents lower, HRW wheat is 18 to 19 cents lower and HRS wheat is mostly 9 to 17 cents lower. Front-month crude oil futures are near unchanged and the U.S. dollar is more than 300 points lower this morning.
Black Sea grain export initiative update... Russia spoke in favor of extending the Black Sea grain deal at this week’s G20 summit in Bali, as long as more grain was sent to countries in the greatest need, Finance Minister Anton Siluanov told Russian state-run RT news channel. Russia is also seeking to free up its exports of grains and fertilizers. The Kremlin said on Wednesday Russia had seen “certain progress” toward addressing its concerns over the Black Sea grain deal. Meanwhile, Turkish President Tayyip Erdogan said he believed the grain export deal will be extended beyond its Nov. 19 deadline, adding that his country is making efforts to extend it by a year.
Russia/Poland update... Poland and NATO are investigating Tuesday’s explosion in eastern Poland near the Ukrainian border, but Polish President Andrzej Duda said there appeared to be no signs of an intentional attack on his country and the rocket was probably used by Ukrainian air defense. President Joe Biden also told allies the missile that killed two people in Poland was a Ukrainian air defense missile, a NATO source said. Earlier, Biden said publicly the missile was unlikely to have been fired from Russia. If confirmed, that would ease concerns about an escalation in the war between Russia and Ukraine. Leaders of the G7 and Western countries at the G20 summit held emergency meetings about the matter; NATO and the UN Security Council will meet today.
Plea for Russian/Ukraine war to end... In his opening speech, the host of the G20 summit, President Joko Widodo of Indonesia, warned that “if the war does not end, it will be difficult for the world to move forward.” The conflict has aggravated many global problems, from inflation to food shortages, the G20 is grappling with. A final communiqué from the summit noted that most members condemn the war in Ukraine, but that there are also “different assessments” of the situation.
USDA announces ERP Phase 2, other aid actions; details to come later... USDA announced the launch of Phase 2 of its Emergency Relief Program (ERP), targeted to those who suffered losses in 2020 and 2021 but may not have received any payments under Phase 1. The payments will be based on the difference in farm revenue between a typical year and the disaster year and are to avoid windfall or duplicate payments. The new Pandemic Assistance Revenue Program (PARP) will be available to help those with agricultural commodities that saw revenue declines in calendar 2020 compared with 2018 or 2019 due to the Covid pandemic. USDA said PARP is aimed at addressing “gaps in previous pandemic assistance which was targeted at price loss or lack of market access, rather than overall revenue.” Under PARP, USDA said producers will use revenue information available from “most tax records,” and urged producers to have those documents available for the past few years along with supporting materials. USDA said the documentation is similar to what producers had to provide for the Coronavirus Food Assistance Program 2 (CFAP 2). Of note, USDA said that more details on ERP Phase 2 and PARP will be made available “in the coming weeks” when the rule is published.
Final rule coming on canola/rapeseed oil lifecycle analysis for biofuels... The Office of Management and Budget (OMB) completed its review of the final rule from EPA on the lifecycle analysis of greenhouse gas emissions relative to certain biofuels produced from canola/rapeseed oil via a hydrotreating process. EPA’s final rule arrived at OMB Sept. 19 and the review was completed Tuesday. No major changes are expected from the proposed rule issued early this year relative to the lifecycle analysis for diesel, jet fuel, heating oil, naphtha, and liquefied petroleum gas produced from canola/rapeseed oil.
Meetings finally begin on EPA’s proposed RFS levels... OMB began scheduling meetings on EPA’s proposed rule on the volume requirements for 2023 and beyond under the Renewable Fuel Standard (RFS). Several sessions are also slated for proposals linked to the electric vehicle (EV) industry and decarbonization efforts. Eight meetings are scheduled so far, with separate meetings today with Fuels America, BTR Energy, and Clean Fuels America. A session is set for Nov. 18 with American Fuel and Petrochemical Manufacturers, with two separate sessions set for Nov. 21 with the National Corn Growers Association (NCGA) and AJW Incorporated — a group focusing on clean energy, clean fuels, transportation and industrial decarbonization, carbon markets and other issues. Two sessions are scheduled for Nov. 22 with Growth Energy and EVgo, the latter focusing their efforts on developing a convenient, reliable and affordable EV charging network to provide fast charging services. EPA committed via a court-approved agreement with Growth Energy to issue its proposed RFS levels no later than Nov. 30.
Yellen holds ‘frank, constructive, positive’ talks with PBOC head... Treasury Secretary Janet Yellen met China’s central bank Governor Yi Gang on Wednesday for talks covering issues such as high energy and commodity prices, as well as the macroeconomic outlook in both countries. The meeting “had a frank, constructive, and positive tone,” said a U.S. Treasury official. “In the context of global challenges, Secretary Yellen and Governor Yi also discussed G20 issues,” said the official. Yellen and Treasury officials had previously said they would seek more clarity on China’s plans to ease its Covid-19 lockdowns that have curtailed its growth and restricted its supply chains and how Beijing will deal with problems in its massive property sector.
Fed’s George: Increasingly difficult to tame inflation without recession... Inflation is at risk of becoming entrenched in the economy from an overheated job market, making it difficult for the Federal Reserve to bring down inflation without a recession, Kansas City Federal Reserve President Esther George told the Wall Street Journal (WSJ). “I’m looking at a labor market that is so tight, I don’t know how you continue to bring this level of inflation down without having some real slowing, and maybe we even have contraction in the economy to get there,” George told WSJ.
UK inflation hits 41-year high... Britain’s annual consumer inflation rate reached 11.1% in October, up from 10.1% in September and the highest since 1981. The cost of food and non-alcoholic beverages rose 16.2% -- the fastest rate since 1977. British Chancellor Jeremy Hunt is expected on Thursday to announce “tough but necessary” tax hikes and spending cuts to control surging prices.
McCarthy wins GOP House Speaker nomination – for now... Kevin McCarthy (R-Calif.) won the Republican party’s nomination for speaker of the House of Representatives, beating Andy Biggs (R-Ariz.). A hardline block of right-wing Republicans may yet dash McCarthy’s hopes of becoming speaker in a House-wide contest in January, unless McCarthy makes significant concessions to the far-right members.
China to auction more state wheat reserves... China will auction another 40,000 MT of state-owned wheat reserves on Nov. 23. The full allotment of wheat supplies has been purchased in the weekly auctions that started in mid-October.
Mexico will vaccinate poultry to block bird flu... Mexico will start vaccinating birds in high-risk areas this week to prevent the spread of the highly contagious H5N1 strain of bird flu in the country, authorities said. Last month, Mexican authorities detected a severe H5N1 strain of avian influenza at a commercial farm in Nuevo Leon state on the border with the United States.
Holiday week ahead may limit packer demand... Packers have been slow to establish cash cattle bids this week after actively buying cattle last week. With a holiday-shortened kill next week, packers may slow-play cash negotiations and might not be as aggressive in securing supplies. USDA’s Cattle on Feed Report is also out Friday afternoon, which typically leads to slower cash negotiations on those weeks. Still, cash cattle prices are expected to build on recent price strength.
Neutral stance toward cash hog market over next month... The CME lean hog index is down 16 cents to $88.49 (as of Nov. 14). December lean hog futures finished Tuesday $3.165 below the cash index, which is about a normal seasonal decline over the next month. That suggests traders have a neutral bias toward cash expectations ahead of the contract’s settlement in mid-December.
Overnight demand news... Exporters reported no tenders or sales.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: November 2022 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: November 2022 — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Turkey Hatchery — NASS